Reporting Someone To The IRS For Tax Evasion In New York

by ECL Writer
Reporting Someone To The IRS

According to a 2018 IRS survey, the majority of Americans concur that it is everyone’s responsibility to pay their fair share of taxes. However, not everybody does. While approximately 84% of federal income tax is paid on time, there is a discrepancy between the amount of tax that Americans owe the Internal Revenue Service in any given year and the amount of tax that is paid to them. This discrepancy is known as the “tax gap,” and it exists. According to an IRS statement dated September 2019, the net tax gap for tax years 2011 through 2013 was anticipated to be $381 billion annually after accounting for late payments and IRS enforcement actions.

In a September 2019 IRS news release, IRS Commissioner Chuck Rettig stated that “those who do not pay their fair share ultimately shift the tax burden to those who correctly meet their tax duties.” However, sincere tax payers can aid the IRS in closing the tax gap. You can inform the IRS if you think someone or some organization is engaging in tax fraud. The IRS can better enforce tax laws if this is done. And in rare circumstances, you might even be qualified for a financial award.
In this article, will outline all you need to know about reporting someone to the IRS for tac evasion in New York.

One resource for anyone to tell the IRS of potential tax fraud is the IRS fraud hotline. Let’s examine potential tax fraud warning indicators as well as some information regarding the IRS fraud hotline’s operation.
reporting someone to the irs for tax evasion in new york
One resource for Americans to tell the IRS of potential tax fraud is the IRS fraud hotline. Let’s examine potential tax fraud warning indicators as well as some information regarding the IRS fraud hotline’s operation.

What is the IRS fraud hotline?

There are several avenues for taxpayers to report suspected fraud to the IRS. If you think certain forms of fraud may have occurred, you can receive the information you need to file a report by calling the toll-free IRS fraud hotline at 1-800-829-0433.
Contrary to what its name may imply, you cannot actually report fraud to the IRS through the hotline. The hotline is actually an automated mechanism that directs you to the appropriate form type to use for reporting a potential infringement.
When you call the hotline, you’ll get a recording that tells you …

  • How you can submit a fraud report (through a form or letter)
  • How to download a reporting form from, the IRS website
  • How to order the form over the phone, using the hotline
  • How to send a letter (if you don’t want to complete the form)

What are other ways to report suspected fraud?

Of course, if you don’t want to call the fraud hotline, you don’t have to. The IRS website provides the forms you need to report different types of fraud.

Here’s a quick guide to some of the forms that apply to each potential tax fraud situation. You can mail or fax these forms to the IRS.

  • To report a business or individual, mail or fax Form 3949-A. Or, if you don’t want to use the form, you can send a letter with details of the alleged violation. You don’t have to identify yourself, although the IRS says it’s helpful if you do and that it will keep your identity confidential.
  • To report a tax preparer whom you suspect of fraud, or an abusive tax scheme by a tax return preparer or tax preparation company, mail Form 14157.
  • If you suspect a tax return preparer didn’t file a return when they said they did or changed your return without your approval and you want the IRS to update your tax account, use Form 14157-A and mail it along with Form 14157.
  • To report someone you suspect is promoting or engaging in an abusive tax-avoidance scheme, mail or fax Form 14242.
  • If you suspect a tax-exempt organization such as a church, charity, or trade association isn’t following tax laws, you can mail, fax, or email Form 13909.

Each form comes with instructions that list the kinds of violations the form covers and information on where to mail or fax the form. Be sure to read the instructions to verify the form applies to your situation.

How do I know if someone is cheating on their taxes?

You probably can’t know for sure that someone is cheating on their federal income taxes. And investigating possible tax fraud is the job of the IRS, not individual taxpayers.

But the IRS does encourage taxpayers to report certain types of situations and activities that it may want to investigate. Here are some examples.

False exemptions or tax deductions
False or altered tax documents
Failure to pay taxes owed
Unreported income
Organized crime
Failure to withhold taxes from employee wages
Abusive tax schemes
Fake or altered tax returns

Do I need evidence to report Someone for tax evasion?

If you suspect someone is a tax cheat, the IRS wants to know about it. Still, you’ll need to have some evidence to back up your report. The IRS wants verifiable details, like whether you personally witnessed someone fudging numbers in an accounting book or if you saw someone actively engaged in something like altering financial documents for tax gain.

Can I remain anonymous When reporting someone for tax evasion?

If you’re worried about repercussions for reporting suspected tax cheating, or just prefer not to have your name attached to any information you submit, that’s generally fine. Some of the tax fraud forms have a section for you to include your personal information so that the IRS can contact you for further information (if needed). But it’s not always necessary to fill out this section, so check the instructions for the form to be sure. On some forms, like the information referral form for tax fraud (Form 3949-A), the IRS says that any personal information you provide won’t be shared with the person or business you’re reporting.
But in some circumstances, there might be exceptions. For instance, the IRS may require your information to process your report and may even need to share some information with your bank if you report a tax professional for suspicious behavior involving your tax refund.

Can I get a reward for reporting a suspected tax evasion?

You might be compensated financially if your tip leads to the IRS recovering unpaid taxes, interest, penalties, or other sums. Depending on the specifics of how much is owing and who is responsible for it, you can be qualified for 15% to 30% of the money that is collected.
However, in order to receive your whistleblower reward, you must give up your anonymity (assuming you initially elected to submit an anonymous report) by giving the IRS your personal information. This is so that the IRS can send you the money, but it has to know who you are in order to do so. On Form 211, the request for an award for original information, you must include all of the material listed above.

Can I report state tax fraud?

Taxes on federal income are handled by the IRS. You should get in touch with the state’s department of revenue or other taxing agency to find out how to disclose the information if you believe someone or a business is committing tax fraud at the state level. The procedures and documents for reporting fraud vary by state.
For instance, Colorado permits citizens to mail in or report online suspected tax fraud. Email or postal delivery is acceptable for South Carolina’s fraud complaint forms. Additionally, New York welcomes reports of tax fraud and evasion by phone, fax, mail, or online submission form.

What You Need To Know

According to a 2018 IRS taxpayer study, 95% of Americans believe that it is everyone’s responsibility to pay taxes, and 85% believe that it is never acceptable to cheat on taxes. The remaining 90% believe that tax cheats should be held accountable. However, the same study revealed that just 50% of participants thought that everyone had a duty to expose people who cheat on their taxes.
Only you can determine what to do if you believe someone or a company is avoiding paying taxes. However, the IRS can assist you if you want to submit your suspicions. “Maintaining the highest possible voluntary compliance rate also helps ensure that taxpayers believe our system is fair,” IRS Commissioner Rettig said in the September 2019 news release. “The IRS will continue to direct our resources to help educate taxpayers about the tax requirements under the law while also focusing on pursuing those who skirt their responsibilities.”

Leave a Comment

This blog is ONLY for informational or educational purposes and DOES NOT substitute professional legal advise. We take no responsibility or credit for what you do with this info.