Tax fraud undermines the integrity of our tax system and deprives the government of revenue essential for public services. If you suspect an individual or business of engaging in tax fraud, it is your civic duty to report it to the Internal Revenue Service (IRS). This guide will provide a comprehensive overview of the process for reporting suspected tax fraud, including instructions on completing and submitting Form 3949-A, Information Referral.
What is Tax Fraud?
Tax fraud encompasses a wide range of illegal activities that aim to evade or reduce tax liability. Common types of tax fraud include:
- False Exemptions or Deductions: Claiming ineligible dependents or expenses to reduce taxable income.
- Kickbacks: Receiving illegal payments in exchange for influencing business decisions or tax-related actions.
- False or Altered Documents: Submitting forged or doctored documents to support fraudulent claims.
- Failure to Pay Tax: Willfully neglecting to pay taxes owed to the IRS.
- Unreported Income: Concealing income from the IRS to avoid paying taxes.
- Organized Crime: Engaging in illegal activities, such as drug trafficking or money laundering, that generate unreported income.
- Failure to Withhold: Employers failing to withhold taxes from employee wages.
- Failure to Follow Tax Laws: Knowingly violating tax laws and regulations.
How to Report Suspected Tax Fraud
The IRS provides multiple avenues for reporting suspected tax fraud. The most comprehensive method is to file Form 3949-A, Information Referral.
Form 3949-A
Form 3949-A is an online or printable form used to report alleged violations of income tax laws. It can be submitted anonymously or with your contact information. The form includes sections for providing details about the suspected individual or business, the alleged violations, and any supporting evidence or documentation.
Online Submission:
- Visit the IRS website at https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity.
- Click on the “Report Suspected Tax Law Violations” link.
- Complete the online Form 3949-A and submit it securely.
Mail Submission:
- Download Form 3949-A from the IRS website at https://www.irs.gov/pub/irs-pdf/f3949a.pdf.
- Complete the form and mail it to:
Internal Revenue Service
PO Box 3801
Ogden, UT 84409
What Information to Include in Form 3949-A
When completing Form 3949-A, provide as much specific and accurate information as possible. This includes:
- Personal Information: Your name, address, phone number, and email address (optional).
- Suspect Information: Name, address, Social Security number or Employer Identification Number (EIN) of the suspected individual or business.
- Alleged Violations: Check all applicable boxes that describe the suspected violations, such as false deductions, unreported income, or failure to withhold tax.
- Unreported Income: Specify the tax years and amounts of any unreported income.
- Supporting Evidence: Attach any relevant documents or evidence to support your allegations, such as bank statements, invoices, or correspondence.
Confidentiality and Anonymity
The IRS maintains the confidentiality of tax fraud reports. Your identity will not be disclosed to the suspected individual or business without your consent. You can choose to remain anonymous when filing Form 3949-A by leaving the personal information section blank.
Rewards for Reporting Tax Fraud
In certain cases, you may be eligible for a reward for providing information that leads to the detection and prosecution of tax fraud. To claim a reward, submit Form 211, Application for Award for Original Information, along with your Form 3949-A.
Other Methods of Reporting Tax Fraud
In addition to Form 3949-A, you can report suspected tax fraud through the following channels:
- IRS Whistleblower Office: Contact the IRS Whistleblower Office at 1-800-877-3712 or visit their website at https://www.irs.gov/whistleblower.
- Taxpayer Advocate Service: Contact the Taxpayer Advocate Service at 1-877-777-4778 or visit their website at https://www.irs.gov/taxpayer-advocate.
- Local IRS Office: Visit your local IRS office and request to speak with a Special Agent.
Reporting suspected tax fraud is a crucial step in upholding the integrity of our tax system. By providing detailed and accurate information through Form 3949-A or other reporting channels, you can assist the IRS in investigating and prosecuting tax fraud. Remember to maintain confidentiality and provide supporting evidence to strengthen your report. Together, we can combat tax fraud and ensure that everyone pays their fair share of taxes.
What the IRS is actually looking for that could trigger a tax audit
FAQ
What happens when you report someone to IRS?
How do I get the IRS to investigate someone?
How long does it take for the IRS to investigate someone?
Does the IRS have an anonymous tip line?
How do I get an IRS audit?
There are two ways to be audited – by mail, or in person. This article deals with an in-person audit. The examination may take place in your home, your place of business, an IRS office, or the office of your attorney, accountant, or enrolled agent (a person enrolled to practice before the IRS).
How do IRS audits work?
The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). Remember, you will be contacted initially by mail.
How is a tax audit conducted?
The audit may be conducted entirely by mail or through a face-to-face interview at a local IRS office, your home, your tax preparer’s office or your business. Wherever the audit occurs, you may be asked to supply certain records that the IRS examiner will need to complete their review.
What happens if you’re selected for an IRS audit?
If you’re selected for an IRS audit, you’ll get a letter announcing your fate. The simplest IRS audit, called a correspondence audit, requires only that you mail in the records needed to verify a specified claim on your return. Over the past several years, the IRS has been doing more of these types of audits.