June 08,2010

Grassley Seeks Accounting of Treasury, IRS' Use of Whistleblower Information on Potential Tax Evasion

WASHINGTON -- Senator Chuck Grassley today asked the Treasury secretary and IRS commissioner for an accounting of what U.S. government officials have done with information provided more than three years ago by a whistleblower regarding tax evasion.  The U.S. Department of Justice acknowledged that former UBS employee Bradley Charles Birkenfeld’s information was pivotal in exposing a multi-billion dollar international tax evasion scandal involving a private Swiss bank, yet it may be that the IRS is doing very little with the information yielded from this effort.

Grassley said the information provided by Birkenfeld includes the names of UBS AG employees and their e-mail addresses and cell phone numbers, which could be used to identify their clients in the United States.  Swiss legislators today took a step to unravel a U.S.-Swiss treaty that would allow for the disclosure of more client information to allow U.S. officials to review cases for potential enforcement of U.S. tax laws.

"The action by Swiss legislators today to try to unravel an international treaty emphasizes the need for U.S. authorities to exhaust the information they have on U.S. taxpayers who use offshore accounts to evade taxes,” Grassley said.  “Honest taxpayers deserve to know what's happened with what could be very valuable leads, and if it's nothing, they deserve to know why.  It's a matter of tax fairness and law enforcement.  And the IRS shouldn’t wait for international agreements to fall into place when tax evaders can be identified through other appropriate tools.”

In December 2006, as chairman of the Senate Finance Committee, Grassley won enactment of his proposal to make the IRS whistleblower program more effective than before in cracking down on tax cheats and collecting taxes owed to the Treasury.  Improvements included offering more generous financial incentives to whistleblowers.  Since then, he has monitored implementation of the improvements and urged expedient, effective handling of whistleblower information.   

Grassley was the lead Senate author of the 1986 whistleblower amendments strengthening the federal False Claims Act, which have become one of the nation’s strongest tools to identity and prevent fraud against the Treasury.  To date, those provisions have helped to recover $22 billion for the federal Treasury that otherwise would have been lost to fraud.  The False Claims Act does not cover tax fraud; hence the need for an effective IRS whistleblower office.  Additionally, Grassley succeeded in getting enacted a federal incentive for states to adopt whistleblower provisions as part of state laws on false claims as part of the Deficit Reduction Act of 2005.