The information Birkenfeld revealed detailed the inner workings of the secretive private wealth management division of the Swiss bank UBS , where the American-born Birkenfeld helped his US clients evade taxes by hiding wealth overseas.

At one point during his private banking career, Birkenfeld reportedly brought diamonds across the US border secured inside a toothpaste tube.

Tuesday's announcement represents an astonishing turn of fortune for Birkenfeld, who was released from federal prison in August after serving 31 months on charges relating to his efforts to help a wealthy client avoid taxes.

He is currently under home confinement in New Hampshire. The terms of his probation prevented Birkenfeld from attending the press conference announcing his windfall.

Birkenfeld attorney Stephen Kohn said the information the former Swiss banker turned over to the IRS led directly to the $780 million fine paid to the US by his former employer, UBS, as well as leading over 35,000 taxpayers to participate in amnesty programs to voluntarily repatriate their illegal offshore accounts. Kohn said that resulted in the collection of over $5 billion dollars in back taxes, fines and penalties that otherwise would have remained outside the reach of the government. (Related:Illegal Offshore Account Holders)