New Yorks new tax whistleblower law strengthens state coffers soon other states will follow

New York State’s whistleblower law is the first in the nation to include a provision allowing whistleblowers to collect a reward for helping the state to recover moneys from tax evading companies and people.

The law works like this: a citizen can bring a lawsuit against a person or business that makes more than $1 million in annual income and defrauds the state of more than $350,000 by knowingly making a false claim. The whistleblower gets up to 30 percent of what the state collects. It is similar to the Federal False Claims Act.

In New York and in other states, estimates are that billions of tax dollars go unpaid every year. As budgets tighten, the state governments need the money more so now New York is aggressively pursuing tax cheats and has been successful. As a result, other states are considering adding a provision tot heir whistleblower laws to allow for recovery against tax violators by an individual citizen.

Last week, the Attorney General of New York won a significant ruling in a unique case he has taken against Sprint for deliberately under-collecting and underpaying millions of dollars in New York state and local sales taxes on flat rate access charges for wireless calling plans. The state is seeking over $400 million from Sprint.