Qui Tam

Swiss Bankers Charged in Tax Fraud Scheme

By LaBovick Law

Facing massive fiscal deficits, the U.S government gave the IRS enhanced enforcement authority and the largest budget appropriation in the agency's history in 2006. The current 2010 IRS budget stands at $12.5 billion with President Obama proposing an increase of $243 million targeted specifically for enforcement efforts. The IRS devotes over $5 billion annually to identify, apprehend and prosecute those that attempt to evade paying taxes to the U.S government

Notable IRS cases

Estimates of the annual cost of tax evasion in the United States range from $100-$300 billion every year. Most often, the criminal evasion involves complex offshore holdings in foreign banks in Switzerland, Hong Kong and the Cayman Islands. Accounts are usually established by international financial advisers who encourage their clients to avoid disclosing taxable assets to the IRS.

Recognizing the seriousness of the problem, the IRS launched several simultaneous investigations to identify and prosecute offshore tax evaders. These efforts culminated in 2009 when banking giant UBS turned over detailed information on nearly 5000 Swiss bank accounts to the IRS. In addition, UBS agreed to pay fines totaling $780 million for allegedly sending bankers posing as tourists into the U.S to help clients evade taxes.

Despite a foreign account holder tax leniency program that resulted in over 7500 applications from tax evaders, the IRS continues to uncover mass international tax fraud. Recently, an indictment was brought against four managers of multinational banks in a cross border banking conspiracy. The scheme was designed to help U.S customers evade rightfully owed taxes by maintaining covert accounts in multiple Swiss banks.

During the fall of 2008, the indictment alleges that the conspirators maintained thousands of accounts for customers in the United States while knowingly engaging in activities designed to conceal their ownership from the IRS. The conspiracy involves two generations of tax evaders that dates back to 1953.

Reporting Tax Fraud

The severity of the current recession has created further incentives for those considering tax evasion. The IRS has responded by offering additional incentives for those who come forward and identify tax fraud. Although the IRS has offered rewards for whistleblowers throughout its history, they were largely ineffective because the agency was under no real obligation to pay.

In 2006 the rules were modified to provide a reward for the informant of 15% to 30% of the total taxes that the IRS recovers. The requisites for the program consist of a $2 million threshold that includes interest and penalties, and the gross income of the perpetrator must be over $200,000 annually.

Tax fraud is extensive in the U.S and the IRS received over 1900 leads in 2009. For those who are aware of an individual or business entity that is in violation of tax law, there are several available reporting options. The IRS takes tax fraud seriously and will fully investigate every case. When appropriate, the tax evader will be apprehended and the informant will be properly rewarded.

The IRS provides two forms for tax evasion disclosure. The 3949A form allows the informant to maintain anonymity, but there are no associated rewards for recovery. Conversely, form 211 qualifies the filer for the rewards program, but carries the requirement for testimony if it proves necessary.

Whistleblowers should seek an experienced qui tam attorney to discuss their potential IRS Tax Fraud informant reward. The IRS whistle-blower program, pays an informant a  minimum of 15% and a maximum of 30% of the amount owed. A qui tam attorney can evaluate the strength of the complaint and protect the privacy, rights and interests of those clients with a legitimate whistleblower tax fraud claim.

Click on the following link to read more on: U.S. officials charge 4 Swiss bankers in tax evasion case

Full post as published by Whistleblower Law Blog on March 16, 2011 (boomark / email).