Busting tax cheats pays well – just ask Heinrich Kieber. This former computer technician from the tiny country of Liechtenstein stole 3 CDs worth of banking data containing damning tax-skirting evidence against many of the world’s richest people. Twelve countries have paid him for the information, including the U.S., Germany, Great Britain, France, and Italy. The stolen data has already led to the arrest of several prominent CEO’s in Germany, as well as to a Senate Subcommittee hearing of four wealthy U.S. citizens on Thursday, July 17th.
But whistleblowers aren’t just reporting the wealthy. Some are reporting small business owners and average citizens.
If the IRS acts on a “tip” provided to them, whistleblowers can get paid anywhere from 15% to 30% of the government’s ‘take’ – not only the recovered taxes, but also the interest and penalties. Reporting tax cheats is easy; all a whistleblower has to do is complete an IRS Form 3949-A or write a letter and mailing the information to the IRS. And the pay is good; for instance, if a person or business owed the government $50,000 in back taxes, including penalties & interest, a 30% cut of that pie would be $15,000. Not a bad “piece of the action” for doing something as simple as filling out a form.
As a result, the Whistleblower program is picking up steam and shows no signs of stopping. According to the Justice Department, for the fiscal year 2006, over $3 Billion was collected directly as a result of Whistleblower claims and resulting lawsuits. This may lead to guilty employers becoming paranoid and being tempted to take retaliatory action. And if they suddenly fire someone or try to 'cover themselves' by making a drastic decision, they're just asking for a lawsuit — compounding their problems with a wrongful termination suit.
And even if Whistleblower was partially complicit in the fraud, it does not mean that they automatically disqualified from receiving a cut. It's simple — the IRS wants the money and will often times make the best deal with whoever is willing to deal first.