New York - The Internal Revenue Service (the "IRS") has a formal policy that can reward informants for turning in tax cheats. Informants to the IRS can get cash rewards based on the value of the information they furnish. Here are IRS guidelines for determining awards:
- If your evidence was sufficient enough to begin an investigation and it leads to a recovery - you obtain 10% of the first $75,000, 5% of the next $25,000 and 1% of the remainder.
- If your evidence was helpful, though not specific, in determining liability, the award is 5% of the first $75,00, 2.%% of the next $25,00 and 1/2 of 1% of any additional recovery.
- If your evidence triggered an investigation, but did not help to establish liability, the award is 1% of the first $75,000 recovered and 1/2 of 1% of the rest.
- The maximum reward is $100,000 which equates to a recovery by the IRS of approximately $9 million.
Before you turn in a tax cheat make you know what your doing. Being an informant on a former spouse can be physically and mentally dangerous. Individuals who cheat on their taxes are breaking the law. It is possible that these individuals may get mad should they discover that you reported them to the IRS.
In addition, if you know enough to turn in your former spouse after you are divorced, it is possible that the IRS will review returns when you were married. Given the level of tax evasion, you may have a difficult time explaining to the IRS how you did not know about the tax evasion while you were married. Accordingly, the innocent spouse rule (which allows for a spouse who was unaware on a joint return to escape personal liability) may not be accepted by the IRS.
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