Enron whistleblower gets $1.1 million from IRS
Anonymous tipster alerted the feds to $600 million tax-evasion scheme. Yes, the bounty is taxable.
A whistleblower who exposed a tax fraud scheme by Enron and Wall Street firms has been awarded a $1.1 million reward by the Internal Revenue Service.
The payout came from the new IRS Whistleblower Office, but was made under prior, less generous guidelines. Those older rules, which still apply in some instances, call for a reward of up to 15% of the money that the IRS recovers based on the information.
The whistleblower office was revamped in 2006. Now when whistleblower information about alleged tax cheating leads to IRS collection of unpaid taxes and the subsequent recovery amount exceeds $2 million, the whistleblower can pocket up to 30% of the recovered money.
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The Enron fraud whistleblower wants to remain anonymous, according to a statement from Phillips & Cohen, the law firm that represented him in the case. The law firm did say that the person is a Wall Street banker.
"My client's knowledge of how Wall Street operates and his unflagging persistence in convincing the IRS to investigate Enron were instrumental in the government's recovery," said Erika A. Kelton, an attorney in the Washington, D.C., office of Phillips & Cohen.
According to Phillips & Cohen, Enron evaded taxes on more than $600 million of taxable income, resulting in more than $200 million of federal tax savings. However, the IRS was able to recover only a percentage of taxes and penalties owed due to Enron's bankruptcy.
The IRS declined comment about the case or payout, citing privacy laws.
Swiss bank whistleblower waiting for reward
Another potentially huge whistleblower payment is pending.
Bradley C. Birkenfeld, a former private banker with UBS, is serving a 40-month federal prison sentence for helping his clients hide money in Swiss bank accounts. He's now seeking billions for telling the IRS about all those offshore accounts.
Ratting out tax cheats: Most of us will never be able to report suspected tax cheats on the scale of the alleged Enron or Swiss bank cases. But just in case you know of some not-quite-right tax dealings, you can let the IRS know by filing Form 211.
It might, and I stress might, just pay off.
The IRS has to investigate and that takes a while. The Enron whistleblower first notified the feds in 1999.
Then the agency has to collect unpaid money before it pays tipsters.
Finally, if you do collect for ratting out a tax cheat, remember that whistleblower reward money is taxable.
More from Don't Mess with Taxes and MSN Money:
I wonder how much the IRS and state held out for taxes?
There's a multi-million dollar half constructed Enron power plant a few miles from my house. It's sat there since Enron was closed. It makes me wonder if the Clinton administration couldn't have gone after Enron and other companies without destroying hundreds of thousands of jobs.
My area looks like a ghost town with the fall of the steel industry, all other major companies moved to Mexico or China. All major food chains have closed and reopened as chinese or mexican restaurants. How can a town exist without a KFC, where do you go eat after church?
Typical gov't incompetance, laziness and lies. Do something for your people by whistleblowing on company malfeasance and crime, and then wait 12 years for the gov't to pay what it promised. Just like insurance companies, time is on the gov't's side as many people will surely get their heavenly reward well before getting their gov't "reward".
My question is....what reward do people get who whistleblow on the same bad things in gov't? And, if "rewarded" for same, how many millenia do they have to wait before getting their "reward"?
Tax the poor and lower middle class people with families. They don't pay anything.
If the poor and lower middle class people with families paid a little, instead of nothing, we wouldn't be in the financial hole we're in.
We exempt 45% of the population from paying anything to pay for government, and then jack rates up on the remaining 55% to try to balance the books.
Everyone who lives in the US should have to pay taxes. If you're poor you don't have to pay as much, but you should still have to pay your little share, not nothing. This goes for states as well.
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