The international business community has witnessed an increase in US tax enforcement activity arising from individual whistleblower claims filed with the US Internal Revenue Service. One such instance recently came to light in press reports about a former employee of LGT bank in Liechtenstein who sold information to the IRS and other tax authorities purporting to reveal the names of hundreds of taxpayers with previously undisclosed assets. While the issue of the disclosures made of LGT account holders has been public for some weeks, the new information is that this individual is represented by a US lawyer and is seeking a reward under an enhanced IRS whistleblower program that will pay substantial amounts, potentially millions, to informants who provide information that leads to the collection of US tax, penalties and other amounts.

Multinational businesses with a US tax presence should consider policies and best practices for company management, corporate accounting, legal, and human resources departments in order to establish appropriate protocol to address a situation involving a potential tax whistleblower. For those companies that have established such policies to address whistleblowers in the context of other regulatory matters, (i.e., FDA, SEC, Environmental, Labor, etc.), pre-existing policies may need to be tailored to include procedures specific to this type of whistleblower claim.

While senior corporate personnel may have always been cognizant that any employee could approach a tax authority with information that leads to an investigation, the playing field is now tilted to encourage such conduct. Tax officials who administer tax compliance structures that interface with the US in any respect should be aware of, and be prepared to react to, this changed environment.