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Whistleblower given $4.5m award by IRS

Tip netted $20m in taxes, interest for government

By Maryclaire Dale
Associated Press / April 9, 2011

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PHILADELPHIA — An accountant who tipped off the IRS that his employer was skimping on taxes has received $4.5 million in the first IRS whistleblower award.

The accountant’s tip netted the IRS $20 million in taxes and interest from the errant financial services firm.

The award represents a 22 percent cut of the taxes recovered. The program, designed to encourage tips in large-scale cases, mandates awards of 15 to 30 percent of the amount recouped.

“It ought to encourage a lot of other people to squeal,’’ said Senator Charles Grassley. The Iowa Republican helped get the IRS Whistleblower Office authorized in 2006.

The IRS mailed the accountant’s lawyer a $3.24 million check that arrived in suburban Philadelphia by first-class mail Thursday. The sum represents the award minus a 28 percent tax hit.

The lawyer, Eric L. Young of Blue Bell, will not release the name of his client or the firm because his client remains a small-town accountant and hopes to continue to work in his field.

“It’s a win-win for both the government and taxpayers. These are dollars that are being returned to the Treasury that otherwise wouldn’t be,’’ he said.

“It’s very difficult to be a whistleblower,’’ said Young, who has represented more than a dozen such tipsters, including one in a $2 billion Pfizer case involving off-label drug marketing.

“Most people would be inclined to turn a blind eye to it,’’ he said. “The process can be time-consuming, arduous, and stressful, from both a personal and professional standpoint.’’

The accountant filed a complaint with the IRS in 2007, just as the IRS Whistleblower Office opened, but heard nothing for two years. Frustrated, he hired Young to help push the issue.

“We were able to help him get it back on track,’’ Young said.

The whistleblower program promises awards only for returns of $2 million or more.

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