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How to Report Tax Evasion

By Edited Mar 20, 2016 0 1

The IRS is making a very lucrative deal for everyday people like you and I to report tax evasion and earn money by doing so. Could you imagine earning between 15%-30% for tipping off a tax cheater in a case of $2 million? Under the passing of the Tax Relief and Health Care Act in 2006 (effective 2008), this has become possible. If you don't think this happens, think again. Between 2004 and 2005, 428 informants received a total of $12 million for their information that recouped the IRS $168 million. This may not be fast money, as the IRS has to verify everything, but it could be good money.

Things You Will Need

IRS Form 3949A and Form 211

Documentation and Information on either a Business or a person

Step 1

If you suspect a person or a business is cheating the government out of money, then you may just have a case. Because the IRS receives many cases each year (especially now that they've upped the whistleblower ante), the more proof you can come up with, the better. The IRS is looking for documentation to prove that someone is evading taxes. Bank account statements, the amount of underpayments, and the legal and factual reasons why taxes are owed.

Step 2

Once you have all of your documents together, you need to fill out IRS form 3949-A and mail it to the Internal Revenue Service in Fresno, CA 93888. A note: you don't need to fill out your information on this form, but if you want a reward, you cannot remain anonymous to the IRS. Also submit IRS Form 211 which is an application for the award itself. Please note that rewards are only given for information that leads to the IRS finding tax evaders who owe over $2 million for businesses and $200,000 for individuals.

Step 3

After submitting your information, you have a decision to make. Do you want to wait several years for a payout, or do you want to try to get some money much sooner? If you wish to get money sooner, then you are in luck because there is a new option out there for you. There are several hedge funds and private investors who are willing to pay you money upfront to recoup what you would make in the end. Granted, you will receive a much lesser payout going this route, but that is because the investor risks not receiving anything at all. Now that you've submitted, you will need to sit back and wait. Your case could take a few years before you see any pay, and many cases are not pursued. Good luck!

Tips & Warnings

The IRS is never obligated to pay a reward, unless you negotiate a signed contract in advance of providing the information

All rewards are considered taxable income

Many people submit information on other people because of personal conflicts, divorces, revenge, etc. Your motivations for doing this can be yours alone; however, make sure that you are submitting true information with verifiable documents.



Nov 10, 2014 7:38pm
Very Helpful Algkent! Now it is clear when to use 3949A. I found a blank fillable Form 3949A on PDFfiller, here's the form I used http://goo.gl/LhJZky. Thanks again for the info!
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