Learning how to report tax evasion will save everyone future headache. Tax Evasion is a crime that hurts everyone by limiting the revenue on hand for state and local services. When people think of tax evasion, big names like Wesley Snipes and Martha Stewart might come to mind. However, it is not just multi-millionaire celebrities that are dodging the tax man. Every day Joe’s like your local bartender, contractor or free lance writer might be tempted to avoid paying the taxes all American citizens are required to pay.
Here is how to report tax evasion if you find someone trying to avoid paying their taxes.
- Get as much information as you can about the alleged tax evasion. Take note the names and addresses of everyone involved and why you believe this person is evading their taxes. It also helps to know the taxpayer ID number or social security number of the individual believed to be guilty of tax evasion. Figure out how many years this individual or business has been dodging their taxes and the estimated amount of income they have unreported.
- Choose whether or not you want to remain anonymous. You are not required to identify yourself if reporting tax evasion. It is helpful to release your identity, including name address and daytime telephone number to the IRS. The IRS promises to keep your identity confidential.
- Complete IRS Form 3949-A. This form can be downloaded from the IRS website. All the information you collected about the alleged tax evasion will be entered onto this form. When completed, mail the form to: Internal Revenue Service, Fresno, CA 93888.
- Complete Form 211 to claim a possible reward. Congress increased award amounts for certain whistleblowers in 2006. Following the enactment of this procedure, hundreds of millions of dollars in unpaid taxes have been collected. To be eligible, the tax evasion must be over $2 million for businesses and $200,000 for individuals. The claim form for rewards is also available at the IRS website.
- If you don’t want to fill out the form, send a letter. You don’t have to fill out the form if you want to report tax evasion. You can write a letter and send it to the Internal Revenue Service instead. Make sure you include all the information listed above in the letter to help the government determine if a crime has been committed.
- Don’t expect to hear back from the IRS. Once you have reported the tax evasion, your job is done. The government will use your tip to determine if a crime of tax evasion exists. If the IRS proves a malicious attempt of tax evasion exists, the case will go before a jury to determine if the individual or business is guilty of tax fraud.