Tax compliance is the bedrock of the United States’ fiscal well-being, allowing public services and infrastructure to be funded adequately. Anytime individuals or entities circumvent their tax dues, the system is undermined. The Internal Revenue Service (IRS) relies on whistleblowers to report such cases of tax fraud, with official avenues to do so. If anonymity is a possibility, though, is convoluted.
Reporting tax fraud: anonymity vs. confidentiality
The IRS does have mechanisms in place for reporting tax fraud by individuals, but it’s important to differentiate between anonymity and confidentiality:
- Anonymity: Reporting information without identifying oneself.
- Confidentiality: Reporting one’s identity with the promise that it will be kept confidential.
According to Kohn, Kohn & Colapinto LLP, a law firm specializing in whistleblower cases, the IRS does not accept anonymous whistleblower claims directly, as the agency needs to be able to contact the whistleblower during the review and examination process.
However, the IRS does assure that it will keep the whistleblower’s identity confidential when he or she reports tax fraud.
Reporting without requesting a monetary award
If you have information about tax noncompliance and are not interested in a monetary reward, the IRS provides a way where you can stay anonymous:
- Form 3949-A: This is an “Information Referral” form for reporting possible violations of tax law by individuals or businesses. You can submit this form without revealing your identity, hence staying anonymous.
Reporting with a monetary reward: The whistleblower program
For individuals who seek a monetary reward, the IRS Whistleblower Office operates a program that pays monetary rewards to persons who provide specific and credible information about significant tax noncompliance:
- Form 211: In order to participate in the whistleblower award program, you must complete and file Form 211, “Application for Award for Original Information.” The form requests your personal information because the IRS must contact you during the investigation process. Although your identity is kept confidential, it is not anonymous.
- Award information: If the information leads to the collection of taxes, penalties, interest, or other funds, the whistleblower may receive an award of 15% to 30% of the collected proceeds, depending on the value of the information and the extent of the whistleblower’s cooperation.
Reporting misconduct by tax professionals or IRS employees
If your issue is misconduct, waste, fraud, or abuse by an IRS employee or a tax professional, you may confidentially report such concerns:
- Treasury inspector general for tax administration (TIGTA): You can report such misconduct by phoning TIGTA at 800-366-4484. You can remain anonymous when reporting.
Steps to report tax fraud anonymously
If you wish to report tax fraud without receiving a monetary reward and also wish to remain anonymous, then do the following:
Obtain Form 3949-A: You can obtain this form from the IRS website.
- Complete the form: Provide full details of the individual or business that you suspect has committed tax fraud. Provide information such as names, addresses, taxpayer identification numbers, description of the suspected violation, and any financial information relevant to the suspected violation.
- Omit personal information: To remain anonymous, do not include your name or any contact details on the form.
Submit the form: Mail the completed form to:
- Internal Revenue Service
Fresno, CA 93888
Considerations and legal protections
While the IRS takes all precautions to maintain the confidentiality of whistleblowers’ identities, there are some circumstances that could potentially reveal your identity, especially if you are one of the limited individuals with access to the specific information that has been reported. You need to know that while anonymity may be maintained in certain reporting channels, it will limit the IRS’s ability to follow up with you for additional information.
The law protects whistleblowers against retaliation. However, the protection is more robust if the identity of the whistleblower is disclosed to the authorities since it facilitates the enforcement of anti-retaliation legislation.
