National Whistleblower Day

In a press release issued today, attorneys for a husband and wife tax fraud whistleblowers, expressed optimism that President Trump’s pick for Secretary of Treasury Steve Mnuchin would show support for the IRS Whistleblower Office by not appealing a the Tax Court’s decision in Whistleblower 21276-13W v. CIR (147 TC 4).

The full press release is reprinted below: Continue Reading IRS Whistleblower Advocates Hopeful New Administration Upholds “Collected Proceeds” Tax Court Decision

The NWC  releases today an extensive commentary that was written by myself and Steve Kohn (with a huge assist from Felipe Bohnet-Gomez) regarding the Treasury Department’s IRS whistleblower reward regs – specifically on the issue of the Treasury’s narrow interpretation of “collected proceeds.”

“Collected proceeds”  — two little words — the definition of which could make a big difference in the success of the IRS whistleblower program going after tax cheats (especially those with illegal offshore accounts).   The NWC commentary provides chapter and verse to the finding that the Treasury and IRS are ignoring the plain language of the whistleblower award statute (Section 7623 of title 26) as well as the history, structure and context of the legislation in seeking thorough regulations to dramatically cut back when a tax whistleblower can get an award.

What is the issue? – Continue Reading Tax Whistleblower Regs – NWC Calls For Rewrite on Definition of “Collected Proceeds”

The Ninth Annual Whistleblower Summit and Film Festival is being held virtually from July 28 – August 1.  The event features panels on an assortment of topics relevant to whistleblowers, whistleblower advocates, and over forty films.  The full calendar of panels can be found here.  Panels and films are available for viewing from their designated start time until July 31st at 11:59 pm EDT.

One of the featured panels is International Whistleblower Rights Program: South Korea’s Tax Whistleblower Reward Law.  For this panel, Youjin Yoon, a law clerk at the qui tam law firm Kohn, Kohn and Colapinto, interviews Joohyun Baek, Deputy Director and Delegate to IBFD Netherlands at the National Tax Service (NTS) of South Korea, about Korea’s Tax Whistleblower Law.

Baek began by explaining that the NTS Whistleblower Reward Program consists of two separate programs: the Tax Evasion Informant Reward Program and the Foreign Financial Account Report Program.  Both programs offer monetary whistleblower awards to individuals who disclose significant original information that leads to a successful enforcement action.  Baek offered clarification about the details of these programs, including the difference between tax avoidance and tax evasion and the definition of “significant original information.”  Baek stated that “under Korean tax law, ‘significant’ information is defined as the information that substantiates the whistleblower claim.  This includes transactional information regarding the vendor, list of supply goods or services, quantity of supply goods, etc.”

Baek further detailed the two whistleblower reward programs.  He explained that whistleblowers can be eligible for rewards under both programs simultaneously and that rewards are for 5-20% of the collected proceeds.  He also made note that under the NTS Whistleblower Reward Programs individuals of any nationality are eligible for awards.

Baek continued by explaining the protections offered to Korean tax whistleblowers.  Through the programs, Baek explained, whistleblowers are legally ensured complete confidentiality and anonymity.  Baek concluded by recounting NTS Whistleblower Reward Program’s successes and the critical role individual whistleblowers play in combating fraud and corruption.

Like South Korea, the United States has important rewards programs for tax whistleblowers.  Established in 2006, the IRS Whistleblower Program operates similarly to the NTS Whistleblower Program.  IRS whistleblowers are offered confidentiality and are eligible for monetary awards if they provide original information that leads to a successful enforcement action.  The IRS whistleblower awards are even greater than those offered by the NTS.  IRS whistleblowers are entitled to an award between 15-30% of any amount recovered by the IRS.  In 2012, Bradley Birkenfeld received an IRS whistleblower reward of $104 million, the largest ever individual qui tam whistleblower award in history.  Earlier this month, the National Whistleblower Center urged Congress to strength the IRS Whistleblower Program to combat COVID-19 related tax fraud.

It is no surprise that fraudsters would exploit the COVID-19 pandemic to cheat the federal government out of millions in relief funds. This was also the case in the wake of Hurricane Katrina.  AECOM, a California-based architecture and engineering firm, conspired with a handful of New Orleanian relief applicants to cheat the Federal Emergency Management Agency (FEMA) out of more than $100 million in disaster relief funds designated for non-profit educational and religious institutions. The scheme was brought to light by Robert Romero, an AECOM project specialist and False Claims Act whistleblower.

Between 2005 and 2019, AECOM received over $300 million from FEMA to prepare damage and repair estimates to determine applicants’ relief eligibility. Romero’s 2016 qui tam lawsuit, unsealed today, alleges that AECOM personnel knowingly submitted false photographs, claimed damage to non-existent buildings, and exaggerated repair estimates to increase funding for applicants. It alleges AECOM management was aware as early as 2011 but failed to notify FEMA, and that certain applicants conspired with AECOM by certifying the reports’ accuracy.

