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IRS Whistleblower Program (for Tax Whistleblowers)

Revenue Recognition Fraud Charges Lead Nortel Networks Agrees to Pay $35 Million

October 23, 2007
Michael Sullivan

Accounting fraud can create liability for violating the securities laws and IRS tax rules and regulations. This whistleblower lawyer blog regularly comments on cases of interest, as whistleblowers often play an important role in bringing the violations to light.

The U.S. Securities and Exchange Commission has announced civil fraud charges against Nortel Networks Corp. and Nortel Networks Ltd., alleging improper revenue recognition by Nortel between 2000 and 2003, designed to make the company look appear more profitable. Nortel agreed to pay
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Illegal Tax Shelter Case Trial Postponed As Judge Disqualifies Counsel in KPMG Case

October 23, 2007
Michael Sullivan

Our whistleblower lawyer blog attorneys have written about how abusive and fraudulent tax shelters promoted by accounting firms are priorities on the list of conduct that the IRS (and IRS tax whistleblowers) seek to stop. We have followed the KPMG tax shelter prosecution, which was set for opening statements to begin on October 23.

Just before the trial, Judge Lewis A. Kaplan responded to a late motion by the government pointing out potential conflicts of interest by counsel for former KPMG
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Tax Write-Offs of Fraudulently Created Business Losses: A Need for Whistleblowers

October 19, 2007
Michael Sullivan

Individuals who have knowledge of the fraudulent write-off of bogus business losses are in a position to reap the rewards from such illegal conduct should they report it under the IRS Whistleblower Program. If a business writes off bogus business losses from a transaction and claims a tax refund, for example, such a transaction could constitute fraud and thereby expose the company to a whistleblower action by an insider with knowledge of such fraud. An apparent example of this was reported this week in
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IRS Whistleblower Program Featured, With Interview of “Whistle-Blower Lawyer” Blog, in Financial Week Magazine

October 16, 2007
Michael Sullivan

The new IRS Whistleblower Rewards Program–and observations by one of the whistleblower lawyer blog attorneys–were featured in an October 15, 2007 article by Nicholas Rummell in Financial Week. Financial Week is a publication geared toward the CFO and other professionals in finance and accounting, with coverage of economics and business markets, regulatory and legislative actions, financing, banking, insurance, real estate, cash management, investment management, benefits and retirement finance, investor relations, accounting and technology.

This article discusses the fast start of the new (more…)

IRS Whistleblowers and 75 Billion Dollars?

October 5, 2007
Michael Sullivan

It is estimated that the annual tax gap between those who owe money to the government as taxes and those who actually pay them (i.e. the annual underpayment of taxes) is $345 billion. Under the new IRS Whistleblower provisions, an insider with information about tax fraud can claim a minimum of 15% up to a maximum of 30% of back taxes collected by the government based on information received from the whistleblower. What this means is that each year if, in fact, the annual tax
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IRS Whistleblower Officials Explain Details of New IRS Whistleblower Rewards Program

September 21, 2007
Michael Sullivan

IRS officials explained long-awaited details of how the new IRS Whistleblower Rewards Program will work to whistleblower attorneys gathered last week at the annual Taxpayers Against Fraud Conference in Washington.

This whistleblower lawyer blog author had the pleasure of appearing with the Director of the new IRS Whistleblower Office, Stephen Whitlock, in a panel discussion on the new IRS Whistleblower Program. I enjoyed spending time with Director Whitlock and with the other participants, Professor Dennis Ventry of American University’s Washington College of
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Whistleblower Law Attorneys to Gather for Symposium on False Claims Act, State False Medicaid Claims Act, and New IRS Whistleblower Rewards Program

September 18, 2007
Michael Sullivan

Some of the country’s leading attorneys in qui tam whistleblower cases and IRS Whistleblower cases will gather for the “First Annual Whistleblower Law Symposium,” which will take place at the Georgia State Bar Headquarters on Thursday, September 20, beginning at 9:00 a.m. (See Agenda below). This Whistleblower Law Symposium is organized and co-chaired by the authors of this whistleblower lawyer blog, Michael A. Sullivan and Richard W. Hendrix.

