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.

The text of today's letter follows here.

June 8, 2010

I am writing to express my concern about continued tax evasion by taxpayers using secret Swiss bank accounts, particularly accounts at UBS AG.  Swiss lawmakers voted today to block the treaty the United States hammered out with Switzerland last year.  While I understand that today's vote in the lower chamber of the Swiss Parliament is not the final word, I am worried that the Internal Revenue Service ("IRS") is doing next to nothing to identify tax evasion by U.S. taxpayers utilizing these accounts while waiting for ratification of the treaty.

It has been over three years since Mr. Bradley Charles Birkenfeld approached the Department of Justice, IRS and the Securities and Exchange Commission about potential tax evasion facilitated by UBS AG on behalf of U.S. clients.  The attached letter from Mr. Birkenfeld's attorneys outlines a number of steps that the IRS could have taken with the information he provided in March 2007.  It seems this information would allow the IRS to trace individuals in the U.S. that had UBS bank accounts.  In addition, this letter also provides information about UBS USA, a wholly-owned subsidiary of UBS AG, and its involvement in UBS AG activities here in the U.S.

Using this information to identify U.S. clients would appear to be more productive than simply pursuing agreements and treaties with the Swiss, especially since those avenues seem limited to specific individuals.  It does not appear that you would need a treaty, or other agreement with the Swiss government, to pursue the records of UBS USA.

As a result, I would like a detailed listing of all steps IRS has taken with the information that Mr. Birkenfeld provided.  Please note that I am not asking for information about any individual taxpayer so I do not expect section 6103 to preclude you from responding to my request.  I would also like to know what IRS is doing to ensure that, if and when it receives a complete list of UBS AG account holders, the IRS will not be precluded by the statute of limitations from auditing those individuals.

Today's vote in Switzerland only underscores the need for the IRS to encourage whistleblowers to come forward.  Mr. Birkenfeld blew the whistle on just one bank. What is the IRS doing to encourage more whistleblowers to come forward about offshore bank accounts?

I appreciate your prompt attention to this matter and ask for a written response by June 18, 2010.  Please contact me or my staff at (202) 224-4515 with any questions.

Sincerely,

Chuck Grassley

Ranking Member

Partners of Scott County Watersheds

Public Lunch Forum

Troubled Waters

A new Iowa Learning Farm Video,

Winner of the Iowa Motion Picture Association award

Partners of Scott County Watersheds will be hosting a monthly educational forum meeting on Tuesday, June 15^th, 2010. The event will be held from 12:00 - 1:00 pm at the Bettendorf Fire Station, Surrey Heights location (5002 Crow Creek Rd).

At the forum, the short film, Troubled Waters will premiere. The film is a new Iowa Learning Farm Video and the winner of the Iowa Motion Picture Association Award. It is filmed entirely on Iowa's waters and is approximately 26 minutes long. The film covers current river themes such as natural resources and biodiversity, human intervention and modification, pollutants and ecological resilience.  It explores the relationship between Iowans and streams and rivers and discusses how humans have altered streams and the consequences of these changes.

RSVP requested from those who would like lunch. Lunch will be provided with a $5 donation.  RSVP to Clare Kerofsky at 563-391-1403 ext. 3 or clare.kerofsky@ia.nacdnet.net.

Floatzilla has a new challenger. On Saturday, June 5th, Pittsburgh hosted Paddle at the Point, an event organized around an attempt at the Guinness World Record for the "largest raft of canoes and kayaks." The event was reported as a success with an unofficial count of 1,800 canoes and kayaks, thus significantly raising the bar over the previous record of 1,104 achieved by One Square Mile of Hope in Inlet, New York. This new record, however, falls short of Floatzilla's ambitious attempt to rally 2,010 canoes and kayaks on August 21st, 2010. Floatzilla offers the Quad Cities a unique opportunity to trump Pittsburgh's impressive accomplishment less than three months after Paddle at the Point and to demonstrate the resources and vitality of a thriving Midwestern community.

The Quad Cities is a premier place to live, work, and play, and is home to a wealth of paddling opportunities on the Mississippi River and its many smaller tributaries that rival some of the best anywhere. Floatzilla isn't just a record attempt put a celebration of our community and its waterways and River Action welcomes paddlesports enthusiasts near and far to join us on August 21st as ambassadors of the sport and to share the experience of this epic event. Floatzilla is an unparalleled opportunity to encourage family, friends, co-workers, and any other interested party to give paddlesports a try and take to the water with thousands of other participants.

Grab your paddle and register today at www.floatzilla.org. The registration fee is $10/paddler, which includes one Floatzilla t-shirt, commemorative boat sticker, registration wrist band, one ticket to "River Roots Live", free parking, and free shuttle to off-site parking for "floats." Premium registration is available for $20 and includes the basic registration package plus coupons for local hotels, restaurants, and retailers.

Floatzilla is coordinated by River Action, Inc. For additional information please call 563-322-2969 or email riveraction@riveraction.org.