We work with whistleblowers to expose fraud against the government.

Tax Fraud

Reporting tax avoidance compels violators to pay their fair share.

Created in 2006, the IRS Whistleblower Office provides financial compensation to conscientious individuals who provide information that leads to the recovery of unpaid taxes due to tax fraud. While these complex cases may take years to conclude, it can be time well spent in terms of justice and potential monetary reward.

Established as part of the Tax Relief and Health Care Act of 2006, the IRS Whistleblower Office provides rewards of 15 to 30 percent of the total proceeds collected as a result of the whistleblower’s information. Under the law codified at 26 U.S.C. §7623, there is no minimum recovery required in tax claims against corporations and other legal entities. However, in the case of tax liabilities of individuals, the law applies only if the individual’s gross income exceeds $200,000 for each taxable year at issue and only if the tax, penalties, interest, additions to tax, and additional amounts in dispute for the combined tax periods exceed $2 million.

Unlike qui tam claims filed under the Federal False Claims Act, tax whistleblower claims do not involve the filing of a suit against the responsible taxpayer (or tax evader). Rather, the whistleblower typically hires an attorney to research the tax issues in question, hire and advance the costs of experts in tax law and accounting, prepare forms and disclosures to be filed with the IRS Whistleblower Office, and to interface between the Office and expert witnesses for the duration of the investigation, which may require several years to conclude.

The types of tax claims that may be presented to the IRS Whistleblower Office are as varied and complex as the Internal Revenue Code itself. Areas of particular interest include:

  • Transfer pricing of pharmaceuticals manufactured in foreign countries and sold by U.S. subsidiaries of international pharmaceutical firms.
  • Schemes to shift corporate or individual income to offshore tax havens or jurisdictions with lower tax rates.
  • Tax shelters designed to generate deductions rather than legitimate business transactions.
  • Tax avoidance schemes involving capital gains on large real estate holdings.
  • Tax avoidance schemes involving the federal estate tax on large estates.

In April 2011, the IRS Whistleblower Office paid out its first-ever reward — a check totaling $3.24 million after taxes, based on a 22 percent cut of the $20 million in taxes and interest that was recovered roughly four years after the whistleblower’s initial complaint. There are reportedly many high-quality whistleblower claims that have been filed since the new law was put into place in 2006 that remain under active investigation. It will be only a matter of time before those investigations begin to be concluded, tax liabilities begin to be collected, and large rewards to whistleblowers begin to be announced on a regular basis. However, potential whistleblowers should be aware that it may take years for the typical IRS whistleblower claim to reach a conclusion.

In selecting counsel to pursue a tax whistleblower claim, an important consideration may be the financial resources available to the whistleblower’s counsel to retain the very best experts in the fields of accounting and tax law to substantiate the whistleblower’s claims before the IRS Whistleblower Office. As a mid-size plaintiffs’ firm with a national presence, the lawyers of Waters Kraus & Paul routinely work with expert witnesses in all of their cases. We do not hesitate to secure the services of renowned experts in order to bring cases to successful resolution.

What is Qui Tam?

Under the Federal False Claims Act (FCA), whistleblowers have the power to save taxpayers billions of dollars each year by taking a stand against fraud. The U.S. False Claims Act allows private citizens to file suits on the government’s behalf when the government has been defrauded through any federally funded contract or program. The qui tam provisions of the False Claims Act allow these citizens to recover damages. A number of states and the city of Chicago also have laws similar to the False Claims Act to protect against fraud. To learn more about the different types of fraud … READ MORE

Celebrating Whistleblowers and Qui Tam Attorneys

July 30, 2019 National Whistleblower Appreciation Day was established to acknowledge and celebrate the courageous people who expose misconduct and speak up against fraud. Last year, the U.S. Senate recognized July 30th as “National Whistleblower Appreciation Day” to honor the anniversary of the…

Dallas Attorneys Honored on Texas Super Lawyers Rising Stars List

August 27, 2019 This year, Dallas attorneys Caitlyn Silhan, Christopher Johnson, Erin Wood, and Patrick Wigle were selected for the 2019 Texas Super Lawyers Rising Stars list. These four attorneys were all selected based on the outstanding work they do for plaintiffs. These attorneys represent a variety of practice areas, including civil litigation, products liability, and general personal injury. Only the top 2.5 percent of attorneys in Texas are selected to the list. To be considered, each candidate must be 40 years old or younger and have practiced for 10 years or less. About Caitlyn Silhan Caitlyn Silhan was selected to the 2019…

What are my chances?

That’s the first question everyone asks. The truth is it’s impossible to know. But we can tell you this. Waters Kraus & Paul has what it takes to fight against big corporate interests and win. That’s why we’ve taken more mesothelioma trials to verdict than any other firm. And that’s why we’ve recovered more than $1.3 billion for clients like you. Do you think you have a case? Contact us now to speak with an attorney.

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