August 11, 2014 9:52AM 

# Bigger Bounties for Tax Tipsters 

By [Walter Olson](https://www.cato.org/people/walter-olson) 

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I’ve got a [guest post up at Reason](http://reason.com/blog/2014/08/09/rat-out-your-employer-on-taxes-win-cash) on how bounty-seeking informants are bypassing the Internal Revenue Service tipster-reward program in favor of selected state False Claims Acts, such as New York’s, which enable richer recoveries for disloyal employees and others who charge defendants with underpaying taxes. Excerpt:

> Will the spread of a culture of informants sow distrust and disloyalty in the workplace, while encouraging dissident executives and their lawyers to shake settlements out of risk- and publicity-averse targets by seizing on doubtful, gray-area legal theories? That’s part of the game too. Lately hedge funds and litigation finance firms have moved in to bankroll the filing of likely “[whistleblower](http://overlawyered.com/tag/whistleblowers/)” cases. …
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> …by getting pro-plaintiff laws through the legislature in just a [few states](https://www.cato.org/publications/commentary/anti-fraud-legislation-maryland-could-have-disturbing-side-effects) — New York [liberalized its law four years ago](http://www.mondaq.com/unitedstates/x/279596/tax+authorities/A+Decade+Of+Lessons+Learned+From+State+Tax+False+Claims+Act+Cases) — advocates can set the stage for a nationwide informant push.
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> In Illinois, a single Chicago lawyer was [reported in 2012](http://overlawyered.com/2012/12/chicago-law-firm-benefits-tax-whistleblowing/) to have used that state’s whistleblower law to file at least 238 lawsuits against retailers, pocketing millions in settlements, over alleged failure to charge sales tax on shipping-and-handling.

Whole thing [here](http://reason.com/blog/2014/08/09/rat-out-your-employer-on-taxes-win-cash).

##### Related Tags 

[Constitutional Law](https://www.cato.org/constitutional-law), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy), [Robert A. Levy Center for Constitutional Studies](https://www.cato.org/robert-levy-center-constitutional-studies) 

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