IRS Highlights Fraud Protection
Per the notice below, the United States Internal Revenue Service (IRS) is highlighting protecting against fraud during International Fraud Awareness Week.
IRS: International Fraud Awareness Week highlights how to report fraud; taxpayer protection against scams, schemes
As part of International Fraud Awareness Week, the Internal Revenue Service reminds taxpayers how to report tax-related fraud in their community to protect personal and financial information from scam artists and tax schemes. During International Fraud Awareness Week, Nov. 17-23, the IRS Office of Fraud Enforcement and IRS Criminal Investigation aim to raise awareness of fraud, scams, and schemes affecting taxpayers across the country. The IRS also encourages individuals, businesses, and tax professionals to take time now to learn to recognize red flags and to ensure defenses are in place to stop scammers and those who promote unscrupulous tax schemes. The Security Summit, a public-private partnership between the IRS, state tax agencies, and the nation’s tax industry, also works to protect taxpayers, businesses, and the tax system from identity thieves and warn people to watch out for common scams and schemes.
Reporting tax fraud
Tax fraud can come in many forms, including scams targeting individuals, tax-related schemes pitched by unscrupulous promoters, and fraud committed by taxpayers who knowingly file incomplete or inaccurate information with the IRS. The public can assist the IRS in identifying and investigating possible fraud of individuals and businesses by filing Form 3949-A, Information Report Referral. Form 3949-A is a tax-related public use form submitted voluntarily by individuals to report alleged violations of tax law by individuals and businesses. A Form 3949-A submission remains confidential. Individuals can report suspected tax law violations such as:
- False exemptions and deductions.
- Multiple tax filings.
- Organized crime, public/political corruption, and kickbacks.
- Unsubstantiated and unreported income.
- Narcotics income.
- Wagering/gambling income.
- Failures to pay tax, withhold tax, and file returns.
These are only some of the suspected violations individuals can report. The IRS will review submissions and determine the appropriate action to take based on the information provided. These actions may include a referral for audit or a referral for criminal prosecution. The IRS Office of Fraud Enforcement promotes compliance with tax laws by strengthening the IRS response to fraud and mitigating emerging threats. This includes improving fraud detection, identifying areas of high risk, enhancing enforcement, and helping develop and submit fraud referrals to IRS Criminal Investigation where appropriate.
Tax-exempt organizations
If an individual suspects a tax-exempt organization is not complying with tax laws, they can submit Form 13909, Tax-Exempt Organization Complaint. These organizations may include exempt organizations, employee plans, Indian tribal governments, and other governmental units. The details and information provided can help hold tax-exempt entities and organizations accountable for following tax law.
Possible monetary award
Information submitted by individuals regarding fraudulent tax-related activity can sometimes lead to a possible monetary award. Individuals requesting consideration for an award should submit Form 211, Application for Award of Original Information. The Form 211 and any attachments must include specific and credible information concerning the person that the whistleblower believes will lead to the collection of proceeds. The IRS Whistleblower Office evaluates Form 211 submissions.
Fraudulent schemes, promoters, or preparers
Each year, the IRS compiles a Dirty Dozen list that brings public awareness to a variety of common scams that taxpayers may encounter. This year’s list included phishing and smishing scams, questionable Employee Retention Credits, Fuel Tax Credit claims, Offer in Compromise mills, and fake charities exploiting taxpayer generosity. Anyone experiencing these scams, or taxpayers encountering promoters or tax preparers peddling these schemes, are encouraged to submit Form 14242, Report Suspected Abusive Tax Promotions or Preparers. People should mail or fax a completed Form 14242 and any supporting materials to the IRS Lead Development Center:
Internal Revenue Service
Lead Development Center MS7900
1973 N. Rulon White Blvd
Ogden, UT 84404
Fax: 877-477-9135
The Lead Development Center within the Office of Promoter Investigations follows up on each referral and ensures cases involving abusive tax schemes and improper tax return preparation are appropriately sent for further action to the IRS. Referrals may lead to injunctions against preparers or promoters, monetary penalties, or referrals to criminal enforcement action.
