I love the New York State False Claims Act. One of the reasons is that the statute explicitly allows Qui Tam claims for tax violations. Combine this with an excellent and aggressive AG’s office and it’s a big win for the state and the whistleblower. I predict that NY state coffers will benefit tremendously in the years to come from this law. I hope it becomes a model for the rest of the country.
A perfect example of the statute’s strength became public this week, right in time for tax day. A prominent investment fund allegedly diverted attribution of profits earned in New York to related entity in Alabama to take advantage of lower rates. A whistleblower stepped up, the state recovered $40 million and the unnamed whistleblower collected $8.8 million. You can view a copy of the settlement here. It’s difficult to see how this result could have occurred in most other states.
Tax evasion hurts the state in so many ways. It leaves many necessary programs underfunded. It causes higher tax rates on those of us who pay their fair share. In the instance of uncollected sales tax, businesses that properly collect tax are left at a significant competitive disadvantage. I’m proud to see New York take the lead in this area.