Thursday, September 13, 2012

IRS awards UBS whistleblower $104 million

The IRS awarded $104 million to UBS whistleblower Bradley Birkenfeld Tuesday.  In 2007 Birkenfeld played a key role in alerting the U.S. government to the ways the Swiss bank, UBS, was encouraging clients to evade taxes in the U.S.  Following Birkenfeld’s tip, UBS agreed to a $780 million settlement with the Department of Justice, and turned over information on some 5,000 Swiss accounts to the IRS. 

Largely as a result of Birkenfeld’s cooperation and the subsequent investigation of several Swiss banks, the IRS launched its first Offshore Voluntary Disclosure Program in 2009.  Over 33,000 Americans have since participated in the program and the IRS has recouped approximately $5 billion in back taxes and penalties.   

Such a substantial whistleblower reward recognizes the value of Birkenfeld’s contributions to the IRS investigation.  ErikaKelton, a whistleblower attorney at Phillips & Cohen LLP, noted the significance of the reward in a Bloomberg article.  Kelton said, “The government acknowledged that without him or someone in his position, offshore evasion at UBS would still likely be going on.” 

Kelton also noted that although the record of IRS whistleblower program has been discouraging for the past few years, Birkenfeld’s reward bodes well for the momentum of the program.  “This is a powerful statement that things are moving and whistleblowers are welcome and they’re open for business,” said Kelton.