How To Report Tax Evasion


Federal tax evasion is a crime that affects every American in some way. When people and businesses do not pay their fair share of taxes, that means that the money has to be made up by taxing everyone else even more. Reporting tax evasion or suspicious tax activity can help put a stop to these abuses and keep the average tax rate down. There are four reasons for reporting tax evasion, and each method has its own way for reporting.

Reporting Entities That Purposely Avoid Tax Laws

Tax evasion is when people or companies attempt to collect an income without paying their fair share of income taxes. But it is important to know that the IRS does not pursue every tax evasion claim. Since the IRS is limited in its manpower, it generally only pursues corporations that are evading $2 million or more in taxes each year or individuals who make $200,000.00 per year or more.

To report people or companies evading taxes that fit that criteria, you need to go to the IRS website and download form 3989-A. You need to fill that form out completely, and mail it to the IRS at the address indicated on the form. You can remain anonymous when submitting this form, but there might be a cash reward you could collect if your submission leads to punishing a tax evader.

Tax Schemes

People who know the federal tax laws can sometimes set up effective schemes that hide income from the IRS to avoid paying taxes. This is also a form of tax evasion, and it can also cost the general public a lot of money. Some of the more popular tax schemes are off-shore bank accounts, home-based businesses that appear to do no business and law firms that specialize in evading tax laws. To report this type of tax evasion, you would need to download IRS form 13909 from the IRS website, fill it out and return it to the IRS at the address indicated on the form.

Abuse of Your Social Security Number

If you suspect that an identity thief, or even someone you know, might be filing a false tax return in your name then this is also evasion. Since your identity is involved, you should waste no time in downloading IRS form 14039 and immediately mailing back to the IRS at the address indicated on the form. Incidents of potential identity theft should also be reported to the police so there is a police report you can use to file formal charges.

Reporting A Tax Preparer

People trust tax preparers to not misuse their personal information and file correct tax forms. But when a tax preparer violates that trust and uses people’s information to alter tax information, then that is evasion. You can report a tax preparer by printing out and mailing in IRS forms 14157 and 1457-A.

Tax evasion is a serious crime and it can be committed in many different ways. As an American taxpayer, it is your duty to report tax evasion when you see it and make sure that everyone pays their fair share.