While most people don’t like to pay taxes, what’s even worse is when you know someone who should be paying taxes, but they are cheating on them to not pay their fair share. According to the IRS, taxpayers underpay their taxes by some $300 billion. If you have enough information on how they are cheating and can document the cheating, it could be worth a lot of money depending on the amount of money the person you know is under-reporting. The IRS may be willing to pay you up to $10 million for the information you provide. The bigger the cheating you report, the more you’re likely to receive.
The most important thing to claim your reward is quality documentation. Without solid documentation of the cheating that’s going on, it’s unlikely that the IRS will investigate the charges. If you contact the IRS and merely say that you know your neighbor is cheating on their taxes, but are unable to provide any proof of how exactly your neighbor is cheating, the IRS will likely not investigate. As might be expected, the IRS receives numerous reports of cheating from people trying to get back at one another or from people that think someone might be cheating, but really don’t have any idea if they are or not. Unless you are able to produce some type of documentation along with your accusation, the IRS likely will place its limited resources toward other accusations where they do have solid documentation.
If you feel you have information and documentation to back up your report, the IRS would be extremely interested in hearing from you. You can contact the IRS toll free at 1-800-829-0433 if you suspect tax fraud. When contacting them, you’ll be expected to provided the following information:
The rewards for reporting the tax cheat can be hefty. If the IRS does investigate and recover money from your information, you may be entitled to anywhere from 1% and 15% of the money they recover – up to $10 million. The IRS has a minimum payout of $100 which means any tax cheating reported has to be in the thousands of dollars for any chance of you receiving a reward. For more information on the rewards, you can visit irs.gov and look at publication 733 – Rewards for Information Provided by Individuals to the Internal Revenue Service.