Articles Posted in IRS whistleblower

Americans with offshore accounts are being advised to apply immediately as the US Internal Revenue Service’s (IRS) Offshore Disclosure Programme (OVDP) is due to end September 28, 2019

American citizens with a foreign bank account have until September 28 to voluntarily disclose worldwide income, including interest, foreign earnings, wages, dividends and other income. The IRS’ Offshore Voluntary Disclosure Programme (OVDP) ends on 28 September, and some people are rushing to get in, as it offers some protection from severe penalties. The IRS is encouraging taxpayers who need to disclose non-compliant and unreported foreign accounts and assets to come forward before the September deadline. Qualifying taxpayers who have unreported foreign accounts can still use the OVDP to come into compliance while avoiding the risk of criminal prosecution and minimizing otherwise applicable civil penalties, but only until that date. The statute of limitations is six years. Plus, the statute of limitations never expires on tax fraud, so the IRS can pursue the citizen many years later for back taxes, interest and penalties.

For those who failed to report income, the civil liability to the IRS can include a 20% accuracy-related penalty or a 75% civil fraud penalty.

Congress has enacted a new law which has strong protections for tax whistleblowers which protects whistleblower privacy, advances the speed of investigation and completion of the process and builds strong new protections against whistleblower retaliation.  The changes in the IRS Whistleblower program include:

*Authorizing the IRS to communicate with whistleblowers during their claims period;

*Protecting taxpayer privacy;

The Internal Revenue Service awarded more than $312 million to whistleblowers last year.  This exceeds the previous record of $125 million awarded in 2012. The 2018 rewards, paid in the fiscal year ended Sept. 30, were for additional collected revenue of $1.4 billion, compared with $191 million in fiscal 2017.

And the agency has already paid $115 million to whistleblowers for 2019, and there is more coming. Last year, one tipster alone was awarded  $100 million, nearly one-third of the total collected by the government.

To date, the largest known IRS whistleblower award of $104 million went to Bradley Birkenfeld, a former private banker for UBS AG who did go public. His 2012 payment was for turning in the Swiss banking giant, which admitted it encouraged U.S. taxpayers to hide assets abroad.

whistleblower-stories-300x175Former whistleblower, Everett Stern, states that the crackdown on financial fraud still has a way to go before it can truly be considered a successful pursuit.

A whistleblower is considered anyone who has insider information about a fraudulent act and decides to come forward to law enforcement about such activities. Anyone can be a whistleblower, and if they decide to pursue the matter legally, they will be acting in the name of the government. The government can then choose to step in and settle the matter if they find it to be a worthy endeavor that can benefit from their direct support.

Stern was a whistleblower involved in the case of HSBC, a British bank that was accused of money laundering activities. Stern assisted in this case by providing essential insider information about the bank’s financial details to law enforcement authorities. This case eventually ended in a $1.9 billion fine in repercussions from HSBC.

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.