Nearly everyone is expected to pay taxes, but there are people who cheat and pay less than what they owe. It's illegal, no matter how you feel about paying taxes and what the government does with your money. The government believes that tax cheats hurt everyone and encourages you to report tax evasion. Read on to learn more.
- Skill level:
Collect information. Get as many details as you can about the company or person you suspect of tax evasion, including names, addresses and tax number. Be prepared to explain why you believe there is fraud involved, how many years it's been happening, and how much money the suspected person or company may have failed to report.
File a form. The Internal Revenue Service, many states and some local taxing authorities have a website to report tax evasion. They will ask for as much information as you can provide about the situation.
Send a letter. Write down the information and put it in a letter to the IRS or other tax agency. You can also obtain a copy of the form they use, fill it out and mail (or fax) it to them.
Call in a tip. Check the phone listings for your local IRS or state taxation department, and call to report tax evasion. Many agencies even have a special hotline for your tip. Again, have as much information about the person or company and details of the suspected tax evasion as possible when you call.
Decide if you want to be anonymous. Most agencies encourage you to identify yourself when you report tax evasion, but they don't require it. The IRS offers to protect your identity. It may give you a reward for your tip. Not all taxing authorities offer rewards.
Be prepared to hear nothing more. Although they may acknowledge your report, most agencies have no requirement to give you updates on their investigation. Some places use confidentiality laws to avoid releasing any kind of progress reports.
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