At SureTax®, our services support telecom tax calculation for the purpose of compliance. The notion being that if a company does not comply with tax laws, they are subject to fines and penalties.
But, what if a company cheats - doesn’t pay taxes - and is caught by a whistleblower? Then what happens?
There is a provision in common law call called qui tam, which is short for the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitu, meaning ‘he who sues in this matter for the king as for himself’. It’s a principle that is still alive in US law and it means that whistleblowers can earn some or all of the collections of a case presented on behalf of the government.
Earlier this year, a whistleblower brought a qui tam case in New York under the state’s False Claims Act. New York attorney general Eric Schneiderman intervened in that case against a national wireless provider for deliberately under-collecting and under-paying $100 million dollars in sales taxes on wireless access plans.
But, what about the federal tax? Why not bring a qui tam case there also?
A loophole in federal law prohibits whistleblowers from bringing qui tam cases. The IRS has a whistleblower office, where whistleblowers can go to file a complaint. But, if the IRS decides not to take the case, it’s over and the whistleblower has no qui tam option.
In New York, the defendant must have at least $1 million in sales and must have deprived the state of at least $350,000 in revenue.
Maybe Congress needs to take a look at New York to figure out how to increase collections. A federal qui tam law could do for tax fraud what nickel return deposits did for aluminum can recycling.