Bradley C. Birkenfeld, a former UBS banker, provided information to authorities about UBS’s schemes to assist Americans in avoiding their taxes, and information supplied by Mr. Birkenfeld resulted in an investigation that significantly lowered Switzerland’s role as a secret haven for U.S. citizens seeking to evade their tax obligations. In addition, the U.S. Treasury recovered billions of dollars in fraudulently unpaid taxes.
However, Mr. Birkenfeld has served two and a half years in prison because, in the investigation of UBS tax fraud, Mr. Birkenfeld concealed from federal investigators evidence of his own conspiracy with his largest client to evade income taxes.
Information from Whistleblower Led to Recovery of Billions in Unpaid Taxes
To avoid criminal prosecution for the crimes revealed by Mr. Birkenfeld, UBS paid $780 million in 2009, and the bank turned over its account information on over 4,500 U.S. clients. The disclosure of this Swiss banking information caused vigorous debate in Switzerland and alarmed wealthy Americans enough that over 14,000 joined a tax amnesty program. According to the IRS, this tax amnesty program has resulted in the recovery of over $5 billion in unpaid taxes.
Because Mr. Birkenfeld’s information resulted in such a significant recovery, the IRS has paid Mr. Birkenfeld $104 million as a whistleblower, the largest award the IRS has ever paid. The IRS estimates that every year $100 billion in taxes go unpaid, according to the New York Times. To encourage whistleblowers to come forward and help the government recover some of these unpaid taxes, the whistleblower program was revamped in 2006 to allow larger awards — up to 30 percent — for whistleblowers.
Mr. Birkenfeld came forward as a whistleblower when his concerns about the legality of UBS’s tax advice received no response from the bank’s compliance department. His own prosecution resulted, not from his involvement in the tax fraud, but rather his efforts to conceal important information about the involvement of one of his own clients.
Information from Whistleblowers Is Vital To Address Tax Fraud
The information provided by Mr. Birkenfeld resulted in the recovery of billions of dollars in fraudulently unpaid taxes. For that, he was awarded $104 million. Such awards are designed to encourage whistleblowers to come forward with evidence of tax fraud.
If you know that someone is committing tax fraud, that information is important to the IRS. Learn about your rights as a whistleblower by talking to a whistleblower attorney at Waters & Kraus. Our highly skilled tax fraud attorneys have decades of experience working with whistleblowers. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.