Michael Carlow, a resident of Pittsburgh, Pennsylvania, has pleaded guilty to corruption in attempting to obstruct the Internal Revenue Service (IRS). According to the Department of Justice, Carlow pleaded guilty in 1996 to tax fraud and bank fraud and received an eight year prison sentence. When Carlow was released from prison in 2002, he moved to Pittsburgh to live with Elizabeth Jones, his girlfriend.
The IRS charged that Carlow owed more than $6 million in back taxes, interest and penalties for the years 1992 to 1996. Between 2000 and 2011, however, Carlow concealed his income and assets from the IRS in an effort to prevent the IRS from collecting the $6 million. According to the IRS, Carlow had a secret interest in a number of corporations and directed payment of his fees and royalties to his girlfriend rather than to himself. Carlow also neglected to report his ownership of corporate assets to the IRS. He filed sham individual U.S. tax returns from 2003 to 2006 and filed no individual U.S. tax returns at all between 2008 and 2011.
Carlow’s girlfriend pleaded guilty in 2011 for her conduct in acting as Carlow’s nominee. Carlow is now scheduled to be sentenced in October 2013.
Tax Fraud Whistleblowers Eligible for Cash Rewards Under the Tax Relief and Health Care Act
In 2006, the IRS Whistleblower Office was set up to provide financial rewards to conscientious informants who collaborate with the IRS by providing information that leads to the recoupment of fraudulently withheld tax payments. The Tax Relief and Health Care Act of 2006 authorizes the IRS Whistleblower Office to reward whistleblowers with a share ranging from 15 to 30 percent of any recovery made based on information provided by a tipster.
If the tax evader is an individual, the Tax Relief law allows a whistleblower reward only when the individual’s gross income exceeds $200,000 for each taxable year at issue and where the amount collected for tax, penalties, interest, and other amounts is more than $2 million. No minimum recovery is required for a reward in cases involving fraudulent tax claims by corporations. When corporations cheat on their taxes, it is often company insiders who are the first to notify the government.
Waters & Kraus: Helping Tipsters With Knowledge of Tax Fraud
Providing aggressive representation of informants in qui tam, or whistleblower, lawsuits, Waters & Kraus maintains a national presence with offices in Texas, Maryland, and California. The firm is now involved in a variety of federal and state whistleblower actions involving health care providers, large pharmaceutical companies, government contractors and school district contractors.
To learn more about Waters & Kraus, or to speak with one of our whistleblower attorneys about your potential case, email us or call 800.226.9880.