With the tax filing deadline just around the corner, you must already be trying to find ways to reduce your tax liability. But what you may not be aware of is that you can actually earn a reward by reporting a case of tax evasion to the IRS.
The Whistleblower Informant Award program of the IRS has been around for a long time but very few people have taken advantage of it. Under the program, you stand to earn a reward of as much as 15 percent of the amount that the tax cheat owes, as long as it does not exceed $10 million. Another program, which is targeted towards bigger tax cheats, awards 15 percent to 30 percent of the total amount that the IRS can recover. However, this is only applicable to cases where the amount owed exceeds $2 million.
The procedure for reporting tax cheats is not very straightforward, The IRS asks you to fill up Form 211, which requires a lot of details like the tax evader’s address and social security number. This helps keep out frivolous and inaccurate claims. Although your name won’t be made public, you still need to reveal your identity to the IRS, which you will anyway have to do if you want to collect your reward.
The program has had mixed success so far. Disgruntled employees, who are not happy with how their company is treating them, or those who are not comfortable with their employer cheating the government, often end up tipping the IRS about tax evasion at their company. Similarly, people often inform about instances of tax evasion by their ex spouse or boss.
What is holding the program back is the fear that informants have of their employers. Despite the confidentiality of the arrangement, it sometimes becomes obvious as to who the informant was. Although whistle blowers can not be fired for their act, people are usually concerned about the damage that it would do to their professional relationships at the company. Another risk is that the person could find it hard to get hired by another company.
If you know of any individual or company evading taxes, this could be your chance to earn money and help the government. But before you report anyone, be absolutely sure that your information is correct. You can also take the advice of an attorney to make sure that there would be no negative impact on your professional and personal life.