The Internal Revenue Service encourages individuals who possess information about a company’s or an individual’s fraudulent tax reporting practices to report the information to the agency. It even offers rewards to people who report IRS fraud under either the IRS whistleblower law or its Informant Claims Program.
IRS Whistleblowing Basics
Tax fraud can take on many forms, but in essence it is defined as any noncompliance with United States tax laws. Tax fraud could occur in situations ranging from an individual taxpayer simply not filing their taxes to a large multinational company filing intentionally false information.
Under its whistleblower law and its informant program, the Internal Revenue Service may pay awards to people who provide credible information to the IRS. In order for someone who blows the whistle to receive an award, the information must be specific enough to allow the IRS to collect amounts owed plus interest and penalties.
Depending on how much is owed and the income of any individuals involved, the whistleblower can receive from 15 percent up to a possible 30 percent of amounts collected. In some circumstances, the whistleblower can even go to court to appeal an award if he or she disagrees with the amount. A Maryland tax attorney can advise individuals on what recourse, if any, they might have to appeal an IRS award decision.
Whistleblower-Worthy Activities and Information
Examples of the types of evidence a whistleblower might provide to the IRS include:
- Proof that a company delayed the reporting of losses or earnings so they could be shifted to a more beneficial tax year
- Information that false deductions were made
- Evidence of the failure to report revenue or of exaggerating losses
- Proof of the altering of subsidiary information in order to falsify profits or hide losses
- Information exposing the concealing of earnings from foreign markets
- Exposure of the failure to file United States federal tax returns
In order to be eligible for an award, the information must meet the following criteria:
- The fraud must not have been previously reported to the IRS.
- The IRS actually must use the information to prosecute or settle the tax fraud.
- The person must make the report within the time periods specified in the statute.
Whistleblower Protection
The IRS insists it will do everything in its power to keep its whistleblowers’ identities secret. However, there are instances – such as in cases where there will be a criminal prosecution – where whistleblower identity cannot be kept concealed. The IRS recommends that whistleblowers consult with an attorney to ensure that they completely understand the circumstances under which they might lose anonymity.
Declarations to the IRS are given under penalty of perjury. If you paid a part in the fraud you are reporting, you need to take great care to make sure you make your report in a manner that protects you.
Get Help From a Maryland Tax Attorney
Whether you are potentially culpable in the fraud you are reporting or not, it is advisable to consult with an experienced Maryland tax attorney prior to providing the IRS with information under the whistleblower statute.
Contact the US International Tax Advisors at 844-796-8565 or online today for a confidential consultation.
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