Daily Tax Update - September 11, 2012: IRS Awards $104 Million to Whistleblower Birkenfeld

IRS AWARDS $104 MILLION TO WHISTLEBLOWER BIRKENFELD:  According to the National Whistleblower Center, the Internal Revenue Service (IRS) has awarded former UBS banker Bradley Birkenfeld a whistleblower reward of $104 Million for his "contributions in providing the US Government with insider information on UBS’ illegal offshore banking scheme. This is believed to be the largest reward ever given to an individual whistleblower in the United States and the first major reward issued under the IRS tax whistleblower law."

  • In a joint statement, Mr. Birkenfeld’s attorneys, Stephen M. Kohn and Dean A. Zerbe stated: "The IRS today sent 104 million messages to whistleblowers around the world – that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards.  The IRS also sent 104 million messages to banks around the world – stop enabling tax cheats or you will get caught."
  • Sen. Charles Grassley commented on the award: "This case provides evidence about how the whistleblower program can be effective because the IRS is saying its work against this kind of tax fraud would not have been possible without the whistleblower.  By paying an award as the law allows, the IRS encourages courageous actions by others against such big-dollar tax cheating.  The potential for this program is tremendous, and it’s up to the IRS to continue paying rewards and demonstrating to whistleblowers that the process will work and that they will be heard and protected.  An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid as a result of the whistleblower information.  Again, billions of dollars are paid that would otherwise be lost to major tax evasion.  This whistleblower program gives respect to honest taxpayers by targeting tax fraud.  Unfortunately it has taken the IRS nearly four years to settle this whistleblower case.  If the IRS is serious about encouraging future whistleblowers, it needs to continue to honor the spirit and intent of the law and issue awards in a timely manner."

IRS RELEASES NEW DRAFT FATCA FORM W-8 BEN:  The IRS released a new draft version of a form to certify the status of individuals for withholding purposes under the Foreign Account Tax Compliance Act (FATCA).

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE: 
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE 
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country.  The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court.  The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.