Modest Results of IRS Amnesty Program Highlight Need for More Whistleblowers

Published on October 14, 2009

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Modest Results of IRS Amnesty Program Highlight Need for More Whistleblowers

Government is Discouraging Future Tax Whistleblowers

Washington, D.C. October 14, 2009. Tomorrow marks the end of the IRS’ amnesty program for special voluntary disclosures by taxpayers with unreported income from hidden offshore accounts.   The entire basis for the IRS amnesty program was due to the efforts of one whistleblower – Brad Birkenfeld – who blew the whistle on UBS and the 19,000 undisclosed accounts held by U.S. taxpayers.  The U.S. Government has stated this in court:

“I will say that without Mr. Birkenfeld walking into the door of the Department of Justice in the Summer of 2007, I doubt as of today that this massive fraud scheme would have been discovered by the United States Government.”

The Court asked the U.S. Government:  “Now, you said something that has great significance and I just want to make sure that I am clear on your statement, and that is that but for Mr. Birkenfeld this scheme would still be ongoing?”  The U.S. Government replied: “I have no reasons to believe that we would have had any other means to have disclosed what was going on but for an insider in that scheme providing detailed information, which Mr. Birkenfeld did.”  See birkenfeld – sentencing transcript 8.21.09.

Despite Mr. Birkenfeld being the sole reason that the IRS was able to move forward with the tax amnesty program, the U.S. Government has prosecuted Mr. Birkenfeld.

“There is one reason, and one reason only that there is an IRS amnesty program – because Brad Birkenfeld came forward and blew the whistle.  The prosecution of Brad Birkenfeld, the most important whistleblower in U.S. history, has done incredible damage by discouraging other whistleblowers from coming forward.  The day that Brad goes to jail will be a national holiday in Switzerland and other tax haven countries,” said Stephen M. Kohn, Executive Director of the National Whistleblowers Center (NWC).

“The IRS needs to put away the celebratory firecrackers.  The amnesty program has gotten at best a thimble of the offshore tax cheats.  Many people with big offshore accounts look at the prosecution of the tax whistleblower Brad Birkenfeld and have concluded that the IRS is not really serious about going after offshore tax fraud.  A serious effort by the IRS to go after offshore tax cheats would be to reward and encourage whistleblowers – not put them in jail.  As the Department of Justice admitted in court, the way you are going to find out about offshore tax cheats is through insiders.  The strong signal being sent right now by the IRS and the DoJ is to tell the insiders who want to blow the whistle to stay on the outside.  Nothing is making Swiss bankers and their clients sleep more soundly at night then the IRS discouraging whistleblowers,” said Dean Zerbe, Special Counsel for the NWC and attorney at Zerbe, Fingeret, Frank and Jadav law firm representing Mr. Birkenfeld in his claim for a reward from the IRS.

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