How Do I Report Suspected Tax Fraud Activity?

 Posted on June 12, 2018 in Taxation Law

Tax fraud is common in the United States; however, this type of activity often goes unreported or undiscovered. Tax fraud not only affects the government’s ability to obtain funds used to provide essential services to citizens, but fraud can also take the form of tax scams that seriously harm many individuals. If you suspect that a person, business, or organization is committing tax fraud, you should understand the steps you can take to report this fraud to the IRS.

Reporting Tax Fraud

Depending on the type of fraud, there are different methods of reporting information to the IRS:

• To report an individual or business that fails to pay taxes, improperly withholds taxes, claims false deductions or exemptions, does not report income, or files false tax returns, use Form 3949-A (Information Referral). As much relevant information as possible should be included, such as the name and address of the offender, his or her Social Security number or tax identification number, and a description of the violation that includes the time period during which it occurred and the amount of income that was not reported or taxed correctly. While you are not required to identify yourself, the IRS encourages you to do so, and you may be asked to serve as a witness if the tax evasion case goes to trial.

• To report the theft of your Social Security number, use Form 14039 (Identity Theft Affidavit). This will help you address any issues in which a person used your SSN to obtain employment or file a fraudulent tax return.

• To report an abusive tax scheme by a person or company that prepares tax returns, use Form 14157 (Complaint: Tax Return Preparer) and Form 14157-A (Tax Return Preparer Fraud or Misconduct Affidavit).

• To report a person or organization that is promoting a tax avoidance scheme, use Form 14242 (Report Suspected Abusive Tax Promotions or Preparers).

• To report tax fraud or improper activity by a tax-exempt organization (such as a religious organization or a charity), use Form 13909 (Tax-Exempt Organization Complaint).

Whistleblower Awards

While people may wish to report tax fraud to ensure that the laws are being followed correctly, a person may also be eligible to receive a reward for reporting credible information to the IRS. When whistleblowers report cases in which the amount of unpaid taxes, interest, and penalties total more than $2 million, or in which an individual taxpayer’s gross annual income is at least $200,000, he or she may be able to receive between 15 percent and 30 percent of the amount recovered by the IRS during the case. For cases involving amounts below this threshold, taxpayers may receive a discretionary reward of up to 15 percent of the recovered amount. Taxpayers who wish to claim an award for reporting tax fraud should use Form 211 (Application for Award for Original Information).

Contact a San Jose, CA Tax Attorney

If you have evidence that a person or company has committed tax fraud, John D. Teter Law Offices can work with you to report this activity to the IRS, ensuring that you meet your legal requirements and helping you obtain any awards you are eligible to receive. Contact our San Jose tax fraud lawyer today at 408-866-1810.

Sources:

https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity

https://www.irs.gov/compliance/whistleblower-informant-award

https://www.investopedia.com/articles/taxes/09/reporting-tax-cheats.asp