For the fourth year in a row, the whistleblower awards that the Internal Revenue Service pays to tipsters will be reduced.
For fiscal year 2016, awards paid to whistleblowers on or after Oct. 1, 2015, and on or before Sept. 30, 2016, will be reduced by the fiscal year 2016 sequestration rate of 6.8 percent, according to the IRS.
Under the Budget Control Act of 2011, Congress and the Obama administration imposed mandatory reductions in both defense and non-defense spending known as sequestration if they were unable to agree to a budget. Chafing under the budget restrictions, in 2013 they eased some of the automatic cuts, but not for the IRS.
Despite the cuts, whistleblower awards can be lucrative, allowing tipsters to receive up to 30 percent of the money the IRS collects as the result of the tip. A former UBS executive, Bradley Birkenfeld, collected $104 million in 2012 after providing the IRS with information on how the Swiss bank helps U.S. clients evade taxes. The bank agreed to pay $780 million to the U.S. and provide the names of more than 4,450 of its U.S. clients to the IRS (see UBS Whistleblower Secures $104 Million UBS Award). Despite his help with the case, the Justice Department pursued a case against Birkenfeld and he served two and a half years in prison.
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