Criminal fines and civil forfeitures are collected proceeds under Internal Revenue Code section 7623(b), the mandatory tax whistleblower program, according to a recent decision by the U.S. Tax Court. The opinion paved the way for an award of $17.8 million to a pair of whistleblowers.
IRS Targets Big Business for Inbound Distributions, Basket Options, Captive Insurance and Asset Transfers
Almost a year ago (September 2015), the Internal Revenue Service announced the reorganization of its Large Business and International (LB&I) Division. Struggling to keep up with the nearly 300,000 taxpayers within its jurisdiction, and faced with significant declines in the IRS budget from the Congressional appropriation process, LB&I is moving to issue-focused examinations of taxpayer documents. Potential areas of noncompliance within an industry or industries will be identified and then corporate returns examined to see whether those issues are present.
The war against international tax evasion took another step forward yesterday with President Obama proposing a federal registry of the owners of all companies created and operating in the United States to aid in the elimination of anonymous shell companies.
The Senate Finance Committee approved the Taxpayer Protection Act of 2016 this week, which reforms the Internal Revenue Service’s communications with whistleblowers as well as protects taxpayers from identity theft and tax fraud. The bill will now go before the full Senate for approval.
The Internal Revenue Service received 87,000 information referrals in Fiscal Year 2015 from the public submitting Form 3949-A to report suspected tax evasion, according to a recent U.S. Government Accountability Office report on the IRS referral programs which also included comments about the Office of the Whistleblower. The report concludes that the IRS may be missing opportunities in the fight against the net $385 billion tax gap because of ineffective internal controls, fragmentation and overlap in the management of the referral process.
A Forbes article written by another whistleblower attorney is reporting the first settlements following appeals of award determinations by the Internal Revenue Service whistleblower program. The outcomes are remarkable because the IRS section 7623(b) program has been routinely criticized over the past few years for the dearth of payments given the sheer number of tips.
Whistleblowers should continue to expect the government’s pursuit of some enforcement actions to be tempered by limited resources as both the IRS and CFTC have recently acknowledged insufficient funding is causing tough choices within their agencies.
The Internal Revenue Service Whistleblower program has released its annual report to Congress for Fiscal Year 2015. The office awarded just over $103 million to informants for information about tax evasion, nearly double the amount paid in FY 2013 or 2014. Since 2007, the program has now awarded more than $400 million to whistleblowers for helping the IRS recover more than $3 billion in tax revenue.
The Department of Justice has reached the last non-prosecution agreement with a Swiss Bank as part of its voluntary disclosure program which ended in 2013. In total, the U.S. received more than $1.3 billion in penalties from the 80 banks which came forward and settled. The U.S. has received another $8 billion from 54,000 taxpayers who have come forward through the IRS Offshore Voluntary Disclosure Program.
The Justice Department’s pursuit of offshore banks for assisting U.S. customers avoid taxes is expected to reach a conclusion with regard to another large settlement against a Swiss bank in the first quarter of 2016. Julius Baer Group AG has announced it reached an agreement in principle with the U.S. Attorney’s Office for the Southern District of New York to resolve their investigation and it reserved $547 million to settle the matter.