March 9, 2010
The Information You Need to Know About Tax Fraud
Everyone knows that you have to pay your taxes on money that you earn to the IRS. Most people simply learn this as they enter the working world and pay their taxes with no difficulty throughout their lives. Some people aren’t so honest though. Tax fraud abounds in this country, and the IRS realizes that they simply do not have the resources to root out every single case that occurs. One measure they have implemented in order to help compensate for that is their whistle blower program, which can reward people that correctly report an individual that has been engaging in tax fraud.
The IRS has a whistle blower reward program that pays people when they report tax fraud, but they are very careful to state what this program is not. First, the whistleblower law is not meant to be abused by people that are airing private business disputes or who have personal grievances against others. The program is also not meant to allow for educated guessing. Instead, it is to be used to report specific cases of tax evasion where you have proof, evidence, or certain knowledge.
The payment of the reward that you can earn from the IRS under their whistleblower law varies on the amount that they collect from the individual that you’ve informed on. If the total amount which is owed to the IRS exceeds 2 million dollars, the payment made to the informant will generally range from between 15 - 30% of the total amount that was owed.
Obviously not all back tax cases involve monies of this amount, but there is another program in place for those who may have information about cases involving smaller dollar amounts. In situations where the total amount owed (which includes penalties and interest) does not hit that $2 million mark, informants will instead be paid up to a maximum of 15% on the payment made.
If you do inform on someone and are believe that you are owed an IRS reward, you should know that these amounts aren’t up for discussion. They aren’t disputable and are awarded solely at the discretion of the IRS.
Reporting on someone who is committing tax fraud is important, but can also be profitable. First, paying taxes is the law, and everyone should be bound by it equally. Secondly, the IRS provides very reasonable incentive to convince you that reporting on someone that is defrauding their organization is worthwhile.