“Will I get caught?” is one of the most common questions asked by potential tax cheats. The temptation to cheat the IRS is overwhelming for thousands of Americans. While no one knows whether and when they will be caught, the IRS has become much better at finding those who evade taxes. One of the best weapons in the government’s arsenal is the IRS Whistleblower Program.
Depending on the type of tax problem, your chances of getting caught vary widely. For example, in recent years, the IRS has installed sophisticated audit selection and refund fraud software. Getting an audit notice may be nothing more than an IRS computer saying your return varies from their preprogrammed norms. If your return is legit, a couple letters can often resolve the audit.
Although the number of auditors has been steadily decreasing over the last decade, the IRS relies more and more an electronic surveillance tools. Treaties with foreign countries and a global of all foreign banks to report accounts in which a U.S. taxpayer has a beneficial ownership have also been a big factor.
Sometimes, people get caught because a disgruntled employee, neighbor, jilted spouse or [fill in the blank] calls the IRS toll free tip line. the IRS whistleblower program allows people to make anonymous complaints and receive a cash reward program. The rewards are a percentage of whatever the government collects from the wrongdoer. Million dollar rewards are common. “Throwing someone under the bus” is not a new concept, except now the government pays for the information.
Many times, people are caught because the IRS is simply on the lookout for particular behaviors. Unreported offshore accounts, welfare benefit plans and employee leasing “subcontractor” schemes are examples of areas that currently generate much IRS interest and investigation.
In a few high profile cases court documents and testimony revealed that tax agencies actually paid foreign bank employees to steal information regarding the identities of their account holders. While he IRS hasn’t done this directly, they have accepted stolen information obtained by other countries’ tax agencies. In other words, the U.S. is reluctant to pay bribes but looks the other way and accepts the information if a foreign government “purchases” it from a thief.
Taking your chances with the IRS is often called the “audit roulette.”Like the popular term Russian roulette, the stakes are quite high. If you avoid detection, you save money. If you lose, at best you have to pay all the tax you failed to pay, plus interest, plus penalties. Getting caught also means you are more likely to get audited again in the future.
I said that back taxes, interest and penalties were what happened to people who were lucky. If you are unlucky, you could find yourself in a federal prison.Statistically, the odds of just being audited are much, much greater than facing prison. Don’t cite those statistics, however, to those who were selected for a criminal investigation and later indicted.
How Do I Claim a Reward from the IRS Whistleblower Program?
No one likes paying taxes. Most people, however, dislike tax cheats even more. The common logic is, “If I have to pay my taxes then you should pay yours.”
The IRS whistleblower program allows anyone with inside information (non-public information) about a person or business that is willfully failing to report their taxes or willfully failing to pay their taxes to report what they know. We say “willfully” because some people fall on hard times and simply can’t pay. In failure to pay cases, rewards are reserved for cases involving intentional nonpayment.
In most cases, you can report the misconduct and remain anonymous. The IRS will know who you are but typically keeps that information confidential. The exception is in those rare instances where the taxpayer demands a trial and your testimony is necessary. As noted above, those situations are rare.
Recently enacted provisions in the 2019 Taxpayer First Act now offer protections against retaliation!
The program requires that the taxes, penalties, interest and other amounts in dispute exceed $2 million. If the taxpayer is a person and not a business or entity, his or her annual income must exceed $200,000. Assuming these thresholds are met, the IRS will pay 15 percent to 30 percent of the amount collected. (The IRS can pay discretionary rewards if the $2 million / $200,000 income threshold isn’t met.)
The downside of the program is that the IRS only selects a small percentage of the whistleblower tips it receives. In 2019, the IRS paid 181 whistleblowers a total of $120,305,278. What the IRS doesn’t say is that they received 11,394 formal tips. That is just 1.5%.
Anyone can fill out a form and submit a tip. As the IRS’ own statistics show, however, the odds of collecting a reward are remote. That is why a good IRS whistleblower lawyer is essential.
The whistleblower lawyers at Mahany Law know how to investigate and prosecute tax claims. That is critical in submitting a whistleblower tip that is likely to acted upon by the IRS.
What makes us different from other whistleblower firms? Attorney Brian Mahany is a former government tax prosecutor. We also have a recently retired IRS special agent to assist in our claims. We know what prosecutors and agents want to see and know how to both investigate and present your information in the most favorable light.
All inquiries are protected by the attorney – client privilege and kept confidential. We accept IRS whistleblower cases worldwide. There is never a fee unless we collect a reward on your behalf.