The IRS pursues a number of programs to track down revenues taxpayers fail to pay. You know about audits, but fewer people seem to be aware of the Whistleblower Office. Yes, the IRS will pay people to report on others who are not paying their fair share.
I’ve always enjoyed parties, but find the things many people say to be absolutely amazing. Around tax time, there always seems to be someone who has had an adult beverage or four that starts talking about how much they’ve taken the IRS for. Talk about acting for trouble! Most realize the threat from the IRS, but don’t seem to understand someone at the party could report them in exchange for a cash reward!
The Whistleblower Office at the IRS is pretty much what the name suggests. It is an office where people can report taxpayers who are not, well, paying their taxes. This can happen over the phone or via the filing of IRS Form 211. Once filed, the IRS reviews the matter and determines whether action is appropriate. If it is, a reward might be in the offering.
Might? Yes. The IRS likes big fish. As a result, it only provides rewards for cases of two million dollars or more involving a business or $200,000 in gross income or more involving an individual. If the case is found to have merit, the IRS will pay between 15 and 30 percent of the proceeds the IRS collects in the case. That is usually a pretty decent chunk of change.
Doesn’t this sound like a system people could take advantage of for other purposes? What if you have a bad breakup? Can your ex report you to the IRS? Well, yes and no. The claim one makes must include detailed facts on the taxes not paid and the claim must be filed under penalty of perjury. This effectively means the person making the claim could go to jail if they are lying.
As a general rule, you should avoid discussing your finances with others regardless of what you are doing. Such information is simply meant to be private!
Thomas Ajava is with
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