Is it true that the IRS pays rewards for turning in tax cheaters?
Twenty thousand rewards have been paid by the IRS since 1967. However, you don’t get the reward until the IRS collects from the cheater, which is far from a sure thing. The IRS pays about 8% of the first $100,000 it collects and 1% of the balance. However, in 2007, a new whistleblower law was enacted to increase rewards in cases where additional taxes and penalties collected exceed $2 million. In this case, the reward ranges from 15% to 30%. (IRC 7623.) Any reward you recover is taxable income. Identities of informers are kept secret, but tax cheats usually know who reported them—mostly ex-spouses or disgruntled business associates. In a recent year, the IRS paid out a paltry $1.5 million for tips, on $72 million collected. The IRS places low priority on investigating tips and paying rewards. Typically, you will never know what action, if any, is taken on your tip. If you want to try it, submit IRS Form 211. P.S. Rumor has it that turning someone in to the IRS can result in the informa
