IRS-Tax Evasion Whistle Blowing
The Internal Revenue Service (IRS) cannot possibly identify every instance of tax fraud. Instead, it relies on whistleblowers to expose potential tax fraud. It has instituted a whistleblower reward program in which any whistleblower who provides original information is eligible. If the tip results in the collection of over $2 million in taxes, penalties, interest, and other amounts, they are entitled to up to 30% of the total money recovered. The IRS has made hundreds of millions of dollars through the program, and it provides an excellent incentive for people to come forward about people, corporations, partnerships, or any other entity who is not paying their taxes correctly.Common Types of Tax Fraud
- False returns. This is when a taxpayer knowingly and intentionally falsifies their tax documents to reduce bills or increase tax returns. For an individual to be guilty of this it must be more than a mere mistake, which although may be negligence, is not necessarily fraud.
- Failing to report income. This occurs when a taxpayer leaved out income sources or underreports income. When you hear about people hiding money in offshore accounts, this is the type of fraud they are committing.
- False deductions or credits. A taxpayer may claim false deductions or overstate tax credit. For example, someone may say they made a donation that they never made or claim dependents that are not actually dependents.
- Failing to file a tax return. Failing to file a tax return by April 15 of each year may constitute tax fraud. Those whose income falls below the IRS minimum do not have to file.
Whistleblowers who report companies or individuals who defraud the government in excess of $2 million are entitled to between 15% and 30% of the money recovered. If reporting an individual, their income must exceed $200,000 for the tax year reported. If your report does not meet the threshold you are still entitled to up to 15% of money recovered from a fraudulent party. There is no cap on the award, so you could potentially recover millions of dollars from the government.
The IRS is most likely to pursue tips for larger scale fraud schemes such as fraud committed by businesses or corporations, or for individuals whose income exceeds $200,000. Remember, the whistleblower reward only applies if the amount recovered exceeds $2 million. Smaller scale fraud schemes should still be reported to the government, but the award may not apply. The IRS is really trying to identify schemes that impact the tax system overall.What Should I do Next?
You do not need an attorney to expose about tax fraud, but it is in your best interest to hire one. The IRS is selective in the tips it actually investigates, and the award amount is highly discretionary. An attorney can ensure that you receive all the compensation you are entitled to. After you hire an attorney, we will make a report in writing based on your information and any documentation you have. In whistleblower suits, it is crucial that we shield you from too much direct contact with the IRS. We can take care of the information from there. The IRS should finish an initial review after 90 days, and the Operating Division should finish a final review after another 90 days. The investigation may take several years, but once that is finished you should have a monetary award soon after if you qualify. If you feel the IRS did not award you enough, we can appeal to the United States Tax Court. Whistleblower cases can be complex and have strict requirements and deadlines.
At the law firm of Altman & Altman, our group of skillful Whistleblower Lawyers will be by your side every step of the way to help you navigate these difficult waters. To schedule your free consultation with an experienced whistleblower attorney at Altman & Altman LLP, call 617.492.3000 or contact us through our convenient online chat.