How to form an alliance with the IRS?
March 7, 2008 3:37 AM   Subscribe

How do I bust my employer for TAX FRAUD?

Yes, my employer is TOTALLY defrauding the government. He runs a retail business (about $15M Gross/year) in California. I have ALL sorts of documentation about not reporting large sums of cash (3-4M during christmas season), all sorts of documentation about where that money is physically kept, and a written discussion about how they get around good accounting.

Yeah, I couldn't believe it either about how open they were about all fraudulent activity. The employers also are HORRIBLE to all the employees...they scare them into subservience. So i want to bust them!

How do I do this? If you're going to refer me to this, yeah, I've been there and done that. I filled out the form, included ALL sorts of relevant info (tax forms, contradicting bank statements, emails, etc, etc.). I did that over a YEAR ago, and still haven't heard back. I also decided to do it with my real name/address/contact info. It wasn't even anonymous, because I knew how ludicrous it would sound to have ALL this concrete info about HUGE fraud. It really is crazy.

I understand that the IRS doesn't really have the time or manpower to investigate "my neighbor claims to use gel ink pens for work. But I see him using it for personal tasks". But this is HUGE. They have been defrauding the IRS for AT LEAST $1M EVERY year for 5+ years.

Anybody have any real advice. If you would prefer not to post on here, please feel free to message me.

Stay awesome, MeFites.
posted by anonymous to Law & Government (18 answers total) 2 users marked this as a favorite
anonymize, anonymize, anonymize
posted by rdr at 4:06 AM on March 7, 2008

You might try calling the local US Attorneys Office, or the office of Attorneys General. They are bloodthirsty for cases like this where they can browbeat an employer for not paying taxes and the IRS for ignoring the problem.
posted by parmanparman at 4:28 AM on March 7, 2008

Well, hopefully you're writing about your erstwhile not current employer, yes? Because things could get very dicey for yourself personally if your real name is brought into this while you're still working there.

This isn't probably what you're seeking to hear, but keeping in mind the sums involved and the fact you're previously reported have you considered the fact that perhaps this firm has already been investigated and either fined or cleared? I'm not sure how much feedback the IRS will provide to someone who brought a problem to their attention.

But ok, if you're still adamant about pursuing this matter (and hopefully still not employed there), I'd suggest bringing it to the attention of the State Tax authorities; I seem to recall hearing California is having money trouble, and the back taxes / penalties owed on the sums you're mentioning would certainly get the attention of the State inspectors.

Finally you could take the media route, however I do suspect you're putting yourself / your assets at some degree of personal risk the more your name is raised, whistleblower statues aside.
posted by Mutant at 4:36 AM on March 7, 2008

I'm not sure that a year isn't a pretty short time to see results, and they may have no need to contact you. Their investigation, by necessity, will be very quiet until they decide not to be quiet.

But the suggestion that you also contact the state tax authorities might be useful if there isn't in fact already an investigation going on.
posted by Lyn Never at 5:21 AM on March 7, 2008

I agree with Lyn - it may be that things are in progress. If they don't need to interview you, you might not hear anything for a long time. I don't know how things are in the US, but in the UK, the Data Protection Act would prevent them telling you what was going on, or even whether an investigation was in progress, until the matter was actually taken to court - and that might never happen for all sorts of reasons.
posted by Phanx at 6:00 AM on March 7, 2008

In any correspondence with a government agency, I would RECOMMEND that you not capitalize every word that you feel needs EMPHASIS. You may simply be taken for a CRANK.

IANAL, but you may have compromised any case that the IRS has by sending them "contradicting bank statements", those kinds of things may need a court order to be used as evidence, and they may be required to throw them out.
posted by kuujjuarapik at 6:13 AM on March 7, 2008

I had a roommate in California with a law degree who was an investigator for the IRS. They build cases very slowly, like if they think a laundrymat is skimming cash and not reporting, they will get several years worth of water bills and compare the water usage to reported income and see if it jives. She was also quite blunt about the fact that if someone looks like they can lawyer up and really fight tooth and nail every step of the way, the IRS may be less inclined to pursue that case and go after one that is easier to pursue and close. I agree with the post above that you might appear to be a disgruntled ex-employee with an ax to grind or a crank. If they are hiding money, they might also be underreporting employment taxes for the state, and that would be the California Labor Board or whatever it is called. They do take cases seriously and if that employer has been underreporting for employees they could face huge fines and back wages to employees. Maybe you could pursue an action at the state level instead of the federal level. It does take a long time and you might not ever be included in knowing the outcome unless it becomes very public. Keep in mind also that many of those complaints can become public records so your name will pop up in Google searches which may impinge any future job search if your prospective employer Googles you and sees a list of complaints you have filed against past employers.
posted by 45moore45 at 7:03 AM on March 7, 2008

