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Tax evasion is a risky crime, a felony, punishable by five years imprisonment and a $250,000 fine. *Incarceration may include prison time, home confinement, electronic monitoring or a combination.
Additionally, you have to consider the state you live in. For example, if you live in California, they have a legal right to collect state taxes up to 20 years after the date of the assessment!
You can report anonymously, however, it helps us if you identify yourself. Privacy and disclosure laws prohibit us from sharing information regardless of whether we take action.
Use the Form 3949-A, Information Referral if you suspect an individual or a business is not complying with the tax laws. You can submit Form 3949-A online or by mail. We don't take tax law violation referrals over the phone. We will keep your identity confidential when you file a tax fraud report.
Section 7201 creates two offenses: (a) the willful attempt to evade or defeat the assessment of a tax, and (b) the willful attempt to evade or defeat the payment of a tax.
An award worth between 15 and 30 percent of the total proceeds that IRS collects could be paid, if the IRS moves ahead based on the information provided. Under the law, these awards will be paid when the amount identified by the whistleblower (including taxes, penalties and interest) is more than $2 million.
You will probably never face criminal fraud penalties. At least 98% of the time, the IRS punishes fraud with civil penalties?fines of 75% added to the tax due. For example, if the additional tax due from fraud is $10,000, the penalty is $7,500, for a total of $17,500.
Various investigative techniques are used to obtain evidence, including interviews of third party witnesses, conducting surveillance, executing search warrants, subpoenaing bank records, and reviewing financial data.