Is there a reward for reporting an individual for tax evasion? If so how much is the reward?

Question

I just rolled over on someone who makes roughly 70K per year, and he has never filed a return. He's made this money over the past 6 years, so I figure he has made more than 400K during this period. That equates to roughly 100K in taxes plus lots of penalties. Normally I wouldn't say anything, but he will get busted sooner or later; I might as well get paid! If there is a reward coming, how much does the IRS pay?

Just wanted to add a few notes:

1. My finances are in order and I am an honest, law-abiding taxpayer.

2. Tax Evasion is a FELONY folks.

So please answer the question only and reserve your moral/immoral judgments for elsewhere.

Thanks!

Answer 1

"The IRS will pay a reward in some cases for information that leads to collection of tax revenue. The reward can be up to 15% of the amount the IRS recovers. The information needs to be pretty specific and information that the IRS does not already have. The IRS gets a lot of calls from ex-spouses, disgruntled employees, etc. with general information like "my ex is cheating on this taxes" or "my boss is not reporting all his income.” That general information is not terribly helpful. If you have specific information, like particular transactions, exact amounts, documents showing the tax fraud, etc., that is much more useful and more likely to get you a reward. The following web pages have more information on rewards for tax information. The IRS policy statement on rewards is at:" http://www.irs.gov/foia/article/0,,id=132336,00.html

Answer 2

This Site Might Help You.

RE:
Is there a reward for reporting an individual for tax evasion? If so how much is the reward?
I just rolled over on someone who makes roughly 70K per year, and he has never filed a return. He's made this money over the past 6 years, so I figure he has made more than 400K during this period. That equates to roughly 100K in taxes plus lots of penalties. Normally I wouldn't say...

Answer 3

Reward For Reporting Tax Fraud

Answer 4

Reporting Tax Fraud Reward

Answer 5

Don't count your chickens before the eggs have hatched.

First off, you have no way of knowing if he filed returns or not. If he did, you'll be MUD with the IRS. And even if he didn't, you have no way of knowing what any tax liability might be.

IF the IRS collects any tax and IF the information you filed was material to either the collection or the amount collected you MAY qualify for a reward. However, since the IRS already knew that he hadn't filed, your revelation of that fact won't be material to any collection actions that they take and you WON'T get any reward for that.

If you have SPECIFIC information about transactons or business dealings that are evading taxes that the IRS does not ALREADY know about, THATS the type of information that the IRS can use that may result in a reward for you. But a general allegation that "He hasn't filed a tax return in 7 years," isn't going to get you a DIME from the IRS.

Rewards for material information that leads to the collection of tax or successful prosecutions for fruad or tax evasion typically get 10% of the amount of the TAX that is actually collected.

Answer 6

First you need to do some homework..
Is this person required to file a tax reutrn? Do he have taxable income? Do you know the definition of income? a) General definition
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.

Does he have any of this income? You say he makes 70k a year but hasnt paid any taxes that means he is self employed. If so he may have deductions that exceeds his income and may actually have a loss. If so he will have no tax due and not be required to file a tax return. Also all income is not taxable!!!! read the supreme court rulings.

Answer 7

The IRS link below discusses rewards for information that is of value in determining tax owed.

NOTE: Someone's failure to file may not mean they OWE taxes. If they would have received a refund if they had filed, the IRS will determine your information is of ZERO value and 'reward' you accordingly.

Answer 8

IRS does offer rewards, but the amount is not fixed or gauranteed. As far as snitching goes, my reasoning would be more like this: I'm paying a lot of taxes already, and there are many more people like this deadbeat who evade the system. If all people paid their fair share then the burden for all would be less.

Currently, the "tax gap" exceeds $300 BILLION. That's a lot of money for the rest of us honest people to make up. (Also see excerpt in Sources box below) With figures like these, I don't understand why people "root for the bad guy" when they hear of tax cheats getting away with it. I don't know about you, but I could think of a lot of things more useful than taxes to do with MY $2200.

Answer 9

A shame isn’t it that the income tax can make criminals and snitches out of ordinary people. Until we adopt the FairTax Act (H.R. 25) we will not be free.
The FairTax replaces all income taxes with a national sales tax and eliminates the IRS and compliance costs.

Answer 10

You sound like a government agent yourself. Maybe the IRS is pulling us some mental tricks.