Tax Lawyer's Blog

Ryan J. Donmoyer of Bloomberg BusinessWeek reports in Americans Seeking Reward Money Inform IRS on Others that:

Americans seeking reward money are turning in neighbors, clients and employers they suspect of cheating on taxes to the IRS at a rate of nearly eight per day, the director of the agency’s whistleblower program said.

Steve Whitlock, the director, told an audience of about 200 lawyers, investigators and government officials at a Miami Beach conference on offshore banking that his office receives 40 to 50 tips per month alleging tax liability in excess of $2 million. Americans submit another 200 per month alleging smaller violations, he said.

Whitlock said submissions have surged since the enactment in 2006 of a law that requires the IRS to pay awards of between 15% and 30% in cases where more than $2 million is collected. Prior to the law, both the decision on whether to make an award and the amount of payment were discretionary.

“Right after we got the new law” containing the minimum award, “the fax machine was running the next day,” Whitlock told the Offshore Alert Financial Due Diligence Conference.

The rate of submissions is on pace to eclipse the 476 applications filed in 2008, a number that was four times the previous year.

The enhanced whistleblower program is just one of many methods the IRS is now employing to pursue tax cheats and close the tax gap. If you haven’t filed tax returns, are hiding income in an offshore account or have failed to report all of your income on your tax returns, you should strongly consider coming forward voluntarily before the IRS finds you.

Delinquent taxpayers who come forward voluntarily have a much better chance of avoiding criminal prosecution and obtaining favorable repayment and settlement deals than do those who the IRS has had to hunt down.

Of course, you should consult with a tax attorney before you take any action.

Related Posts:

• TIGTA Report: IRS Should Accelerate Criminal Tax Investigations
• IRS to Step Up Enforcement to Close Tax Gap
• UBS Whistleblower is Tax Man of the Year
• IRS Whistleblower Set Me Up Says Girls Gone Wild Founder Joe Francis
• IRS Whistleblower Program Going Gangbusters
• IRS Whistleblower Program: The Finks’ Brinks

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