The collection of federal taxes, responsibility of Internal Revenue Service (IRS), is chiefly dependent on voluntary reporting in the US. This implies that individuals and businesses file tax documentation according to their tax liability on their own. In most cases, this voluntary reporting is sufficient to collect the taxes.

However, there are individuals and businesses that try to evade taxes or utilize fraudulent means to lower their tax liability. To detect these entities the IRS has come up with the whistleblower program. It is the cases involving huge sums of money that the IRS takes more interest in investigating.

If you have enough proof that there is tax evasion or fraud, you need to take action immediately. You can directly report it to the IRS or first get in touch with an attorney. How could an attorney be of help in this regard? Well, you need to understand the basics of how the procedure works beforehand.

Only when a whistleblower fulfills certain criteria, does the IRS initiate investigation about the reported matter. What are these factors? Your attorney can explain the exact ones pertaining to your case. However, the two common factors are as follows:

1. The case involves a large amount of money
2. There is ample proof that tax evasion/fraud occurred

If the IRS thinks that in the report - there is no significant amount involved, there is not sufficient proof or the actual reason behind the report was vindication - it may not initiate any investigation into the matter.

Apart from doing the right thing, reporting a tax evasion/fraud can get you a reward as well. However, the whistleblower is only eligible for a reward if the collection was of significance. Usually, an IRS whistleblower gets 15-20% of the collections where it was more than $2 million.

Between informing the IRS and getting your reward, there is a lengthy period of waiting. After receiving your information and evidence, IRS launches an investigation of its own. The audit and accounting helps identify the exact details. Next, the IRS may decide to collect funds or make a resubmission compulsory depending on the circumstances.

After the completion of the investigation and collection, the IRS determines what percentage of the collections should go to the whistleblower. This notification comes to you directly. However, if you think that the reward is not commensurate, you have the right to file an appeal within 30 days.

James Blatt, a legal consultant, offers helpful tips for handling tax related legal issues. If you are thinking of reporting a tax evasion/fraud incident, she suggests you to get a clear idea regarding IRS Whistleblower Program from http://www.irsfraud.net.

No comments posted. Comments are closed.