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Saturday, February 1, 2014

The Perks of Being a Tax Whistleblower

NewsweekNewsweek:  The Perks of Being a Whistle-blower, by Lynnley Browning:

High-level whistle-blowers are the newest players in the vastly rich world of offshore tax evasion. The tax gap - the amount by which U.S. corporations underpay their federal income taxes - is $385 billion, according to the most recent IRS estimates in 2006. But deep inside multinational financial services, technology and pharmaceutical corporations, and at smaller family-run companies in everything from manufacturing to real estate, high-level insiders are stealthily exposing them.

Nailing these cheaters is a nascent game fraught with risk and disappointment, but carrying the promise of astronomical payouts. ... There's now a clutch of lawyers taking clients on a contingency-fee basis and charging up to 40 percent of the rewards for corporate tax tipsters. "We have clients with whistle-blower claims for billions of dollars in unpaid taxes," not including penalties and interest, says Eric Havian, a lawyer at Phillips & Cohen in San Francisco. "The multinationals with offshore operations are the ones where you see some of the biggest tax scams." [Gregory] Lynam says Ferraro represents more than 100 whistle-blowers with claims alleging $120 billion in tax dodging.

These tax-code whistle-blowers are often motivated by moral outrage, but many are angry at cash-rich employers who have stiffed them on bonuses, passed them over for promotions or branded them "wimps" for refusing to participate in the subterfuge. Most of all, they covet the same thing their tax-evading companies do: money, and lots of it. ... . "Some people are going to become very wealthy through this process," says Bryan Skarlatos, a tax lawyer at Kostelanetz & Fink in New York with around three dozen bounty-hunting clients with claims totaling tens of billions of dollars.

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