Reporting an Individual for Not Filing a Tax Return
UPDATED: July 11, 2018
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In the United States, tax evasion costs the US government over $1 billion dollars each year. While some might consider it a bragging point, not filing a tax return is actually a crime, and overhearing someone talk about it without reporting what you know can have consequences for you. On the other hand, reporting this information to the IRS is both your duty as a taxpayer and can be very rewarding.
A whistleblower is someone who discovers a financial crime and reports it to the proper authorities. In this case, to the IRS. According to IRS rules, a whistleblower that gives the IRS accurate and useful information can receive up to 30 percent of the total tax money and fines collected. This means that you can be paid by the IRS for any information you have regarding someone else’s refusal to pay their taxes.
There are two programs with the IRS’s whistleblower program. The first department handles cases where the taxes in dispute exceed $2 million and the annual gross income must be more than $200,000. In other words, the person you are reporting has not filed taxes for years, so that they owe at least $2 million dollars in back taxes. When this is the case, and the information you provide leads to the capture and prosecution of the person, the IRS will pay you between 15 and 30 percent of the total amount that is collected after the hearing. Additionally, if the IRS fails to reward your whistleblowing efforts, you can appeal and request payment through the tax court.
The other whistleblower program is for evaders that owe or make less than the above requirements. In this program, accurate and useful information will be rewarded with a reward up to 15 percent of the total amount and fees collected with a maximum award of $10 million. In this program, the awards are entirely discretionary on the part of the IRS and you cannot appeal if the IRS does not give you a reward. On a good note, however, you’ll be helping the IRS catch a tax evader.
If you are interested in reporting someone for not filing a tax return, fill out and submit this form to the IRS.
It is never a good idea to report information to the IRS unless you are absolutely certain the information is correct and that it will be helpful. If you are unsure that the information will be helpful, or you have doubts about whistleblowing, consult with a whistleblower attorney or tax law attorney for advice. These attorneys typically offer a paid consultation for their time, and that will suffice for either confirming or denying if you should report the information. Additionally, the attorney can advise you on the possible consequences of being a whistleblower and help you reach the right decision. Remember that anything reported on the whistleblower form is considered confidential under IRS law.