Tips on tax cheats skyrocket with bigger rewards

The IRS has implemented a law that allows tipsters to report companies and individuals who they believe are cheating their taxes. The law allows the qualified whistleblower to receive between 15 to 30 percent of the amount the IRS collects. The IRS believes that having a cash incentive will cause more people to report tax evaders. The IRS has enacted a similar law in late 2006.

When the law first started in 2006, the law targeted any company that owed at least $2 million in unpaid taxes, interest, and penalties. The law also targeted any individual with an income of at least $200,000. Today, these are the same qualifications for the whistleblowers to receive their reward.

In 2008, the agency reported receiving 1,246 tips on suspected tax dodgers, each owing more than $2 million. That's up from 116 big-money tips in 2007. A recent report has shown that among the tips received in 2008 included 228 accuse suspected tax dodgers of owing more than $10 million and 64 accuse suspected tax dodgers of owing more than $100 million.

The law states that the informants are promised confidentiality, unless they are required to testify in court. Keep in mind that whistleblowers themselves are not immune from prosecution if they take part in tax scams.
Officials however still do not know how well the tips will pan out. Once a tip is given, there is still a long process of audits and appeals. Many lawmakers have shown support of the law but criticize the pace of the program. The IRS claims that rewards will only be paid once all the taxes, penalties, and interest are collected. Whistleblowers may have to wait a long time for any rewards, possibility several years. Today, no one has been paid under this new law.

However, if you decide to submit information and seek an award you can do so by filling out the IRS Form 211.