Watch Your Offshore Assets! Tax Court Increases Incentive for Whistleblowers

Be careful who you share your offshore account information with---whistleblowing just got more lucrative.  On August 3, 2016, the US Tax Court issued an opinion in a whistleblower claim case finding that the whistleblowers were entitled to an award based upon a percentage of $74,131,694 in tax restitution, a criminal fine, and civil forfeitures paid to the government. 147 T.C. No. 4. The targeted taxpayer pleaded guilty to conspiring to defraud the IRS and was ordered to pay $20,000,001 in tax restitution, a $22,050,000 criminal fine, and $15,821,000 civil forfeiture.

The Internal Revenue Service (IRS) agreed that the whistleblowers were entitled to an award based upon the tax restitution but disputed the whistleblowers' right to an award based upon the criminal fine and civil forfeiture. The whistleblowers maintained that the plain language of the whistleblower award statute was clear, and that the plain language required an award based upon a percentage of the "collected proceeds" resulting from the IRS action against the target taxpayer.

The Court agreed that the language of I.R.C. sec. 7623 was plain and found that the whistleblowers were eligible for an award of 24% of the entire collected proceeds of $74,131,694.

You may qualify for one of the IRS' Offshore Voluntary Disclosure Programs that will allow you to come into compliance, pay reduced penalties, and manage the risk of a criminal investigation.

If you have undisclosed offshore accounts, contact one of our attorneys today.

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