Working for Justice

Following in D.C.’s Footsteps, Maryland Enacts Tax Whistleblower Law

Posted July 3rd, 2021 by Rob Van Someren Greve in Whistleblower Law.

Maryland recently took an important step in the fight against tax dodgers, as it enacted a bill that creates a tax whistleblower program similar to the successful programs administered by the Internal Revenue Service and the District of Columbia. The policy created by Maryland House Bill 804, which was enacted on June 1, 2021, and scheduled to take effect later this year, creates strong incentives for individuals to come forward with information regarding tax fraud and avoidance in the State of Maryland.

As previously discussed on this blog, the District of Columbia recently strengthened its False Claims Act with an eye to increasing the incentives to blow the whistle on tax fraud. In D.C., individuals who provide the government with information that leads to a successful enforcement action are now eligible for awards up to 30% of the money recovered.[1] On June 1, Maryland’s General Assembly followed in its neighbor’s footsteps by passing H.B. 804, which creates a tax whistleblower award program that allows the brave individuals who come forward with actionable information to share in the proceeds of a successful enforcement action.

Under H.B. 804, individuals who voluntarily provide “original” (i.e., non-public) information to Maryland’s Office of the Comptroller action are eligible to receive a monetary award amount between 15% to 30% of the money that the State recovers.[2] The upper end of this range is identical to that provided for under D.C.’s and the I.R.S.’s tax whistleblower programs.[3] However, unlike under D.C.’s whistleblower law, H.B. 804 does not permit tax whistleblowers to bring a qui tam action on behalf of the government, leaving enforcement of Maryland’s tax laws entirely in the hands of the State.[4]

Despite its limitations, H.B. 804 represents excellent news for Maryland’s tax payers: Maryland’s Department of Legislative Services estimated that the State can expect to receive “about $3.2 million a year from the program, with $4 million in additional tax collection and $800,000 in payments to whistleblowers.”[5]

If you believe that you may have knowledge of tax fraud by individuals or corporations in Maryland, the District of Columbia, or New York, you may want to contact a whistleblower lawyer at our firm.

Footnotes

[1] See also S. P. Kranz, et al., DC Council Expands False Claims Act to Tax Claims, Nat’l L. Rev. (Dec. 2, 2020), https://www.natlawreview.com/article/dc-council-expands-false-claims-act-to-tax-claims.
[2] See MD H.B. 804 (2021), available online at https://legiscan.com/MD/text/HB804/id/2343323.
[3] See D.C. Code § 47–4111(b) (limiting awards to 30% of money recovered); 26 U.S.C. § 7623(b)(1) (setting range of 15 to 30% of proceeds, subject to certain limitations).
[4] Compare Rob Van Someren Greve, D.C. Council Moves to Strengthen the District’s False Claims Act, Working for Justice Blog (Dec. 4, 2020), https://sanfordheisler.com/d-c-council-moves-to-strengthen-the-districts-false-claims-act/ (discussing qui tam provisions of D.C.’s tax whistleblower law); with Maria Koklanaris, Md. Lawmakers OK Bill For IRS-Like Whistleblower Plan, Law360 (Apr. 14, 2021), https://www.law360.com/articles/1374727 (noting lack of qui tam provision in H.B. 804).
[5] Koklanaris, Md. Lawmakers Ok Bill, supra note 4.

Rob Van Someren Greve is an Associate in the Washington, DC office of Sanford Heisler Sharp, LLP. He received his law degree cum laude from Georgetown University Law Center in 2018. He earned his undergraduate degree cum laude and Ph.D. in philosophy at the University of Amsterdam.
More About Rob

Share this Post

Categories

Tags

Archives

Back to Top