False Claims Act legislation to cover tax frauds is under consideration in D.C., Michigan, and California, according to Bloomberg Tax.
The inspiration for these new proposed laws comes in part to the success of New York’s false claims law, which has racked up a whopping $467.4 million in settlements in the past ten years.
Since 2010, whistleblowers in New York have been awarded $85.8 million from False Claims Act settlements arising in 18 tax-related cases, the most recent being “a jackpot settlement” with Sprint. Sprint agreed to pay $330 million to settle claims in New York involving a failure to collect and pay sales taxes on flat-rate access charges for wireless calling plans.
False Claims Act whistleblowers, known as qui tam relators, can earn monetary rewards by filing suits against parties who knowingly perpetrate frauds against the state. If original information presented by the qui tam relator results in a sanction against a fraudster, they are eligible for a reward between 15-30% of the proceeds collected by the government.