How to Report Tax Fraud to the IRS

Willie Nelson, Richard Pryor and Al Capone have one thing in common—a tax evasion conviction. Nelson settled a $16 million bill, Pryor spent 10 days in jail and Capone was fined $80,000 and spent 11 years in jail, according to channel3000. These are not typical cases, but even the average person who commits tax fraud does damage by keeping funds the governments needs to provide valuable services. An estimated $100 billion is lost annually to tax evasion in the United States, according to Reuters. Reporting tax fraud, better known as tax evasion, is relatively simple.

The first step to reporting tax fraud is the ability to recognize it. Tax fraud is the act of deliberately not paying the amount of taxes one owes, and fines for this crime can be relatively steep. The Internal Revenue Service (IRS) brands tax fraud as a felony. If convicted, violators can be forced to pay up to $250,000 in fines, or $500,000 if the violator is a corporation. Violators may also face up to five years in prison or a combination of jail time and the fine combined with the cost of prosecution. These penalties would come in addition to a requirement that all back taxes be paid.

To report tax fraud the IRS provides a Form 3949-A. This form can be found on the IRS website. The completed form should be mailed to the Internal Revenue Service in Fresno, California with a 93888 postal code.

If the Form 3949-A is unavailable, or not preferred, a violation can be reported by sending a letter to the IRS. In order to investigate a potential case of tax fraud, the IRS asks for some vital information if it is available. The name and address is the first piece of information the IRS requests, in order to identify the violator. The tax identification number should also be provided. For an individual the tax identification number is his or her social security number, while for a business it is the employer identification number. A brief description of the violation, including how it was uncovered, the years involved and the estimated dollar amount of unreported income are also requested. Finally, the person reporting the violation should include his or her name. This is not required and can be kept confidential.

In addition to individual cases of tax fraud, abusive tax promoters and promotions can also be reported through a form found on the IRS website. As with the Form 3949-A, this form can be sent to the IRS in Fresno, California.

With billions of dollars fraudulently withheld, tax fraud is a humongous problem. By following the simple steps above, anyone can recognize and report tax fraud. For the price of a stamp anyone can help bring felons to justice.