You can get paid by the IRS to be a whistleblower and help fight tax fraud
IRS Whistleblower & SEC Whistle Blowers
When Benjamin Franklin made his famous quote that “there are only two certainties in life, death and taxes” he was absolutely right. Unfortunately when it comes to paying taxes some unscrupulous individuals don't agree and that is why tax fraud is on the increase and why we need more IRS whistleblowers.
The difference between amount that Americans owe in taxes and the actual amount that they are paying is known as the tax gap and at the moment it is sitting at somewhere around three hundred billion dollars. That's a pretty large gap by anyone's standards. So how are the government and more importantly the IRS looking to close that gap? They are offering an IRS whistleblower program, which means that if you suspect your company is sidestepping the tax man then by whistleblowing, you may well get a share of the spoils.
According to a mandate made by congress back in 2006, ordinary citizens can help the IRS by speaking out against people they know are illegally evading or not paying sufficient taxes. So if someone that you know such as your employer isn't paying their fair share, then you can report it. However there are certain criteria that you will have to take into account and these are as follows:
- The total tax fraud needs to amount to at least $2 million. This is inclusive or interest, tax penalties and anything else the government wants to add
- If the fraudster is an individual then that person's income should be in excess of $200,000 per annum.
If the claim is successful, then there are strong incentives for lodging a formal complaint in that the IRS will pay somewhere between 15% and 30% of the total amount recovered. This means that you could be looking at a lot of reward money.
The IRS has taken this law from the DOJ's very successful False Claims Act which has been in place since Abraham Lincoln introduced it back in 1863. It relates back to the civil war days when unscrupulous businessmen used to sell sick and lame horses and mules, non-functioning weapons and ammunition and rancid supplies and rations to the Unionist and Confederate soldiers. It was the first program of its kind to reward people for reporting on acts of fraud against the government.
Being a Whistleblower is the Right Thing to Do
Reporting on someone such as your boss or company might sound a little strange, however when it comes to taxpayers against fraud, whistleblowers have recently been perceived in a much better light. This is never truer since the case of Enron, when a handful of employees spoke up about the chaos that was going on inside the company. They were eventually seen as heroes as the full extent of the wrongdoing within the company slowly started to unravel.
Are the IRS Whistle Blowers Laws working?
Sources say that in 2009 the Internal Revenue Service received notification of leads on 1,900 potential tax dodgers that they are now pursuing claims for and this is up from around 650 from the previous fiscal year. Although this doesn't sound like a huge amount it is worth pointing out that many whistleblowing tips came with reports that ran into nine figures or more.
These increased rewards serve to motivate people to keep a look out for tax dodgers, especially when it comes to large scale tax fraud. Also for the people doing the 'dodging' the risk is only going to be greater because not only are they going to have to watch out for the tax man, but they are also going to have to keep a look out for employees, acquaintances and colleagues.
How are Whistleblowers Protected Under IRS Fraud laws?
Under the Whistle Blower Provisions Act, any employer, colleague or acquaintance who is seen to either terminate employment, suspend, demote, harass or threaten in any way will be subject to severe penalties. Also any whistleblower who feels as if they have been treated badly can file a claim for financial damages against the offending person. This can result in large amounts of money depending upon the severity of the incident or incidents.
At the end of the day, non-payment of taxes affects us all as the government levy higher taxes to get back some of the money through non-payment of others. This is why we should view whistleblowers as unsung heroes that are trying to do their bit to level up the playing field a little.