National Law Journal op-ed:  Going After Tax Cheats, by Eric Schneiderman (New York Attorney General):

Other states can follow New York's lead and amend their false claims acts to allow whistleblowers to report on corporate tax fraud, and AG offices to work with these whistleblowers in filing lawsuits.

[W]hen I became attorney general, my first major action was to create a Taxpayer Protection Bureau to stop fraud against the government, whether it's by corrupt contractors or tax cheats, using our state's newly strengthened False Claims Act.

The False Claims Act is a powerful tool to prevent waste, fraud and abuse. First created at the federal level by President Lincoln in 1863 to fight corrupt Civil War contractors, the act allows any citizen to file a lawsuit against any government contractor or beneficiary for defrauding the government. The act is effective because it empowers and incentivizes whistleblowers by allowing them to keep a percentage of the funds recovered for the taxpayers.

After the federal government amended and strengthened the act in 1986, many states followed with their own false claims acts aimed at government contracting fraud at the state and local level.

But there was one big loophole in the federal False Claims Act and most state acts: They prohibit whistleblowers from using the law to fight tax fraud.

In 2010, New York took the lead with a new approach that protects taxpayers not only from fraud in government spending, but from fraudulent tax evasion that is equally harmful to the people of our state. We passed a law that reformed our state's False Claims Act to encourage whistleblowers to come forward to report corporate tax cheats, and expressly permitted the attorney general's office to work with whistleblowers to file tax fraud lawsuits.

Now, large-scale tax cheats are subject to the same consequences as corrupt contractors, including triple damages and mandatory penalties. My new Taxpayer Protection Bureau is aggressively enforcing this new provision, and the result is better and fairer tax enforcement, as well as better self-policing.

High-powered law firms now warn their clients to take New York tax compliance more seriously, and to confirm any "aggressive" tax strategy with the New York State Department of Taxation and Finance lest they run afoul of the False Claims Act and trigger a lawsuit for multiple damages and penalties. …

New York's reforms are working, and any lawmaker who is serious about cracking down on corporate tax cheats ought to follow our example.