Tax fraud is the evasion of taxes through either intentionally underreporting income or overstating deductions. If you suspect or know an individual or business that is violating the tax law, you can report them to the Internal Revenue Service (IRS) and maybe even get paid for it.
History
The IRS has been paying awards to individuals for credible information regarding violations of tax laws since 1867. Known as the "Informant's Claim Program," the program was governed by IRS policy that "defined award percentages and set a cap."
Types of Awards
Beginning in 2006, there are two types of awards. If the taxes, penalties and interest due total more than $2 million, and other certain requirements are met, the IRS will pay an award of 15 to 30 percent of the amount collected. If the case involves an individual (as opposed to a business), gross income must exceed $200,000. A disputed claim amount can be appealed to the Tax Court.
For cases that do not meet the $2 million criterion or the $200,000 gross income requirement, the award granted will be less. The maximum award in these instances is 15 percent, up to $10 million. These awards are discretionary and disputes cannot be reviewed by the Tax Court.
Procedures
All whistleblower claims must be submitted on Form 211 (see Resources) and signed under penalty of perjury. Submit the form to the address noted on the form. Informants who do not want to claim an award may report the suspected activity on Form 3949-A (see Resources). Alternatively, informants who wish to remain anonymous may submit a letter containing the same information requested on Form 3949-A. Mail the form or letter to the Internal Revenue Service, Fresno, CA 93888.
