How to Report Someone to the IRS

This article was co-authored by Darron Kendrick, CPA, MA. Darron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.

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Some American taxpayers find themselves in the uncomfortable position of witnessing another person’s tax evasion and fraud. The Internal Revenue Service welcomes whistleblowers. You can choose to report anonymously, or you can provide your name. The IRS also has a program that allows you to report tax fraud for a financial reward.

Things You Should Know

Visit the IRS website and download the appropriate form for the violation, such as Form 3949-A for businesses or individual fraud.
Complete the form, filling out every field you can, then follow the instructions on the form to submit it, either via mail or online.
To receive a reward for a report, first verify your suspicion as best you can, then complete Form 211 and submit it according to the instructions on the form.

Method 1 of 2:

Reporting Suspected Tax Fraud

If you have documents that show fraud, keep a copy of them. For example, someone might not report income from a bank account. If you have a copy of the bank statement, hold onto it.
Write down your own memories or observations. You are a witness to any fraud. Try to be as detailed as possible.
Collect the names of witnesses. Other people might have first-hand knowledge of the fraud, and you can give the IRS their names and contact information.
Avoid breaking the law. [1] X Research source For example, you shouldn’t open someone’s mail, log onto their computer, or steal files. If you don’t have documents in your possession, you can tell the IRS where they can find them.

Form 3949-A. Use this form to report a business or individual of violating the tax laws. Common examples include failure to pay, kickbacks, false deductions or exemptions, not reporting income, and altering or falsifying tax documents.
Form 14157. Use this form to report an abusive tax scheme or fraud perpetrated by a tax return preparer or tax preparation company. Also use this form (and Form 14157-A) if you think the preparer altered your form without your consent.
Form 14039. Complete this form if someone stole your identity and used your Social Security Number for a job. Also use this form if you suspect someone could file a tax return using your number.
Form 14242. Use this form to report an abusive tax promoter or promotion.
Form 13909. Submit this form if you suspect wrongdoing by an exempt organization or employee plan.

Read the instructions. You should also download or request the instructions for any form you fill out. Read the instructions thoroughly and refer back to them as you fill out your referral form.

identifying information about the taxpayer you are reporting
contact information for the taxpayer you are reporting
alleged violation of the law
short description of the facts (who, what, where, when, etc.)
information about the banks used by the taxpayer
whether you consider the taxpayer dangerous
information about yourself (optional)

If you don’t give your name, then you can’t testify against the person should they be prosecuted. For that reason, you might want to give your name.

Include copies of all supporting evidence as well.
The IRS does not provide updates on the status of any investigation. [5] X Trustworthy Source Internal Revenue Service U.S. government agency in charge of managing the Federal Tax Code Go to source However, you may be contacted if the IRS needs additional information. Provide it promptly.

Advertisement Method 2 of 2:

Reporting Fraud for a Monetary Reward

If the amount in dispute exceeds $2 million, and a few other conditions are satisfied, then you may get 15-30% of the amount the IRS collects. Furthermore, if the case involves an individual, their income must exceed $200,000.
The IRS also has discretion to give awards in other cases. The maximum amount of the award is 15% of the amount collected, up to $10 million.

Supporting evidence can include contracts, emails, bank records, ledger sheets, receipts, and books or records. [6] X Trustworthy Source Internal Revenue Service U.S. government agency in charge of managing the Federal Tax Code Go to source
You don’t need to have supporting evidence in your possession. However, you should describe them and identify their location with as much detail as possible.

name of the taxpayer you are reporting, including any aliases
last four digits of their Social Security Number or Employer Identification Number
taxpayer’s address
taxpayer’s date of birth or estimated age
information about whether you have already reported the taxpayer to the IRS
alleged violation
short description of when and how you uncovered the violation
your relationship to the taxpayer
amount owed by the taxpayer
your identifying information
your signature under penalty of perjury

Mail to: Internal Revenue Service, Whistleblower Office—ICE, 1973 N. Rulon White Blvd., M/S 4110, Ogden, UT 84404.

A claim with merit gets forwarded to an investigator. Generally, it can take five to seven years to complete an investigation.
Because it can take so long to decide, you should make sure the IRS has your current contact information. If you move, send your new contact information as soon as possible to Internal Revenue Service, Initial Claims Evaluation Team, 1973 N. Rulon White Blvd., M/S 4110, Ogden, UT 84404.

Because so much money is at stake, you should hire a tax lawyer to help you make the strongest case that you can. You can find a qualified tax lawyer by contacting your local or state bar association.

Expert Q&A

Can I report someone who is claiming 11 dependents to avoid taxes being withheld? Darron Kendrick, CPA, MA
Financial Advisor

Darron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.

Financial Advisor Expert Answer If they don't have 11 dependents you certainly could. See the reporting instructions in the article.

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If someone is selling cars and taking cash, but is not a car dealer and doesn't register the vehicles before the sales, is that fraud?

Darron Kendrick, CPA, MA
Financial Advisor

Financial Advisor Expert Answer

Could be. This may involve a violation of state regulations for auto sales. Check with your state's regulators for auto sales. Of course, the IRS would also be interested.

I know my ex is reporting personal expenses as business expenses in a business I was previously involved with. Should I report this?

Darron Kendrick, CPA, MA
Financial Advisor

Financial Advisor Expert Answer

That would be fun, but you would to have proof. Plus, if the amounts are not material it may lead to nothing.

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You shouldn’t report suspected fraud to the IRS if you in any way participated in the fraud. The IRS will investigate and probably prosecute you as well. [9] X Research source

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