Whistleblower Law Blog
Topic: Tax Fraud
UBS has agreed to pay $780 million to settle allegations that it helped thousands of U.S. taxpayers defraud the Internal Revenue Service (“IRS”). According to reports by the Department of Justice, UBS concealed billions of American dollars in accounts held overseas despite requirements to report IRS income and other identifying information for its U.S. clients to the IRS. The U.S. Securities and Exchange Commission (“SEC”) also filed a complaint against the financial firm, alleging that UBS violated SEC rules by acting as an unregistered broker-dealer and investment advisor to thousands of U.S. citizens. The settlement agreement includes payment for disgorgement, interest, penalties and restitution for unpaid taxes. Other terms of the agreement include disclosure of the names of U.S. clients with UBS accounts.
This settlement is significant because it allows the U.S. government to pierce the veil of the Swiss bank secrecy and reminds companies that the penalties for participating in tax evasion schemes are severe.
The Internal Revenue Service released new guidelines for whistleblowers to report tax fraud and possibly claim a reward based on the amount of additional tax, penalties and interest that is owed. Under the new procedures, the award for reporting tax fraud ranges from 15% to 30% of the collected proceeds. To be eligible for an award, the tax, penalties, interest, additions to tax, and additional amounts in dispute must exceed in the aggregate $2,000,000 and, if the allegedly noncompliant person is an individual, the individual’s gross income must exceed $200,000. The new guidelines are posted at http://www.irs.gov/pub/irs-drop/n-08-04.pdf.