Articles Posted in IRS whistleblower

NC-health-care-fraud-300x199Mental health company owner, Catinia Denise Farrington of Cyprus, Texas, pleaded guilty to health care fraud and tax evasion in September of 2018. As of March 1st, 2019, she has been sentenced to 60 months in prison after profiting $4 million from Medicaid and just under $400,000 from her tax evasion scheme.

Health Care Fraud Conspiracy

According to prosecutors, Farrington owned a mental health care company out of North Carolina, Durham County Mental Health and Behavioral Health Services, LLC. Through this company, she submitted thousands of fraudulent claims to Medicaid for services that were never performed. These incidents occurred between 2011 and 2015, but this is not the only fraudulent activity that Farrington participated in during this time.

tax havenThe Sackler family empire comprises Purdue in America, Napp in Britain, and Mundipharma in Europe and Australasia. The companies have helped amass a £10 billion fortune, protected, in part, by the tax haven of Bermuda.

The Evening Standard in the UK released a report detailing that while their opioid painkillers are manufactured in Cambridge, the Caribbean is actually the heart of the Sacklers’ tax avoidance strategy. They report the Sackler family has allegedly diverted billions of pounds in profit to Bermuda to avoid paying millions in taxes that would have been due to the UK or Europe.

The Investigation into Opioid Companies

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.

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 Tax Division of the Department of Justice and the IRS is increasing its scrutiny of offshore tax evasion with fourteen active federal grand jury investigations related to foreign banking institutions to identify and reveal American depositors. It is pursuing criminal investigations of scores of Swiss banks and also banks in Israel, Lichtenstein, Luxemburg, Barbados, Hong Kong, Singapore and others. Bank Leumi recently entered into a deferred prosecution agreement with the DOJ, paying $270 million and the bank agreed to identify numerous account holders in the U.S. to the I.R.S.. B.S.I, a Swiss bank paid $211 million and also turned over U.S. account holders.

The law requires that U.S. citizens report moneys in foreign accounts. Failure to report foreign accounts means filing a false tax return which may have criminal penalties.

The IRS whistleblower statute allows individuals with “specific and credible” information about tax evasion exceeding $2 million to collect a percentage of what the government recovers. The IRS program protects against disclosure of the whistleblower’s identity.

U.S. taxpayers and U.S. companies shifting profits and come to other countries robs the Government of more than $100 billion in tax revenue each year according to a report by a congressional research group the Congressional Research Service.

The federal government loses both individual and corporate income tax revenue from the shifting of profits and income into low-tax countries, the report says. The revenue losses from this tax avoidance and evasion are difficult to estimate, but some have suggested that the annual cost of offshore tax abuses may be around $100 billion per year.

A large portion of the tax evasion relating to individuals occurs when they take actions to move their investments to foreign companies and then do not report the holdings of these assets on their tax returns.When a person does this, they evade a tax that they are legally required to pay. according to CRS.

The United States Internal Revenue Service (IRS) has sent a delegation to Israel for the purpose of meeting with the Israel Tax Authority to create an agreement to exchange information about accounts of US customers in Israel and Israeli customers in the U.S.

In line with its recent dealings with Swiss banks, this arrangement will be designed to prevent tax evasion in both nations. Recently, U.S. banks began contacting their Israeli customers demanded that they sign a declaration stating that their assets were reported to the tax authorities in Israel.

The trend towards sharing of information about foreign residents and their bank accounts has accelerated in recent years in the framework of the global war on tax evasion.Authorities in Israel and the US have signed a cooperation agreement.