How Do I Report Suspected Tax Fraud?

How do you report suspected tax fraud activity? As with most things, the IRS has a form for it.

In this case, if you become aware of either an individual, a tax preparer or a company that is not reporting their fair share, you can download and send in to the IRS Form 3949-A, Information Referral.

The heading of this form asks you to fill in the taxpayer’s or the business’s name and address. This is not your information – it is the information on the person or company on whom you are making the referral.

Part 4 of the form also asks that you use a series of checkboxes to indicate the alleged violation of the income tax law. Some of the boxes you can choose from include:

False Exemptions: This means a taxpayer has illegally claimed an individual as a dependent or an exemption that they are not entitled to. Unsubstantiated Income: At times, an individual may increase their income in order to then make a claim for bloated business expenses or fraudulent federal tax withholding. Unreported Income: Many individuals purposely omit income sources. Self-employed earnings, online sales and 1099 income frequently goes unreported. False Deductions: Fabricating deductions and expenses in order to defeat tax is illegal.

Other possible reasons to refer illegal activity include the willful non-payment or non-filing of tax, altering official documents (like changing your W-2), erroneously claiming the Earned Income Tax Credit or any other tax credit, and failing to report wagering and gambling winnings.

The form asks you to briefly describe the alleged violation, asks if documents or proof is available, and also wants to know if you would consider the taxpayer to be dangerous. This is especially important if the IRS considers sending a Revenue Officer for a face-to-face meeting.

You need to describe how you learned of the alleged activity, or how you obtained the information. Although you can send this form anonymously, it is most helpful if the IRS has a point of contact. Your identity will be kept confidential if that is your wish.

Many times, you become aware of potential tax fraud because you are the unfortunate victim in an Identify Theft.

ID theft occurs for tax purposes when someone may use your Social Security Number to file a tax return and claim a refund, or to illegally work under your number in order to avoid the filing and payment of tax.

If you believe the above has occurred, contact the IRS immediately at the number listed on your notice, or at the general toll-free number of 1-800-829-1040. You will be asked to fill out and submit form 14039, Identity Theft Affidavit, so that the IRS can formally open an investigation.

If you have previously been in contact with the IRS regarding your ID theft issue and have not as of yet achieved a resolution, then contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.

More from this Contributor:

Report a tax scam – You may be eligible for a Whistleblower Award

What is the IRS doing about Identity Theft?

Beware of federal tax refund scams

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