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Enron whistleblower gets $1.1 million from IRS

Anonymous tipster alerted the feds to $600 million tax-evasion scheme. Yes, the bounty is taxable.

By Kay Bell Mar 18, 2011 5:41PM

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:



Mar 18, 2011 11:53PM
Now if they would only offer whistleblowers a portion of taxes UNPAID  by companies  HIRING ILLEGAL ALIENS, we could balance our national budget. Think of the Trillions of dollars in income taxes, not paid to our government from this "under the table", or cash paycheck scam. The IRS is being ripped off by 5 out of 10 companies today. America could have twice as much money, or half as much debt, if we go after those hiring illegals. FORGET ABOUT PUNISHING ILLEGALS, PUNISH THOSE WHO HIRE THEM, AND STEAL FROM THE IRS. Also, illegals aint goin anywhere, as long as they got your job, and all those free services..,
Mar 19, 2011 12:38PM
Why tax it?  Just reward less and make it tax free.  Why reward the money and then take some back, it's just another example of government stupidity.
Mar 19, 2011 10:45AM

They only pay out a percentage of the money COLLECTED.  The 600 mil was the taxable amount.  About 200 mil was owed in tax.  They did NOT collect the full 200 mil.  They paid a percentage of what they did collect.  Read the damn article


Hey IRS, I can tell you about 20 companies ripping you off, right now, Call me, I tell you their names for free. Also, that 8 dollar an hour job, I'll take it sir. Where would you like me to be Monday morning. I'll bring my sun burn lotion.,
Mar 19, 2011 3:32PM
Dear IRS, Here is my tip on tax cheats of well over a billion dollars. They are U.S. Senators, Congressmen and women, and numerous other government employees. By the way, are government employees exempt from paying taxes? Obozo has a bunch of them in his cabinet starting with Timothy Geithner. WTF are you waiting on?
Mar 19, 2011 4:54AM
PP you are so misinformed do you think the 10 seconds it takes to pick a head will REALLY add $7 to the price?
Mar 19, 2011 10:29AM
I just have to say something about this. The IRS pay's out up to 30% to a whistleblower for anything over 2 million in tax evasion. Well what is 1.1 million from 600 million? 1.1% right?  Why is the IRS ripping off the whistleblower when they just brought in 600 million? Fact of the matter is the IRS is just as bad as the coporate slime who rip off the American public on a daily basis. 1.1 million! And it's being taxed! Give me a break! There all pen devils and they prosper off the fruits of our hard labor.
Mar 20, 2011 2:20PM
Abolish the IRS, make the system more efficient and responsible and there would be no need for rats ! 50% of our pop pays no taxes at all and no one can blow the whistle on them !
Mar 30, 2011 8:10PM
I say everone rich or poor pay the same rate of TAX.  Its only fair
Mar 25, 2011 9:56AM

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"?

Mar 19, 2011 5:49PM
If the government didn't recoup any of the $600 million, this person shouldn't get ****. If that's the case, the government just lost $601 million. I'm sure that's the case, since these politicians running the show are treasonous pricks.
Mar 20, 2011 1:36PM
It is good that some one is getting some money for whistle blowing. Worked for the Federal Government, reported very large fraud, waste and abuse, got fired, no retirement, did not learn a lesson, worked for the State of Florida, blew the whistle on fraud, waste and abuse, got fired again, no retirement. But then that is the norm for Government agencies, including Obama's. 
Mar 20, 2011 5:41AM

So, the Real criminals in what is the I.R.S. paid over a million dollars to a whistle blower

They're not even the real feds.

Maybe they paid em with the magic-money they keep pulling out of their a$$es

Mar 31, 2011 7:01AM
I met and talked with a multi millionair who owned realty all over the country and lots of it in NY  This is what he told me "Taxes are for the poor.  The wealthy do not pay much in taxes is any at all.  If  you are not wealthy be prepared to pay" true
Mar 30, 2011 10:26PM

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.

Mar 19, 2011 1:09PM
Nothing like getting America to rat on it's own citizenry...this is DISGUSTING. This is why we need a national tax or a flat-rate, so we can abolish the theivery in Washington.
Mar 19, 2011 6:40PM
They are not heros they are just doing it for the money, just goes to show you how quick they are to eat their own.
Mar 19, 2011 10:40AM
Now this really tears it!! I just sent the IRS almost $10,000.00, from having my taxes done! They are going to just give away one million dollars!! REALLY!!! Seems to me like the scales are really out of balance here. Not to mention all the other "under handed" crap that goes on. Why doesn't someone AUDIT the IRS!!! They are apparently out of control and it's like they are untouchable!! Guess as long as they are "raking in the bucks", it doesn't matter who they hurt or even destroy!!! Truly a sad state of affairs, but then again who am I, but another taxpaying cog in the IRS wheel of fortune.
Mar 19, 2011 11:31AM
Hey Greg, got a great job for ya: clean my yard for $6 an hour.. want it? don't think so, pablo will do i though... most jobs done by illegals are snubbed by citizens unless they are truly desperate..

Klaus: really, a KFC is essential? I'll take Indian or Sushi any day... KFC, Chili's, Longhorn et all are garbage, disgusting food etc..
Mar 19, 2011 11:27AM
I like how the union guy thinks it takes 10 seconds to pick a head of lettuce -typical
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