It isn't only on undisclosed offshore accounts where the IRS whistleblower program can play a significant role.
After all, the program provides incentives to tipsters to tell the IRS about many other types of potential tax revenue besides tax evasion through foreign accounts.
In this post, however, we will revisit one of the major tax stories of 2012: the payment of a whopping $104 million whistleblower award to the man who tipped the IRS off to alleged tax evasion by the Swiss banking firm UBS.
Our goal will be to put this case into the context of the U.S. offshore enforcement campaign in recent years that has breached the formerly impregnable barriers of Swiss bank secrecy.
Overall, the whistleblower awards paid out by the IRS in Fiscal Year 2013 were down compared to the year before. In FY 2013, the amount paid to whistleblowers was $53 million. In FY 2012, it was $125 million - on its face a much larger number.
But the lion's share of the $125 million in FY 2012 went to a single whistleblower. The man who told the IRS about alleged offshore tax evasion by U.S. taxpayers made possible by UBS received $104 million.
As we noted most recently in our February 21 post, the travails of UBS are an important part of the offshore enforcement back story. In 2009, UBS agreed to pay $780 to settle charges of tax evasion. It also had to disclose to U.S. authorities the names of hundreds of its customers who may not have been in compliance with all of the reporting requirements for offshore accounts.
This successful prosecution of UBS set the stage for a U.S. offshore enforcement campaign that remains very aggressive. Most recently, another large Swiss bank, Credit Suisse, has come in for particular scrutiny.
In short, whistleblowers are only one of many problems for Swiss banks and U.S. taxpayers as they seek to navigate an offshore compliance climate that continues to be very challenging for all concerned.
Source: The Wall Street Journal, "IRS Pays Awards to Whistleblowers," Laura Saunders, April 18, 2014