If you know someone who is cheating the Internal Revenue Service, you could be in for a payday. The IRS Whistleblower Office will pay you if you alert them about someone who has managed to avoid paying taxes they owe. If the IRS is able to use the information you provide, you could receive up to 30% of the additional tax, penalty, and other amounts collected.
The IRS makes it clear that it will not accept speculation or “educated guesses.â€ You must be able to provide evidence that someone is indeed making an effort to avoid paying taxes. The IRS says it seeks tips about significant Federal tax issues.
Know the rules
There are two types of awards. If the taxes and penalties are more than $2 million (in addition to other qualifications) you might be eligible to receive a payment of between 15% to 30% of the amount collected. If an individual is the subject of the investigation, his or her annual gross income must be more than $200,000.
If you don’t agree with the IRS’ final decision in the case, you can appeal to the Tax Court. See Internal Revenue Code IRC Section 7623(b) – Whistleblower Rules.
There is also an award program for individuals who don’t meet the $2 million requirement in cases where the individual’s gross income is less than $200,000.
However, this program offers a lower reward. The most you could receive is 15% up to $10 million. Furthermore, you won’t be able to dispute the outcome in Tax Court if you’re not satisfied with the final decision.
Use IRS Form 211 to submit information about a tax cheat.