Could $104 Million Tax Whistleblower Award Be Erased Under Dodd-Frank Rules?

Whistleblower Bradley Birkenfeld, whose insider information has allowed the IRS to collect more than $5 billion in taxes, interest, and penalties (so far), is slated to receive an award of $104 million for his cooperation. That’s because the tax whistleblower statute allows him to receive an award even though he went to jail for participating in the fraud. 

The Dodd-Frank Act isn’t so generous, writes Richard Albert of law firm Morvillo Abramowitz:

“… it appears that a key difference in language between the pertinent IRS whistleblower provision and the parallel provision in the Dodd-Frank Act likely would mean the difference between a $104 million award and no award at all.

Under the tax whistleblower statute, Birkenfeld’s conviction did not disqualify him from collecting an award. That statute provides that the IRS is prohibited from making a whistleblower award only to an individual ‘who planned and initiated actions’ that led to violation of the internal revenue laws and ‘who is convicted of criminal conduct arising from’ such role…

But the comparable Dodd-Frank provision applicable to securities fraud whistleblowers is different. As I discussed in a prior entry on this blog, Dodd-Frank provides that ‘no award …  shall be made … to any whistleblower who is convicted of a criminal violation related to’ a securities enforcement proceeding in which the sanctions are collected.”

Read the full update, Would $104 Million IRS Whistleblower Get Stiffed Under Dodd-Frank? - Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, P.C.»