Governor David Paterson has signed into law a bill that will strengthen the New York False Claims Act and give the state greater opportunity to collect money that has been fraudulently withheld from defendants. Specifically, the bill provides a qui tam provision which will allow private citizens to sue defendants in the name of the government for tax law violations. If a whistleblower is helpful in providing the government with information that leads to a recovery of lost tax revenue, he or she will be able to collect a portion of the recovery.
The defendant’s net income or sales must exceed $1 million, and the estimated damages to the government must exceed $350,000. The bill also adds additional employee protections for both private and government whistleblowers who come forward with information.
The enhanced law comes on the heels of two major amendments to the federal False Claims Act – one in 2009 and one in 2010 – which many predict will assist the federal government in collecting more money. The federal government collected $2.4 billion in fiscal year 2009 and New York is estimated to recover $20 million annually through the Act.