MASSACHUSETTS WHISTLEBLOWER LAW
A self-described psychic and spiritual leader Sally Ann Johnson, 41, of Martha’s Vineyard, ran businesses including Psychic Match Inc and Flatiron Psychic, admitted in Boston federal court that she tried to impede the administration of tax laws. Johnson was paid to purportedly perform spiritual cleansing and healing services and repeated exorcisms. Johnson, who told the court she never passed the second grade, called herself a Romani “spiritual consultant.” She said she had not paid taxes in connection with the money she received as income as well as a gift.“I honestly did not do the right thing,” she said. Sentencing is scheduled for January 17, 2018 and she could face upto three years in prison. In addition, she could also face a fine from $250,000 or double the gain or loss the offense caused.
Johnson, who has resided in New York, Florida, Illinois and at times Massachusetts, faces up to three years in prison. She is scheduled to be sentenced on January 17. Her lawyers declined to comment. According to court papers, Johnson at various times lived with the unnamed woman on Martha’s Vineyard, a favorite vacation spot for the rich and famous.
A Government Accountability Office Report says that the IRS Whistleblower Office has issued 500 awards to whistleblowers which exceeds $315 million in claims paid since 2011. It says IRS currently has 30,152 open claims, which, if investigated, could result in the recovery of hundreds of billions of dollars from tax cheats.
The GAO made ten recommendations to improve the program, including provisions to ensure that tax whistleblowers are not subject to retaliation.
Jeffrey Newman represents whistleblowers
The Internal Revenue Service has awarded $11.6 million to a whistleblower this week and said that as many as 10 more payouts will be announced shortly by the agency. Under the IRS whistleblower program whistleblowers reporting cases involving $2 million or more of unpaid taxes are eligible for awards as much as 30% of what the IRS recovers.
So far, only one major reward recipient has publicly identified himself, Bradley Birkenfield who received an award of $104 million, the largest ever.
The name of this week’s whistleblower has not been released but it is known that he was a corporate officer who resigned and the claim involved a number of very weathy individuals whom the business helped to evade taxes.
The U.S. Department of Justice Tax Division and the Internal Revenue Service are ramping up a hallmark expanding crackdown on offshore tax evasion, and banks that assist US tax evaders are being faced with potential indictments for felonies wherever they are located.
The government’s blitzkreig extends to Switzerland, where it is aggressively pursuing criminal investigations of a dozen Swiss banks are ongoing, and another 100 banks are seeking to avoid criminal investigations and prosecutions. The IRS has entered jurisdictions including India, Liechtenstein, Luxembourg, Barbados, Hong Kong, Singapore and Israel. (Bank Leumi recently entered into a deferred prosecution agreement with the DOJ, paid a penalty of $270 million, and agreed to identify numerous additional Bank Leumi account holders in the U.S. to the IRS.) Several other investigations in other parts of the world are being pursued in other areas as well, which have not been made public.
15 active federal grand jury investigations of foreign banking institutions In addition there is the recently enacted Foreign Account Tac Compliance Act legislation, which requires that a foreign financial institution identify and reveal American depositors — individual and entity — to the IRS or suffer a 30 percent withholding on withholdable payments and pass-thru payments., along with the DOJ amnesty program for Swiss banks (BSI SA became first Swiss bank in this disclosure program to agree to pay a $211 million penalty and turn over U.S. account holder’s identity to escape criminal charges) to disclose how they aided tax evasion. Taken together, all of the foregoing will result in the eventual disclosure of several thousands of taxpayers’ identities to the IRS.
It is not a new story. The very rich trying to evade the IRS for what should be considered pocket change and ending up jailed and fined. The most brilliant behavioral psychiatrist would have trouble figuring out why. Ms. Arlette Ricci, heiress to French fashion deigner Nina Ricci’s Estate was convicted of tax fraud and sentenced to one year in jail for hiding millions in an HSBC account. Following her prison term, there will be a two year suspended sentence and she was fined one million euros and had two properties confiscated worth 4 million euros. This does not include the millions in back taxes which must be repaid.
HSBC’s Swiss private banking division is under scrutiny after a leak revealed huge tax fraud and many other prosecutions of the rich and famous are expected. The identities of thousands of HSBC clients were obtained by the French Government in 2009 by whistleblower Herve Falsiani a former employee of the bank’s Swiss unit.
A fairly recent American law called the Foreign Account Tax Compliance Act (FATCA) has forced banks in many nations to reveal the identities of American tax evaders hiding their moneys abroad. FATCA requires foreign banks to reveal Americans with accounts over $50,000 and non-complaint banks are not allowed to do business in the United States. The United States taxes its citizens-even permanent residents- on their worldwide income regardless of where they live.
The Vanguard Group one of the world’s largest investment funds with $3 trillion under management illegally evaded taxes through transfer pricing, says whistleblower David Danon, a tax attorney at Vanguard for nearly five years. He became aware of a transfer pricing arrangement while at Vanguard and its affect on corporate taxes. He filed a whistleblower action in 2013 under the New York False Claims Act. He alleges that Vanguard charges its own funds at cost prices for management services, which is below market pricing. Vanguard says that the Securities and Exchange Commission issued an order approving :joint participation arrangement. Danon says that order allowed the transactions for securities purposes not taxes. Continue reading
The IRS has released new regulations which include guidelines for its whistleblower award program.
Under the final regulations, the IRS is expanding the definition of “collected proceeds” to include not only how much revenue the IRS collects from the whistleblower tip, but also the impact of other tax attributes such as net operating losses, potentially bringing the whistleblower far larger awards. Generally, Section 7623(b) provides that qualifying whistleblowers will receive an award of at least 15 percent, but not more than 30 percent, of the collected proceeds resulting from the action on which the Treasury proceeded, based on the information provided to the IRS by the whistleblower.
Section 7623 provides for the payment of awards from collected proceeds, but it does not specifically address the treatment of claims that involve tax attributes that do not result in collected proceeds for many years, if ever. Originally, the proposed regulations provided a computational rule that reflects a discussion contained in the preamble to the 2012 regulations, in which the Treasury and the IRS noted that tax attributes such as NOLs do not represent amounts credited to the taxpayer’s account that are directly available to satisfy current or future tax liabilities or that can be refunded. Instead, tax attributes such as NOLs are component elements of a taxpayer’s liability.
The Internal Revenue Service (IRS) has released figures stating that it had paid at least $53 million to whistleblowers during 2013 as part of its informant award program. These whistleblowers, who received an average bounty of $435,000, provided information that led to the assessment and collection of more than $367 million in taxes. It is expected that the amounts collected as a result of whistleblowers will increase yearly from 10-20% and that the whistleblower awards will also increase substantially as more moneys are collected in larger cases. Under the IRS program a whistleblower may maintain his or her anonymity and still reveal information and collect the reward. This fact has increased the numbers of individuals coming forward with information about tax evasion.
The program is currently subject to the following limitations:
- The IRS pays a bounty of between 15 and 30 percent for information that leads to the recovery of $2 million or more. If the delinquent taxpayer is an individual, his or her annual income must be in excess of $200,000.
As of July 1, any Americans trying to stash funds abroad to evade taxes will be faced with a comprehensive new law which requires banks, funds and other financial institutions around the world to report assets held by American clients or face a damaging 30% witholding tax.
So far more than 77,000 financial institutions have agreed to pass information to the IRS.
The new law is called the Foreign Account Tax Compliance Act and it covers any “US person” including green-card holders and anyone with substantial connection to this country.