Phillips & Cohen partner Erika Kelton explains some of the obstacles tax whistleblowers may face with the IRS and why state tax whistleblower cases can be faster and more effective.
Erika Kelton, a whistleblower lawyer and partner at the law firm Phillips & Cohen, said the opportunity to work directly with the prosecution is an important element of state and local False Claims Acts. With federal agency whistleblower programs [SEC, CFTC and IRS], whistleblowers do not initiate a lawsuit and there isn’t a complaint filed in court. Tipsters who bring information to the IRS, for example, typically aren’t involved in the agency’s investigation, according to Kelton.
“The IRS really freezes out whistleblowers because cases take forever to be resolved, the agency is tight-lipped about the status of the investigation, and the IRS doesn’t take advantage of the expertise of the whistleblowers or the attorneys who represent them,” Kelton said.
This means tax-fraud whistleblowers will increasingly look for ways to bring their tips to New York law enforcement to be more involved in the investigation process. Tipsters can work with a state in addition to passing along the information to the IRS, Kelton said.
Read the entire article, “An inside look at the crazy world of whistleblower lawsuits, where anonymous tipsters make millions,” on Insider’s website.