Tax Fraud - IRS and Whistleblower Awards
Anyone working in the United States is legally required to fill out a tax return every year in order to ascertain how much they owe in tax to the government. Although, the majority of Americans do take the time to file their tax returns in the proper manner there are a growing number of unscrupulous individuals or corporations who try to cheat the government out of their tax obligation by knowingly committing a tax fraud.
Tax Law Violations
If you violate the tax laws by intentionally fudging your numbers or misrepresenting your income so as not to have to pay tax, then you are more than likely to be charged with tax fraud.
Ways in which individuals can breach tax laws include:
- Entering false deductions
- Transferring assets or concealing funds
- Knowingly changing income
- Exaggerating the amount of deductions
- Running two sets of books
- Entering personal expenditure as business expenditure
- Using false amounts in records and books
Ways in which corporations can commit tax fraud
Although you may rightly assume that the only way to commit tax fraud is to make false declarations or not pay it at all, there are numerous other ways in which companies can commit such fraud. Here are some of them:
- Knowingly failing to file a return or other document
- Knowingly participating in a scheme to cheat the state in regard to any tax matter
- Intentionally failing to collect a Sales, Excise or Witholding tax that is needed to be collected
- Intentionally failing to remit taxes collected on the State's behalf
- Knowingly filing a false return or report of supplying false information
- Knowingly failing to pay any taxes due with an intent to evade tax
- Submitting False Exemption Certificates
Reporting a Tax Fraud
The Internal Revenue Service (IRS) has a system in place whereby a whistleblower who reports on individuals or companies that are not paying their taxes may be eligible for a monetary award. If they are able to use the information and a case is successfully awarded, then the person who blew the whistle can be entitled to up to 30% of the recovered tax figure, penalties and any other amounts collected.
What are the rules for receiving an award?
According to the law there are two kinds of awards:
Where the amount of tax fraud exceeds $2 million in the case of companies or where an individual earns in excess of $200,000
- If the taxes, penalties, interest and other amounts exceed two million dollars and a few other criteria are met, then the IRS will pay 15-30% of the total figure
- If the case is dealing with an individual then their gross income should exceed $200,000
If the whistleblower is not in agreement with the findings of the claim, then they are able to go to the Tax Court with an appeal.
Where the amount of the tax fraud falls below $2 million (companies) and $200,000 (individuals)
The IRS also has another award for whistleblowers whose claim falls below the threshold of $2 million in the case of companies and $200,000 in the case of individual cases. The awards are considerably lower in these cases and a whistleblower could expect to receive a maximum payout of 15% up to $10 million. However, the awards are entirely discretionary and there is no recourse to the Tax Court if the whistleblower disputes the outcome of the claim.
Seek professional advice
If you feel that you have substantial evidence of a person or persons committing tax fraud against the Government and you are willing to put yourself forward as an IRS whistleblower, then it makes sense in the first instance to contact a team of experienced qui tam attorneys who can ascertain as to whether there is enough evidence to support a claim and will also explain your rights.