To further clarify my point above, records that do not belong to you but do belong to your employer (such as tax records and bank statements) may be considered to be stolen by you, and thus be inadmissible as evidence, and useless to any investigation. Be careful how you handle these records.
posted by kuujjuarapik at 7:19 AM on March 7, 2008

It may be too late for this if you've already contacted the IRS, but there are laws that reward whistleblowers whose companies are defrauding the government. I've never heard of it applying to tax fraud (the big cases are usually medicare fraud and defense contracts), but I don't know why that would be specifically excluded. Actually, from these search results, it does look like it applies to tax fraud. If that's a route you would consider pursuing, you should definitely find an attorney who specializes in handling those types of cases. They will talk to you for free and tell you what documents you should be saving.
posted by ghostmanonsecond at 7:29 AM on March 7, 2008

If they cheated Federal, did they also cheated State? It might be easy to get action from the State Tax Commission.
posted by francesca too at 7:34 AM on March 7, 2008

You are making yourself a lawsuit magnet by pursuing this in a public forum, or at the very least, making yourself less likely to be hired in the future. I strongly suggest that you pursue this anonymously, if at all, on the public net.
posted by zippy at 8:07 AM on March 7, 2008

Oh, and this part:

Yeah, I couldn't believe it either about how open they were about all fraudulent activity. The employers also are HORRIBLE to all the employees...they scare them into subservience. So i want to bust them!

will undermine your case.
posted by zippy at 8:11 AM on March 7, 2008

How To Be a Tax Snitch.

Go get 'em, tiger.
posted by ikkyu2 at 8:17 AM on March 7, 2008

It might sound tiresome, but I think it could be worth paying a lawyer to have a discussion with you about this. You could potentially get some serious reward money, but to me, it would be reassuring to know I'd done everything correctly.

To further clarify my point above, records that do not belong to you but do belong to your employer (such as tax records and bank statements) may be considered to be stolen by you, and thus be inadmissible as evidence, and useless to any investigation.

I don't think this is true. Unless he would somehow be considered an agent of the government, I don't see how the evidence would be excluded. Maybe I'm wrong...?
posted by the christopher hundreds at 8:26 AM on March 7, 2008

Please disregard everything kuujjuarapik has written so far as completely false.

The exact documents you sent may or may not be admissible at trial, but those same documents could be retrieved by the IRS/State tax authorities in a manner that would make them admissible. In fact, the odds are very high that the IRS wouldn't take your word for it and would subpoena the official bank records anyway, making the admissibility of the documents you actually sent completely irrelevant.

Further, people don't have fourth amendment protection against third parties, only against the government. As a private citizen you can search and seize all you want and it won't impact the admissibility of the evidence one iota. (Of course, you don't have any sort of immunity if you go and do something illegal, so be careful out there).
posted by toomuchpete at 8:38 AM on March 7, 2008 [1 favorite]

ikkyu2 for the win. The last sentence gives you a clue to what's happening: "If we initiate an investigation as a result of the information given, it can take two or more years before there is a final disposition of the investigation." That document also mentions that the IRS can't give information regarding specific actions.

Why don't you go ahead and file a claim for the reward? That pdf tells you which form you need (211).

The IRS may keep your identity confidential, but if you're concerned about legal fallout, talk to a lawyer (sooner is better than later) so you can anticipate what might happen and you'll have somebody who's familiar with the circumstances should something arise. Might as well do it while the IRS takes their sweet, sweet time.

Also, don't worry so much about the ongoingness. They can and do take this stuff seriously, and while it's a slow process at times, it is not without teeth if pursued in earnest. I'm not familiar with IRS whistleblower cases, but qui tam cases under the False Claims Act might be instructive when it comes to timelines. There was a qui tam case against Warner-Lambert that was filed in 1996 by the whistleblower (the way those cases are pursued are a lot different than the way the IRS cases proceed) settled in 2004 for $430M. So, it might take awhile. Getting busted can be a long process.
posted by averyoldworld at 9:06 AM on March 7, 2008

I'm probably just echoing what others have already said, but the form you want to send to the IRS is the "request for a reward" (the link you posted didn't work so I'm not sure what you are alluding to). I remember from working at the IRS a few years back seeing this once come in with the returns.

Getting fired for "whistle-blowing" on your employer is one of the few ways you can successfully sue for unlawful dismissal. I know this from doing jury duty. :-)
posted by thomas144 at 1:00 PM on March 7, 2008

Just be careful about how you do it--society kind of forgets or frowns on the whistleblowers. One thing you could try is contact the local FBI office--they may be able to get in touch with IRS investigators faster.
posted by Todd Lokken at 8:51 PM on April 11, 2008

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