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Report your tax dodging ex to the IRS and collect a reward
If you know someone who’s dodging their taxes, you can report them to the IRS and potentially get a reward for it. The IRS Whistleblower Office offers monetary awards to people who provide information that helps the IRS. The amount you can get ranges from 15 to 30 percent of the money collected based on your information. However, you won’t get paid until the IRS has made a final decision and the taxpayer has no more options to appeal or claim a refund.
Individuals use IRS Form 211, Application for Award for Original Information, to submit allegations of tax noncompliance. The form should include:
- A written narrative describing the alleged noncompliance.
- Supporting information like books, records, receipts, bank records, or emails.
- Details on any supporting evidence not in possession and its location.
- Explanation of how and when the whistleblower learned about the issue.
- Description of any relationship with the subject of the claim (e.g., family member, employee).
- Whistleblower’s signature under penalty of perjury and date.
Individuals must then mail the Form 211 with supporting documentation to:
Internal Revenue Service
Whistleblower Office – ICE
1973 N Rulon White Blvd.
M/S 4110
Ogden, UT 84404
Who is eligible to file a claim for award?
Anyone not listed below can file a claim and receive an award under section 7623. The Whistleblower Office will reject claims from ineligible whistleblowers and provide written notice of the rejection. Ineligible individuals include:
- Employees of the Department of Treasury or those who were employees when they obtained the information.
- Federal government employees who gained the information through official duties.
- Individuals required or prohibited by federal law or regulation to disclose the information.
- Those with access to the information through a federal government contract.
- Individuals filing claims based on information from ineligible whistleblowers to circumvent rejection.
What are the rules for getting an award?
Internal Revenue Code (IRC) section 7623 provides provisions for awards, sometimes mandatory, when the Internal Revenue Service (IRS) takes action based on information from a whistleblower. Claims that offer specific and credible information regarding tax underpayments or violations of internal revenue laws that lead to collected proceeds may qualify for an award.
The Bipartisan Budget Act of 2018 expanded the definition of proceeds to include penalties, interest, additions to tax, and additional amounts under internal revenue laws, as well as any proceeds arising from laws the IRS is authorized to administer, enforce, or investigate. This encompasses criminal fines, civil forfeitures, and violations of reporting requirements.
Generally, the IRS will pay an award of at least 15 percent, but not more than 30 percent, of the proceeds collected attributable to the whistleblower’s information. The percentage decreases if the claim is based on public sources or if the whistleblower planned and initiated the noncompliance actions. Awards are processed as either a section 7623(a) or 7623(b) award.
To qualify for the IRC section 7623(b) award program, the information must:
- Relate to a tax noncompliance matter where the tax, penalties, interest, additions to tax, and additional proceeds in dispute exceed $2,000,000; and
- Relate to a taxpayer, specifically for individual taxpayers, one whose gross income exceeds $200,000 for at least one of the tax years in question.
If a submission does not meet the criteria for IRC section 7623(b), the IRS will consider it for the discretionary program under IRC section 7623(a) of the Code.
Tax Fraud Unveiled: The Case of Salvador Gonzalez and the $28 Million Scam
A Riverside County man has been sentenced to 72 months in federal prison for preparing and filing false tax returns for his clients, resulting in a tax loss to the IRS of at least $28 million, as announced by the Justice Department today. Salvador Gonzalez, residing in Corona, was sentenced on Monday by United States District Judge Jesus G. Bernal, who also mandated restitution payments totaling $403,908.
Gonzalez entered a guilty plea on June 17 to three counts of aiding and assisting in the preparation of false tax returns. Beginning in 2013, Gonzalez operated Grace’s Lighthouse Resource Center, Inc., a tax return-preparation business based in Corona. Throughout this period, Gonzalez consistently advised his clients to create fictitious corporations and to title their homes, vehicles, and other assets under the names of these corporations. He then referred these clients to an associate responsible for preparing the tax returns of these sham corporations. The associate would provide the clients with a blank spreadsheet, requesting that they input their business expenses.
Under Gonzalez’s instructions, clients included personal expenses such as mortgage payments, car payments, and utility bills in the spreadsheet provided to the associate. Consequently, the associate used this information to prepare business tax returns that inevitably displayed a loss. These fabricated losses were incorporated into the clients’ individual income tax returns, fraudulently reducing their taxable income.
Gonzalez further reduced his clients’ tax liabilities by fabricating deductions on their personal returns, including unreimbursed employee expenses, charitable contributions, and medical and dental expenses. As a result of these fraudulent practices, his clients paid less in taxes than they rightfully owed.
Before 2019, Gonzalez typically charged clients a flat fee of $500 per tax return. In 2019, he adjusted his fee structure to charge clients 1% of their gross income for his services. According to court documents, Gonzalez’s actions resulted in a tax loss to the IRS amounting to at least $28 million.
Consistent with the plea agreement, the U.S. Attorney’s Office – Tax Section filed a civil complaint in the U.S. District Court for the Central District of California against Gonzalez. The complaint seeks to permanently prohibit Gonzalez from preparing, assisting in, directing, or supervising the preparation or filing of federal tax returns, amended tax returns, or other related documents or forms for others. The civil complaint alleges that over several years, Gonzalez prepared tax returns that understated the federal income-tax liability of his customers through a scheme that harmed the United States, the IRS, his customers, and the public.
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