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Reporting Tax Evasion: Rewards and Protections


Reporting Tax Evasion: Rewards and Protections

Paying taxes is a civic duty that supports our communities. But some people try to avoid paying their fair share. Tax evasion cheats the government and fellow citizens. It’s illegal. Fortunately, there are legal ways for honest taxpayers to report suspected tax evasion. This article explains the rewards and protections for reporting tax cheats.

Why Report Tax Evasion?

Taxes fund public services we all rely on. Roads, schools, military defense, medical research, and more. Tax dollars better society. When people evade taxes, everyone else must pay more to cover the shortfall. Tax evasion hurts honest taxpayers.

Some justify evasion saying taxes are too high or the government wastes money. But the solution is to change laws or policies, not break laws. Citizens can advocate reforms without cheating on taxes.

Tax evasion also harms fair competition. Businesses paying their taxes properly can’t compete with tax cheats. Unethical preparers lure customers with inflated refunds, while honest preparers lose business. Reporting tax evasion helps level the playing field.

Tax evasion often involves other crimes too. Money laundering, fraud, racketeering, etc. Reporting tax cheats can uncover multiple offenses. The IRS partners with other agencies like the FBI to crack down on criminal networks.

Some believe squealing on tax cheats is dishonorable. But silence enables injustice to continue. Speaking up supports fairness and justice. Tax evasion impacts everyone, so it’s everyone’s responsibility to report it.

Christine Twomey
Christine Twomey
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Brendan huisman
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
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Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
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Bee L
Bee L
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Types of Tax Evasion

Tax evasion takes many forms. Some common schemes include:

  • Not reporting or under-reporting income
  • Exaggerating deductions, credits, or exemptions
  • Hiding money in offshore accounts
  • Using sham corporations or trusts to conceal assets/income
  • Dealing extensively in cash to avoid records
  • Claiming personal expenses as business expenses
  • Paying employees under the table

Tax evasion cases range from small-scale cheating to complex fraud involving millions. But no tax evasion is trivial. Even small amounts add up, and underreporting sets a bad example.

How to Report Suspected Tax Evasion

If you suspect someone is evading taxes, the IRS urges you to report it. You can report suspected tax evasion using IRS Form 3949-A. You can submit this form online, or print and mail it. The form asks for:

  • Your personal information (you can remain anonymous)
  • Name and contact info of person/business suspected of tax evasion
  • Details about the suspected violation
  • List of any documents or evidence you have

The IRS reviews all submissions. Make sure to include as many specifics as possible. Vague reports are harder to verify. The IRS may follow up if they need clarification or additional details.

You can also report business tax fraud using IRS Form 3949-A. Many states have similar forms for reporting fraud on state income taxes.

If you’re reporting your own tax evasion, the IRS has voluntary disclosure programs to allow taxpayers to get right with the law. Requirements vary based on the circumstances.

IRS Whistleblower Program

For major tax evasion cases involving over $2 million in unpaid taxes, the IRS Whistleblower Office pays rewards to informants. Under Section 7623(b) of the tax code, whistleblowers can receive 15-30% of the taxes, penalties and interest collected based on their information. The program protects whistleblowers from retaliation.

To qualify for a whistleblower reward, you must submit IRS Form 211 detailing the violation. Rewards apply only when the IRS collects proceeds based directly on the information provided. Rewards are discretionary and vary depending on factors like:

  • Value of information provided
  • Usefulness of information to the investigation
  • Whistleblower’s participation in the process

The IRS will follow up with whistleblowers and notify them of reward decisions. For more on qualifying and collecting rewards, see the IRS FAQ on whistleblower rewards.

Protections for Tax Fraud Informants

The IRS understands many informants fear retaliation. Confidentiality and anti-retaliation provisions help protect whistleblowers reporting tax evasion.


IRS Forms 3949-A and 211 allow informants to remain anonymous. The IRS will not disclose informants’ identities unless required for legal proceedings. Informants can communicate through attorneys to further protect anonymity.

However, complete anonymity limits the IRS’s ability to follow up for details. Providing some contact information enables better collaboration with investigators.

Anti-Retaliation Provisions

Several laws prohibit retaliation against tax fraud informants:

  • Section 7623(a) of the tax code protects informants from retaliation by employers or contractors.
  • SEC whistleblower rules prohibit retaliation against informants disclosing securities violations, including tax fraud related to securities trades.
  • The OSHA whistleblower law provides anti-retaliation protection for many tax fraud whistleblowers.

If whistleblowers experience any retaliation, they can file a complaint with the government. Agencies will investigate allegations of retaliation and may pursue enforcement actions against violators.

Additional Protections Under Some Reward Programs

Whistleblowers qualifying for monetary rewards may get additional protections, like:

  • Keeping the whistleblower’s identity anonymous during judicial proceedings.
  • Providing private counsel to represent the whistleblower’s interests.
  • Holding retaliators liable for whistleblower expenses like attorney fees, costs, etc.

Protections vary based on the circumstances, but whistleblowers can generally report tax evasion without undue risk of retaliation.


Tax evasion harms everyone by cheating the government and law-abiding taxpayers. Fortunately, informants can safely report suspected tax evasion and even get rewards in some cases. An ethical tax system depends on people speaking up when they witness cheating. If you know of tax evasion, consider reporting it to the IRS. Your information could help recover unpaid taxes and deter future evasion.

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