Are you a tax rat?
The IRS welcomes calls about suspected tax fraud -- so long as your information is legit.
April 1, 2005: 3:54 PM EST
By Jeanne Sahadi, CNN/Money senior staff writer
NEW YORK (CNN/Money) ? If you're like most Americans, you believe everyone should pay their fair share of taxes. So you may get a little miffed by people whom you suspect don't.
You may, in fact, be tempted to rat them out.
Last year, nearly 294,000 people called the IRS hotline for reporting tax fraud (1-800-829-0433) with tips on folks they thought were skirting their tax-paying obligations. But many complainants also have personal reasons for trying to snag someone.
"We encourage people to use that phone line if they know of or suspect fraud," said IRS spokesperson Eric Smith. But, he also noted, "we don't get a real high percentage of good leads from those calls."
The reason: callers often have incomplete information or are transparent in their quest for revenge.
How do you know if you fall into the latter category? "Ask yourself, 'If I didn't have any emotional involvement, would I consider this to be important?'" Smith said.
If you do offer IRS investigators serious leads, it may be willing to pay you for the favor. IRS Publication 733 offers details on the conditions under which the agency pays rewards and how to claim them. And for more information on rewards paid, click here.
The amount of the rewards offered range from 1 percent of the amount the IRS recovers in a case up to -- but not exceeding -- $10 million. :eek:
Most tax issues are not handled in a criminal manner, Smith said. Of the criminal cases undertaken by the IRS, most involve hundreds of thousands to millions of dollars. "It's not going to happen with very small amounts," he said.
Good to know if you're choosing between snitching on the guy who pockets restaurant receipts to write off as business expenses and the guy you're pretty sure is involved in money laundering schemes.
http://money.cnn.com/2005/04/01/pf/taxes/inform/