Blow the Whistle – New York Tax Fraud Attorney

Whistleblower Law Firm – Millions Recovered – Former DOJ

How to Report Tax Fraud in New York

New York is one of a few states that allow private individuals to file whistleblower (qui tam) lawsuits against those who avoid or underpay state taxes. Successful whistleblowers can receive between 15% and 30% of the state’s recovery, and some whistleblowers have received awards of tens of millions of dollars.

New York False Claims Act lawsuits can be brought against defendants with “net income or sales” of $1 million or more per year, where damages (i.e., taxes owed) are greater than $350,000. So this is really about tax fraud by corporations or high net worth individuals.  Reportable New York tax fraud includes, but is not limited to:

  • Money Laundering
  • Failure to report all revenue
  • Failure To Collect and/or Remit Sales or Payroll Taxes
  • Abuse of tax shelterMispricing goods or services
  • Exaggerating losses
  • Backdating stock option grants

Tax fraud has always been a significant problem in the United States. It’s estimated that about 15% of taxes owed are unpaid, resulting in losses roughly equivalent to ¾ of the annual federal budget deficit. Individuals and corporations that evade taxes are not only cheating the government – they’re also stealing money from their fellow law-abiding citizens, and making it more difficult for the government to provide the programs and services that we all rely on.

Tax Fraud Whistleblower Protections

The NY State False Claims Act provides remedies for employees who experience retaliation after blowing the whistle on their employers. Your remedies can include:

  • Double back pay, plus interest
  • Reinstatement to their job or a job with equivalent seniority
  • Reinstatement of benefits
  • An injunction preventing their employer from continuing to retaliate against them
  • Attorneys’ fees and court costs
  • Additional special damages

In order to take advantage of the anti-retaliation provisions you need to blow the whistle the right way. If you do so the wrong way, you may lose your case before it begins. That’s why it’s important to retain qualified whistleblower counsel early. If your qui tam tax fraud case is filed properly you’ll remain anonymous while the government investigates.

New York Tax Fraud Cases Can Result in Huge Settlements – And Huge Whistleblower Awards

Whistleblower awards under the New York False Claims Act can be quite large. For instance, on March 2, 2021, the New York Attorney General announced a $105 million settlement against an individual hedge fund manager and his firm based on tax-evasion allegations originally brought by a whistleblower. This was the largest recovery against an individual in the 14-year history of the New York False Claims Act, and it resulted in an award of $22.05 million, or 21% of the overall settlement, to the whistleblower.

The case alleged a failure to pay tens of millions of dollars in state and city taxes on deferred fees for offshore investment management services that had actually been performed in – and were, therefore, taxable by – New York City.

The whistleblower in this case was a limited liability company, apparently formed for the purpose of bringing this lawsuit. For stepping forward, the LLC will receive $22.05 million, or 21% of the overall settlement.

Altogether, New York has recovered a total of $577.8 million in tax-fraud settlements since 2010. In the most recent reported case, State of New York ex rel. Argeroplos and Clark v. Service Station Vending Equipment, Inc. and McCabe, the state recovered $4.25 million from a distributor of coin-operated machines for tire inflation that failed to collect and remit sales taxes and also paid employees off the books, and its owner who falsified his personal tax returns. The whistleblowers in that case received $829,500, or 21% of the settlement amount.

In People v. Sprint Communications, et al. (2018), the state obtained the largest-ever recovery by a single state in an action brought under a state false claims act, when Sprint Communications agreed to pay $330 million to resolve allegations that it failed to collect and pay NYS & NYC sales taxes on the monthly access charges for its cellphone plans. The whistleblower in that case received $62.7 million, or 19% of the total, a record New York whistleblower award at the time.

How Do I Report New York Tax Fraud?

If you have information on high-value tax evasion or underpayments, call the New York tax fraud whistleblower attorneys at Brown, LLC at (877) 561-0000. Learn your rights as a whistleblower and the potential to receive a substantial award. We’re available 24/7, and the consultation is free and completely confidential!