Compliance » Disturbing Trend: Whistleblowers Eyeing Tax Ploys

Disturbing Trend: Whistleblowers Eyeing Tax Ploys

Dolores Giraldez Alonso

November 10, 2014

Reed Smith attorneys Adam P. Beckerink, Jack Trachtenberg, Jennifer C. Waryjas look at what they call “a disturbing trend”: Whistleblowers, under state False Claims Act statutes, are filing lawsuits alleging that a taxpayer failed to comply with a tax obligation.Writing in Corporate Disputes magazine, the authors maintain these lawsuits don’t just target fraud, but may be mounted against “reasonable positions in ambiguous areas of the law,” and moreover that their statute of limitations may exceed the time period when audits are mandated, in some cases by several years. Penalties can be heavy, with damages up to three times the amount owed, plus fines and attorney fees.  Among the states that have adopted FCA laws are New York, Delaware and Illinois. In some instances, cases have been brought well after an audit settlement has been concluded.

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