In March 2009, Internal Revenue Service Commissioner Doug Shulman announced that the IRS has increased its efforts to enforce tax rules and guidelines. This means that the IRS is making an extra effort to catch tax snitches and cheats. If you know someone who is evading paying their fair share of taxes, then the IRS has devised two straightforward ways for you to report them and, in some cases, receive a reward in exchange.
Gather as much information on the suspected fraud as possible including, but not limited to; the dollar amount of unreported income, the name and address of the person(s) or corporation you are reporting, the address, a description of the fraud or tax scheme, the number of years the individual has been evading taxes, the taxpayer’s Social Security Number or Tax Identification Number, as well as your name, address, and any additional contact information. Although it is helpful to the IRS if you reveal your identity, it is not required that you do so. You are allowed to remain anonymous if you choose.
Complete IRS Form 3949-A and mail it to: Internal Revenue Service Fresno, CA 93888
File a whistleblower claim with the IRS by completing IRS Form 211 and mailing it to: Internal Revenue Service Whistleblower Office SE:WO 1111 Constitution Ave.,NW Washington, DC 20224
If the IRS uses the information you provided by you, you may be entitled to an award of up to 30 percent of the unpaid tax once it is collected. In determining if you will receive a cash award, the IRS will consider the validity and strength of the information you provide. You will need to have evidence which substantiates your assertions, and not just speculation. The IRS has two categories for whistleblowers; one for those who report fraud in which the individual involved earned income in excess of $200,000, and another for cases in which the uncollected tax, penalty, and interest in is in excess of 2 million dollars. In these cases, the IRS will pay up to the 30 percent to the whistleblower who provided information. In cases where this criteria is not met, whistleblowers are awarded up to 15 percent of the uncollected tax. The maximum award for both categories is $10 million. If you have additional questions or need help completing your form, call the IRS at (800) 829-1040.
Keep in mind that payment of a whistleblower award could take several years as payment is not made until after the uncollected tax is collected by the IRS.
Denise Caldwell is a finance writer who has been writing on taxation and finance since 2006. Her articles appear regularly on websites such as Gomestic.com and MoneyNing.com. She has taken what she learned while working at the IRS to provide readers with helpful tax and finance tips. Caldwell received a Bachelor of Arts in political science from Howard University.