Partner Randall Fox quoted in Tax Notes article on Washington D.C. and New York tax whistleblower laws

In a September article, KM partner Randall Fox is quoted sharing his expertise on tax whistleblower cases. Mr. Fox's comments are included in an article in Tax Notes written by Andrea Muse regarding the first publicly-disclosed case filed under Washington D.C.'s False Claims Act (FCA). The District amended its FCA in 2020 to allow tax whistleblower claims in addition to other claims that the District government was damaged by fraud. 

Mr. Fox commented that the District is using the new tax whistleblower law to target not only taxpayers who allegedly cheated but also others who facilitate fraud. As Mr. Fox stated, the FCA “casts a broader net” than most traditional tax enforcement, which demonstrates “the real power of the false claims act for tax enforcement.” Mr. Fox noted that the New York False Claims Act has also been used to target the facilitators of tax fraud, including in a case against Sotheby's Inc., where the company is claimed to have created false records to help clients evade sales taxes.

With respect to targeting facilitators, Mr. Fox commented, “if you can cut off the source, you will have a lot fewer violations.” Mr. Fox also noted that the new Washington D.C. case, by focusing on an individual who failed to file tax returns in the District, shows the importance of closing a loophole that currently exists in the New York FCA for cases where no false tax return has been filed. Legislation is pending that would close that New York loophole. 

Read the full article here: D.C. Whistleblower Suit Prompts Praise, Concerns.