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Scott Michel Quoted in Tax Notes, Whistleblower Referrals Leading to CI, DOJ Investigations

November 19, 2012, Tax Notes
Excerpt taken from the article.

The increased arsenal of tools available to the federal government in combating offshore tax evasion has made its efforts stealthier and less predictable to practitioners and taxpayers, a panel of tax controversy practitioners said November 9.

New tools include date mined from voluntary disclosures, cooperation by taxpayers and bankers, and notably, information obtained from whistle-blowers. Thomas E. Bishop, assistant special agent in charge, IRS Criminal Investigation division in New York, called the 2006 whistleblowers law a "game changer" for the IRS's efforts to combat offshore evasion.

Kevin M. Downing of Miller & Chevalier, who was formerly with the DOJ Tax Division and who participated in the prosecution of Swiss bank UBS, said that unlike the SEC's whistleblower law, the IRS's version allows a whistleblower to collect and award even if convicted of a felony, albeit with some exceptions. "I think over the next few years, it's going to spawn a lot of cases for the IRS, both civilly and criminally," he said.

Information from whistleblowers, along with other tools used by the government, creates a situation in which practitioners can no longer predict the next wave of enforcement, said Charles P. Rettig of Hochman, Salkin, Rettig, Toscher & Perez PC. Practitioners used to be able to mine their own data to predict those enforcement efforts, but that's changed," he said.

Scott D. Michel of Caplin & Drysdale agreed, citing subpoenas recently issued by the U.S. attorney's office for the Southern District of New York to account holders of Bank Frey & Co. AG, a Swiss bank. Those subpoenas essentially "came out of the blue," with no inkling by practitioners that the bank was even on the government's radar, he said.

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