Whistleblower alleges Vanguard Group failed to pay Millions in taxes

An employee of the mutual fund giant Vanguard Group says it has evaded paying millions in state and federal taxes by using a tax shelter for its 40 years in business. These allegations were made in a lawsuit filed by whistleblower David Danon a former tax manager in the company’s general counsel office before he was fired by the company. Under the New York and federal whistleblower laws, the whistleblower is entitled to recover a portion of what the government may recover in the case. That is between 15%-30% of the recovery.

The suit alleges that Vanguard has had a duty to file returns and pay taxes since at least 2004 because the company earns considerable fees for managing New York’s 529 (college savings) plans, earns massive fees from its individual New York customers, and has staff regularly working in New York. Neither New York tax returns have been filed nor state tax payments have been made since 2004, he said. “We generally do not comment on pending litigation, but we believe it is important to emphasize that Vanguard adheres to the highest ethical standards in every aspect of our business,” Vanguard spokesman David Hoffman said in a statement. “It is also important to note that Vanguard operates under a unique mutual structure and has a long history of serving the best interests of its shareholders. We believe that this case is without merit, and we intend to defend the matter vigorously.”