Sunday Read: Tax Day Recap

This overview of NWC’s Tax Day Event was sent as part of NWC’s Sunday Reading series that aims to educate supporters about specific whistleblower legislative or policy initiatives. For more information like this, please join our mailing list.

On April 15th, NWC hosted a Tax Day Panel, featuring multiple anti-money laundering experts who discussed the importance of whistleblower programs in stopping financial crime, mainly the IRS and Anti-Money Launderingwhistleblower programs.

The panelists answered insightful questions about the protections and rights of whistleblowers, aiming to increase public awareness of the various whistleblower programs that fight against fraud and corruption across the world.

The April 15, panel was moderated by Matthew Beddingfield, Senior Associate at Zerbe, Miller, Fingeret, Frank & Jadav LLP panelists included:

• Dean Zerbe, Former Senior Counsel, U.S. Senate Finance Committee and Partner at Zerbe, Miller, Fingeret, Frank, and Jadav, LLP;
• Sara “Poppy” Alexander, Whistleblower Attorney, and Partner at Constantine Cannon;
• Eric Hylton, Former Deputy Chief of IRS Criminal Investigations, Director of Investigations for Zerbe, Miller, Fingeret, Frank, and Jadav, LLP.
• Jeffrey Neiman, Attorney at Marcus, Neiman, Rashbaum, & Pineiro, LLP, and Professor of Criminal Procedure and Tax Fraud at Florida Atlantic University.

You can watch the recording of the panel while signed in to LinkedIn. Please look out for updates about the panel being available on YouTube.

This week’s Sunday Reading will summarize the main points made during NWC’s Tax Day panel and provide important information about the IRS and AML whistleblower programs.

What does the IRS Whistleblower Program Do?

The IRS whistleblower program provides a system for whistleblowers to earn rewards for reporting violations of tax laws or the underpayment of taxes. With an above-average 15% mandatory minimum reward of funds collected, this program has dispensed many sizeable whistleblower awards, even if it takes, an average, over 10 years to process a claim.

Panelists explained the importance of the IRS Special Agents and their work in protecting the integrity of both the national and global financial systems. In fighting against extortion, money laundering, and embezzlement, these civil servants often depend on whistleblowers who provide criticial information that forms the basis for their investigiation.

The increasing interdependence between the IRS Criminal Investigations Division and the IRS Whistleblower Office represents a changing paradigm concerning the treatment of whistleblowers. As evidenced by President Biden’s 2021anti-corruption plan, there is a growing recognition of the importance of whistleblowers, and as panelists explained, the government is interested in seeing more whistleblowers step forward

Panelists reassured participants that although the IRS whistleblower program and the Financial Crimes Enforcement Network (FinCEN) are underfunded and without sufficient resources, whistleblower efforts are still needed, incentivized, and admired. Two recently proposed bills, H.R. 4701 and its companion Senate bill, would allow the IRS to keep 3% of whistleblower proceeds to fund the program. Initially proposed in June 2021, these bills have seen no action and await further consideration in committee.

Whistleblower Programs are Stopping Financial Crime!

The primary focus of the event was to discuss how this whistleblower program can disrupt Russian President Vladimir Putin’s financial support, thus working to stop the invasion of Ukraine.

Largely focusing on money laundering, panelists expressed how important this program is to cracking down on the illegal financial activity of Russian oligarchs who are key allies of President Putin. Using the power of the Bank Secrecy Act, a set of laws that require businesses to report cash payments and offshore bank accounts, the federal government is working to stop Russian oligarchs from unlawfully shielding assets. The current sanctions against wealthy elites serve to undermine Russia’s military efforts, but they need whistleblowers to be successful. Without whistleblower information on Russian activity, the IRS and FinCEN are hampered in their efforts to hold kleptocrats accountable.

Another issue panelists mentioned is the increasing complexity of cryptocurrency, an entirely digital form of transferring money. While the Treasury Department just issued its first ever sanctions against a Russian-affiliatied crypto mining operation, experts are nevertheless concerned that Russian elites may be able to use crypto to preserve their wealth against the falling ruble, thereby allowing them to continue supporting President Putin.

Being a US citizen is not required to participate in the IRS whistleblower program, meaning that anyone with information about tax crimes can report issues to the whistleblower office. This further supports the government’s commitment and renewed appreciation of whistleblowers, reinforcing the importance of the work that whistleblowers do.

Anyone can be a Whistleblower:

One of the most interesting questions posed to the panelists concerned individuals wanting to blow the whistle on an organization despitie having “unclean hands,” meaning the individuals are implicated in the wrongoing they are reporting.

Whistleblowers can reveal violations that would have otherwise gone undetected and therefore serve a critical public interest. This includes people who are concerned about exposing themselves to criminal prosecution. Panelists advised that these whistleblowers speak to an attorney so that an expert can help decide the best course of action.

While some may be concerned about the value or weight of their information, it is important to note that you do not need tangible evidence to be a whistleblower or to voice concerns about illegal activity. Adding new pieces to the puzzle is always useful when constructing a case, and it is not a whistleblower’s responsibility to have all the facts. As Poppy Alexander, whistleblower attorney and partner at Constantine Cannon LLP, discussed, whistleblowers are only required to provide information that leads to sanctions to qualify for a reward, and need not bring an entire case or even necessarily have physical proof.

NWC Fights for Financial Crime Whistleblower Rights:

In addition to organizing and hosting panels, NWC has consistently advocated for strengthened whistleblower laws to fight against corruption and financial crime. NWC’s Countering Money Laundering campaign focuses on the flow of money through illicit channels that impact the security of the U.S. and European financial systems.

Whistleblowers, naturally, are central to this campaign, symbolizing the need for transparency and security in financial institutions. An integral part of the financial ecosystem, whistleblowers put their careers, and often their financial stability, on the line to speak out against wrongdoing with the public interest in mind.

NWC recognizes that whistleblowers are put in challenging situations and are forced to make tough decisions. NWC encourages the championing of whistleblowers, recognizing that the public benefits from whistleblower disclosures and the publicization of misconduct, as well as increased whistleblower protections and incentives. Please consider donating today to support NWC’s continuing efforts to increase whistleblower protections and support the courageous insiders who protect our global economy.

Please subscribe to our mailing list to stay informed about NWC’s campaigns and efforts to support whistleblowers.

This story was researched and drafted by NWC Intern, Shawn Robbins, a Sophomore double major in Economics and Sociology at University of California, Irvine.