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New York’s Whistleblower Law Encourages Reports of Possible Tax Fraud

The Corporate Whistleblower Center, a Washington, D.C.-based watchdog group, reports that New York remains the only state in the country that provides meaningful awards to whistleblowers who offer proof of sales tax or income tax fraud to regulatory officials.

This gives employees a great incentive to come forward with information if they become aware of their employers’ violating state tax law by accepting “under-the-table” cash payments, maintaining multiple sets of books or paying workers in cash instead of classifying them as employees.

Whistleblowers may collect large awards

New York has tough tax fraud laws, with the state often looking back 10 years to recover what the violator owes. The violator must have income over more than $1 million per year and have done harm to the state in excess of $350,000. The award to the whistleblower in these cases can be up to 25 percent of what the state recovers in an enforcement action.

According to the Corporate Whistleblower Center, the types of businesses often in violation of New York income and sales tax laws are auto dealerships, electronics retailers, roofing and plumbing contractors, bars and restaurants and home remodeling companies.

New York has certainly set the standard for providing whistleblowers with just rewards if they provide state regulatory officials with valuable information on individuals, businesses or organizations that may be in violation of the state’s tax laws. It’s yet to be seen if other states will follow New York’s example in the years to come.

If you are aware of tax fraud or another type of illegal activity happening within your organization, you may be able to serve as a whistleblower. To learn more, contact a knowledgeable attorney at Whistleblower Law for Managers in Dallas, Texas.

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