One such applicant was Xavier University of Louisiana, which misrepresented the degree of damage to various campus facilities. Xavier settled its liability for $12 million, of which Mr. Romero received approximately $2.3 million. Under the False Claims Act, which allows private parties to hold companies accountable for defrauding the federal government, whistleblowers are entitled to 15 to 30 percent of collected proceeds. As the federal government continues to recoup losses from AECOM’s fraudulence, Mr. Romero will continue to collect. Other applicants include Dillard University and the Archdiocese of New Orleans.

The Justice Department announced today that it is intervening in Mr. Romero’s suit, as is its right under the False Claims Act. The U.S. Attorney’s Office for the Eastern District of Louisiana said today that “Federal disaster funds are an instrumental component in the effort to assist disaster victims with their recovery… The favorable resolution of this False Claims Act matter illustrates the collaborative efforts and firm commitment by our federal partners to use all available remedies to address signs of fraud, waste and abuse.” The Justice Department is receiving support from FEMA’s Office of Chief Counsel and the Department of Homeland Security’s Office of Inspector General.

Internal-Revenue-Service-buildingIn February 2018, Congress passed the Bipartisan Budget Act of 2018, requiring the Internal Revenue Service (IRS) to include penalties for Report of Foreign Bank and Financial Accounts (FBAR) violations in calculating whistleblower awards. Prior to this statutory change being signed into law, FBAR violations were not included in the calculation of IRS whistleblower awards. Continue Reading GAO Report Finds Excluding FBAR Violations from Award Calculations “Negatively Affected Whistleblowers’ Willingness to Bring Information to IRS”

its largest whistleblower awardMajor breakthrough for whistleblowers reporting commodity frauds

WASHINGTON, D.C. | July 12, 2018—The Commodity Futures Trading Commission (CFTC) today announced its largest whistleblower award to-date in a commodity fraud case.  According to the Commission, it issued “an award of approximately $30 million to a whistleblower who voluntarily provided key original information that led to a successful enforcement action” Continue Reading Largest Award Issued in Commodity Fraud Case

IRS-Whistleblower-Building-Washington-DCToday, the U.S. Department of Justice officially dismissed their appeal of case Whistleblower 21276-13W and 21277-13W v. CIR, Case Nos. 17-1119 and 1120 (D.C. Cir.), marking a big win for IRS whistleblowers. Below is a statement from the whistleblowers’ attorneys. Continue Reading DOJ Drops Case, IRS Whistleblowers to Receive $12.9 Million Award from Criminal Prosecution of Swiss Bank

Crippling Loopholes in the Tax and Wall Street Whistleblower Reward Laws are Closed

WASHINGTON, D.C. | February 9, 2018The Bipartisan Budget Act of 2018, approved today by the U.S. Congress, included two key whistleblower-rights amendments initially introduced by Senator Charles Grassley (R-IA). These amendments ensure that employees who blow the whistle on criminal tax fraudsters are covered under the IRS whistleblower law, and end the double-taxation of whistleblower awards under the Dodd-Frank Act.

Continue Reading Big Win for Whistleblowers in Bipartisan Budget Act

Washington, D.C. November 15, 2017. Senator Charles Grassley (R-IA) has put forth two amendments to the Tax Cuts and Jobs Bill that are important to whistleblowers.

The major amendment addresses an issue that has been the subject of previous posts, defining the term “collected proceeds” in I.R.C. section 7623(b).  The IRS and Department of Justice have taken the position whistleblowers who report criminal tax frauds, such as the numerous crimes committed by the largest Swiss banks, cannot obtain a whistleblower reward. They have argued that whistleblower rewards should not be paid on any criminal fines. Continue Reading Proposed Grassley Amendment Important for Whistleblowers

World Ocean Day (June 8th), is a global celebration of the vast, and largely unexplored, underwater world that makes up the majority of our planet. It’s also an annual opportunity to highlight the action needed to preserve the ocean’s extraordinary ecosystems, of which we still haven’t even scratched the surface of understanding.

In the spirit of World Oceans Day, the National Whistleblower Center’s (NWC) executive director, Stephen M. Kohn  presented a webinar, “Using U.S. Whistleblower Laws to Fight Illegal Fishing and Marine Pollution and Fund MPAs” on June 6, to discuss the impact whistleblowers have in protecting our oceans from oil pollution, and how whistleblower reward laws can be successfully applied to illegal, unreported, and unregulated fishing (IUUF). Continue Reading Against the Tide: Whistleblowers and Illegal Fishing