IRS hands out $104M to whistle-blower

Sept. 11, 2012 at 4:01 PM
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WASHINGTON, Sept. 11 (UPI) -- The Internal Revenue Service said it had awarded a whistle-blower $104 million for his help bringing Swiss bank UBS to justice in a tax evasion scheme.

The whistle-blower, Bradley Birkenfeld, has just completed a 40-month jail sentence for his role in helping UBS clients evade taxes. He is currently living in a halfway house, which is why he could not attend a press event in which the IRS announced his reward, The Wall Street Journal reported Tuesday.

Despite his felony conviction, the IRS thanked Birkenfeld for his "exceptional cooperation," The Washington Post reported.

The bank paid $780 million to settle charges against it and agreed to release the names of 4,000 clients who were using the bank to hide assets from the IRS.

Birkenfeld's brother, Douglas Birkenfeld attended the event at the National Press Club in Washington and attempted to put into words what his brother might be thinking.

"I knew that blowing the whistle would end my career in Switzerland, but I did not realize it would be risking my very freedom in my own country," Douglas Birkenfeld said.

Reportedly, the award is the largest ever under the whistle-blower laws.

Sen. Charles Grassley, R-Iowa, who pushed the IRS into taking advantage of the whistle-blower statute said in a statement, "The potential for this program is tremendous, and billions of dollars in taxes owed will be collected that otherwise would not have been paid."

An IRS spokeswoman said the agency "believes the whistle-blower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law."

Perhaps most emphatically, Birkenfeld's lawyers Stephen Kohn and Dean Zerbe said in a statement "the IRS today sent 104 million messages to whistle-blowers around the world -- that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards."

Birkenfeld will likely pay his lawyers 15 percent to 35 percent of his reward. After that, the award is not exactly free and clear, as Birkenfeld will owe taxes on it, the Journal said.

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