IRS pays $104 million to whistleblower

The IRS richly rewarded a former UBS banker for exposing the Swiss bank's scheme to help Americans avoid taxes through offshore accounts.

Sarah Gardner: When Bradley Birkenfeld blew the whistle on the Swiss bank UBS nearly five years ago, he helped topple the legendary wall of secrecy around that country's banking system. He also exposed thousands of wealthy Americans hiding their riches overseas.

Well, today, he got a big thank you gift from the Internal Revenue Service: A $104 million award -- his share of the fine UBS paid to the government. It's thought to be the biggest award to an individual whistleblower in the U.S. ever. Marketplace's senior business correspondent Bob Moon has our story.


Bob Moon: What a difference a few years can make. Bradley Birkenfeld started out the year in 2010 reporting to a federal prison, where he'd been sentenced to 40 months for helping a wealthy UBS client avoid taxes. He complained at the time that the Justice Department had turned on him, even as he was blowing the whistle on thousands of tax cheats.

Bradley Birkenfeld: This is the largest tax fraud case in the world, and I've sacrificed my reputation, my life, my finances -- and this is how I get treated?

Today, his attorneys announced he's ultimately been treated to the biggest reward so far under a federal whistleblower program. It was revamped by Congress in 2006 to encourage ratting out tax cheats. One of his lawyers, Stephen Kohn, told a news conference today that even if Birkenfeld was involved in the criminal activity, he deserves the huge payout.

Stephen Kohn: To get the big fish, to get into the conspiracy itself, you have to induce someone who's there at the table. The low-level person down the street isn't going to know.

Kohn says the inside information Birkenfeld provided on the tax-evasion scheme, has helped the IRS recover up to five billion tax dollars. The lawyers says he's a hero who ought to receive a presidential pardon, especially since nobody else went to prison in the case. Birkenfeld was recently freed, and is under home confinement.

Iowa Senator Charles Grassley, who helped author the generous rewards program, hopes this will blaze the path for future whistleblowers. But he complains this is only the first big payout. And he says the tax man needs to be more aggressive in pursuing close to a thousand pending whistleblower tips.

Charles Grassley: Do you guys down at IRS know that you wouldn't even know about this if you hadn't had whistleblowers come forth with the information.

This is just part of a new government emphasis on whistleblower rewards, which also extends to Wall Street traders and government contractors.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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