Are you sure that the tax return you are about to file is correct and doesn’t have any errors?
Sometimes, it is hard to be 100% sure.
Well, you see, when a taxpayer files their return, he or she needs to include every income detail and the taxes paid throughout the financial year. These income details will consist of domestic and foreign transactions, and hence the taxes levied will also be different.
If somehow any of the detail is missing or manipulation has been done with the taxes being paid, the return can be taken for a review by the IRS under the rules of submitting an incorrect tax return.
Here, in this article, we will give you details regarding false returns, their types, the penalties you can be assessed, and the aftermath.
A false return is a tax return where some details mentioned are either mismatched with the actual data or manipulating incomes and taxes paid. Intentionally submitting a false return leads to taxation fraud. Taxpayers should be conscientious and try their very best to avoid errors.
If you are submitting a falsified tax return to the IRS, and if you are caught during screening, you will be penalized. The penalty will depend on the type of errors present in the false returns and whether it was intentional.
Your identity numbers and tax information are confidential. Regardless, return files are screened and scrutinized by the IRS department. They employ different techniques to check whether the return is correct and complete or not.
Here are some ways of how the IRS determines a false tax return after it is filed:
How would you know that you may be penalized for filing false tax returns?
Tax whistleblower rewards:
Are you willing to earn a little extra by doing something good for your country?
Well, there is literally no harm in making extra income by letting the government know about fraudulent activity. But the question is, will the IRS approve your claim?
Your worries are definitely substantiated. It is not easy to get that reward. The IRS department has opened a new office, specifically for whistleblower activities. They provide a reward to any person who will give them credible, true, and supported information about fraudulent tax returns, or any other tax-related criminal activities.
Being a whistleblower to the IRS is a particular source of income. Since this is a legitimate way to make money, we have decided to brief you on the entire concept of getting rewards by tax whistleblowing.
What does a tax whistleblower do?
A tax whistleblower is a person who notifies the IRS authorities when someone has submitted fraudulent data in their tax return files in order to defraud the government.
The IRS has a special whistleblower office that deals with all these whistleblowing cases, verify whether the claims made are true, and then processes the rewards.
Why would someone risk their freedom by submitting fraudulent returns?
Just like any other crime: the alleged criminal sees the opportunity to benefit while being in a desperate situation and has the ability to act.
If this is the person you would like to blow the whistle on, this would be the ideal situation for whistleblowing.
Sometimes, people submit fraudulent tax returns, because they have incorrect information for the return submission. The question is: who provided the incorrect information, with what intent, and what material is the amount in question?
Is the tax whistleblower awarded?
Yes, according to the rules and regulations, a tax whistleblower is rewarded once his claim is verified and is found to be true.
The IRS will pay at least 15 percent, but not more than 30 percent of the proceeds collected attributable to the information submitted by the whistleblower. The percent is calculated based on the tax owed, penalty, interest, and others.
Are there any rules that tax whistleblowers must follow?
Yes, indeed, there are several rules which are applicable for tax whistleblower rewards. This is to ensure that the whistleblowers are not taking advantage of the rewards by handing out false information.
(per IRS https://www.irs.gov/compliance/whistleblower-office) “To qualify for the IRC section 7623(b) award program, the information must:
Relate to a tax noncompliance matter in which the tax, penalties, interest, additions to tax and additional proceeds in dispute exceed $2,000,000; and
Relate to a taxpayer, and for individual taxpayers only, 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) consideration, the IRS will consider it for the discretionary program under IRC section 7623(a) of the Code”.
IRS Form 211- applying for the whistleblower reward claims.
To apply for the rewards during the whistleblowing case, you need to submit Form 211. The reward will be paid out only when the taxpayer actually paid out their debt to the IRS.
Whistleblowing is increasing in popularity in the United States, as people are trying to earn money one way or the other. You need to be very diligent and submit accurate information that taxes are actually due and unpaid, meet the eligibility criteria, and file Form 211 to get a reward that can be up to 30%.