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A guide to reporting an American individual or company for tax suspected offences - part 2

Editorial Staff

.... and now to the meat Form 211. This is the so-called whistle-blower system. You can, on the face of it, use this form to report any breach or suspected breach. In doing so, your report of the various types of tax mentioned above will be incorporated. However, the information sought on this form requires certain information that is designed to ensure that you, as the claimant of a reward, are not complicit in the offence and that you are, also the first reporter and a genuine reporter. Your motives for making the report are irrelevant.

Each form asks for different information.

You can decide to submit your report anonymously (although that means you will not receive any reward, unless you file the initial report without personal information but then file Form 211 referring to your previous report in a way that makes identification certain.

Each of the forms contains the address to which it, and supporting documents, must be sent in hard copy. It is important that you keep a copy for your records. Where you are making a report about something you have found out that you had been innocently involved in, for example an invoicing scheme where you did not know that the invoice that went out understated or overstated the price of goods or services, you may, if an investigation is later commenced, need to prove that you reported it and in doing so tried to have the practice stopped.

Rewards are not automatic. Usually, they apply only if there is a recoverable tax liability of more than USD2 million. However, you do not have to prove such a substantial loss: you can demonstrate a system of evasion that tends to demonstrate that losses exceeding USD2 million may have arisen or may arise if the system is not halted. If the report relates to an individual, there is an additional qualification: his or her annual income must be not less than USD200,000. Having said that, the IRS does have some discretion which it does, from time to time, exercise.

Where you use Form 211, you must ensure that your information is clear, comprehensive and accurate. Anything vague or where there is supposition, will not be considered as worthy of a reward. Again, if you don't have the actual documents but you know where they can be found, you can give that information to the IRS in support of your claim in Form 211.

What happens next is beyond the scope of this article but, in summary, your report will be considered by a case officer. In the case of a Form 211, you will be notified whether the IRS will proceed. In the case of the other forms, you may hear nothing except an acknowledgement. It may take a long time to get a response and the IRS might not bother to track you down from your own Social Security Number of Tax Identification number. If your contact information changes, especially in relation to Form 211, write to Revenue Service, Initial Claims Evaluation Team, 1973 N. Rulon White Blvd., M/S 4110, Ogden, UT 84404, making sure you include sufficient information to enable them to tie up your submission with your new contact information.

Some cases have taken as long as ten years from report to conclusion in court: rewards are not made until a final determination of tax liability is made and any penalties and/or fines and/or unpaid taxes are paid.