The presenters will include the very successful Pat O’Connell of the Texas Attorney General’s Office, whose group has recovered more than $216 million in health care fraud cases since 1999; and Jim Breen, who has represented relator Ven-A-Care of the Florida Keys Inc. in many very substantial qui tam cases, including the action that led to last week’s announcement by DOJ of a settlement with Aventis Pharmaceuticals Inc.

In addition, Steve Cowen of King & Spalding, LLP will chair a discussion of issues in defending False Claims Act cases; Marlan Wilbanks and other relators’ counsel will speak as well; and Charlie Richards of the Georgia Attorney General’s Office and Georgia’s Inspector General Doug Colburn will discuss the new Georgia State False Medicaid Claims Act.

We will also discuss the bill introduced last week by Senators Grassley, Durbin, Specter, and Leahy to make substantial modifications to the federal False Claims Act, the “False Claims Act Correction Act of 2007.” (See http://grassley.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=fac0a482-1321-0e36-ba6f-0150b8a2b182&Month=9&Year=2007).

Further, my partner Richard Hendrix and I will explain and discuss the new IRS Whistleblower Program created by Congress in December 2006. I spent several hours this past week in Washington with the Director of the new IRS Whistleblower Office, Stephen Whitlock, to prepare for and appear in a panel discussion to explain the new IRS Whistleblower Program. I also enjoyed lunch with the lead IRS official responsible for IRS Whistleblower claims in the financial services industry, Stuart Mann, and with Nicole Cammarota, an IRS official who is working on the new regulations. There is a great deal of excitement about this new IRS Whistleblower program, which rewards citizens who report large tax fraud, tax evasion, and other tax law violations to the IRS. (Our firm is pursuing a variety of IRS Whistleblower cases across the country.)

For anyone who believes that taxpayers pay too much to allow fraud against the federal and state governments, these exciting new developments in the law are important.

We are excited to be hosting this Whistleblower Law Symposium, and to discuss recent developments in the False Claims Act, the new state False Claims Acts, and the new IRS Whistleblower Program. The Agenda for the Symposium is below.
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New IRS Whistleblower Rewards Program Explained at National Conference with Its Director, Stephen Whitlock

September 8, 2007
Michael Sullivan

Tomorrow in Washington, this whistleblowerlawyerblog author is looking forward to participating in a panel discussion with the Director of the new IRS Whistleblower Office, Stephen Whitlock, to explain how the new IRS Whistleblower Rewards Program works.

We will speak at the Taxpayers Against Fraud Annual Conference in Washington at 6 p.m. on September 9. Leading the panel discussion will be Paul Scott. I am also looking forward to the presentations by Erika Kelton and Professor Dennis Ventry of American University’s Washington
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Confidentiality of IRS Tax Whistleblowers or Informants–Federal Regulation on Keeping Whistleblowers Confidential

August 22, 2007
Michael Sullivan

Our potential tax whistleblower clients–who call our attorneys about participating in the new IRS Whistleblower Rewards Program–regularly ask before they proceed if the IRS will keep their identities confidential.

Across the country, the IRS Special Agents we have been dealing with in representing our tax whistleblower clients (for example, in New York, Las Vegas, Dallas, and Atlanta, to name a few) have consistently answered the question the same way. Confidentiality is addressed by Treasury Regulations applicable to the IRS, which provide in part
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Should a Tax Whistleblower in the New IRS Whistleblower Program Use an IRS Form 3949?

July 28, 2007
Michael Sullivan

Question about the new IRS Whistleblower Rewards Program: if you go to the Internal Revenue Service’s website, the IRS notifies persons that, if they have evidence of suspected tax violations, they should use a Form 3949 and send it to an Internal Revenue Service Office in Fresno, California. While this blog is not legal advice, we have not seen a basis for individuals seeking a reward under the new IRS Whistleblower Program for blowing the whistle to utilize this form. The reason is because
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