IRS Form 3949-A: How to Crack Down Tax Fraud
Do you suspect someone or a business is committing tax fraud or violating tax laws? If so, you can report them to the Internal Revenue Service by filling out IRS form 3949-A. This powerful form serves as an information referral tool to blow the whistle on fraudsters cheating the system.
But what exactly does IRS form 3949-A entail? And what kind of tax crimes can you report with it? This guide will walk you through everything you need to know about Form 3949-A, from what it is to how to properly fill it out.
We’ll also explore the most common types of tax law violations people file 3949-As over. That way, you’ll gain clarity on what constitutes fraud in the eyes of the IRS. So if you’re ready to fight tax evasion one form at a time, keep reading.
Why IRS form 3949-A matters
Tax fraud costs the United States over $381 billion annually in lost revenue. And who ends up footing the bill for all those lost taxes? Law-abiding citizens like you and me, who always report our income and file our tax return on time. That’s why the IRS introduced Form 3949-A—to empower people to report suspected tax cheats. The form provides an easy way for whistleblowers to submit detailed tips to the IRS about potential fraud, including original information about violations.
In some cases, Informants can even collect reward money for reporting substantial tax underpayments using Form 3949-A. But beyond personal incentives, filing the form helps fight tax evasion at large by directing IRS enforcement efforts towards fraudulent activity. This protects federal revenue that funds vital public services we all depend on.
So by taking a few minutes to complete a Form 3949-A, you can make a real difference in cracking down on scammers trying to game the tax system.
When to Use IRS Form 3949 vs. Form 211
Before we dive into the nitty-gritty details, let’s clarify the difference between IRS Form 3949-A and Form 211. It’s easy to mix up these two whistleblower reporting forms.
A 3949A form serves as a basic information referral tool about suspected tax law violations. You can quickly submit tips about potential fraud without needing to build an elaborate case.
Whereas IRS form 211 allows you to file an official claim under the IRS Whistleblower Program if you have extensive documentation backing up tax cheating. Submitting a Form 211 to the IRS whistleblower office begins a formal review process and may entitle you to between 15% and 30% of recovered amounts if your claim, based on original information, leads to collections.
So in short:
– Use Form 3949-A to easily report signs of possible tax fraud without much burden of proof, facilitating IRS tax violations investigations.
– Use Form 211 if you’ve gathered substantial evidence of over $2 million in unpaid taxes and want to file a formal reward claim.
Now let’s explore the key sections of Form 3949-A in more detail.
Filling out IRS form 3949-A sections
IRS Form 3949-A contains three main sections:
- Information about the suspected tax cheat, including any known tax problems
- Description of the alleged violation
- Your contact information as the informant, essential for follow-up in case of an audit or further investigation into the tax issue.
Let’s look at what details to include in each section to submit an effective tip.
Section A: Information on the suspected tax fraud
In Section A, you’ll need to provide as much identifying information about the person or business potentially committing tax fraud, including:
– Full legal name
– Date of birth (for individuals)
– Social Security Number or Taxpayer Identification Number
– Current home and/or business address
– Phone number
– Occupation (for individuals)
– Employer identification number (for businesses)
Gathering some basic background like addresses and age helps the IRS verify identities to pursue enforcement actions if warranted. The more precise details you fill in here, the better. But make absolutely sure the information is accurate. Falsely accusing someone of tax fraud carries serious legal consequences.
Section B: Description of the alleged tax law violation
Here’s where Section B earns its keep. You must describe the specific tax law violations you’re reporting about the person or company named in Section A.
Some examples include:
- Failure to report cash income
- Claiming false deductions
- Claiming false credits like the earned income credit
- Hiding money in offshore accounts
- Paying employees under the table
- Abusing tax-exempt status
You’ll also need to note which tax years the potential fraud occurred during. In addition, provide any comments clarifying the suspicious activity. List any corroborating details, documents, or first-hand observations supporting why you suspect failure to comply with the tax law.
Specificity is crucial for Section B. Vague, unsubstantiated claims about unspecified “tax fraud” will likely get dismissed without further IRS scrutiny. But by calling out detailed warning signs in Section B, you help investigators immediately spot red flags worthy of a closer look.
Section C: Your contact information
Lastly, Section C requests your personal information as the informant, including:
- Full name
- Mailing address
- Phone number
The IRS keeps informants’ identities confidential to protect the whistleblower’s source as mandated by Section 7623 of the Internal Revenue Code. But they require your coordinates in case investigators need to follow up for clarification or evidence.
And that wraps up everything to complete when filling out IRS Form 3949-A!
5 most common tax law violations people report
Now that you know how to file IRS Form 3949-As, what kinds of tax cheating do people actually report most often?
Check out 5 of the top tax crimes people blow the whistle on below:
Failing to report cash income remains one of the most widespread—yet basic—forms of tax evasion, often leading to an audit or penalty for failure to pay the correct tax amount.
Common examples include small business owners pocketing cash payments without recording transactions or waiters not claiming tip income.
Deliberately hiding cash dealings from the IRS often constitutes criminal tax fraud.
Another popular tax scam involves fabricating or exaggerating business expenses to claim excessive deductions.
Many fraudsters view bogus write-offs as an easy way to lower their tax liability. Common ploys include padding mileage logs or claiming personal costs as business deductions.
Similar to ignoring cash income altogether, some taxpayers consciously underreport earnings. For instance, a contractor might file returns only declaring half of what they billed clients for the year.
Skimming unreported income directly defrauds the tax system, representing a clear tax violation to the IRS.
While many legitimate non-profits deserve tax exemption, the IRS also uncovers entities illegally posing as charities mainly to benefit private interests.
Private foundations, churches, and other exempt organizations have all gotten busted misusing their privileged status for personal gain.
And sneaky taxpayers often go to elaborate lengths to dodge taxes, like stashing money abroad in secret offshore accounts. Complex shells corporations and dummy financial arrangements help disguise foreign holdings from the IRS’ watchful eye.
But following international money trails to track down non-filers represents a top IRS enforcement priority
Take action: Report tax fraud activity today!
As you can see, IRS Form 3949-A allows you to report a wide range of suspicious tax activity from basic undeclared income to complex offshore evasion schemes. No tax crime is too big or too small to blow the whistle on. Even relatively minor tip-offs can prompt the IRS to target enforcement resources towards an issue they may overlook otherwise.
So do your civic duty by completing a Form 3949-A whenever tax cheating crosses your radar. Every informative referral empowers the IRS to build high-impact fraud cases against wrongdoers. You don’t need smoking gun proof or mountains of documents to submit a valid tip—just good faith reasons to raise red flags warranting a closer look.
Who knows? Your quick form filing could directly launch the investigation leading to the next Al Capone-style IRS indictment against major multi-million-dollar tax lawbreakers!
