As I've mentioned before, I get letters from readers. I love 'em, readers and their questions.
However, as I've also mentioned before, I can't answer every question that shows up in my e-mail.
Some are technical beyond my knowledge (remember, I'm not an accountant). Others I know I could answer, but they would take time and unfortunately, just like y'all, I tend to run very short of that commodity, especially during tax season when I have a regular writing gig.
Others queries, though, where I know the answer off the top of my head or know just where to find it, I try to send along as soon as I can.
A couple of weeks ago, a reader asked me something I knew I could handle: How to report someone who is not filing their taxes.
I put it on my to-do/to-answer list, which immediately disappeared under six similar lists I had floating around my desk and/or on my computer.
Well, this reader really, really has some scofflaw info she wants to share, so she wrote again. Being a nag myself (yes, dear hubby, I admit to it!), this time I answered her (see, honey, nagging does work).
And in case any more of you also know someone who is derelict in their federal filing duties, here's the deal, straight from the IRS' Criminal Investigation division:
If you suspect or know of an individual or company that is not complying with the tax laws, you may report this activity by completing Form 3949-A. You may fill out the form online, print it and mail it to the Internal Revenue Service in Fresno, CA 93888. (No street address necessary. The Post Office knows where to find the Fresno IRS office.)
If you prefer, you may send a letter instead of the form to the Fresno address. In that case, the IRS would like you to include, where possible, the following information:
- Name and address of the person you are reporting,
- The taxpayer identification number (Social Security number for an individual or employer identification number for a business),
- A brief description of the alleged violation, including how you became aware of or obtained the information,
- The years involved,
- The estimated dollar amount of any unreported income, and
- Your name, address and daytime telephone number.
About that last bullet point. The IRS says you don't have to reveal your identity. But if information on a tax cheat entitles you to a reward, giving your name and contact info is the only way the IRS will know where to send the money.
Skunks at the picnic: Maybe you're not as adamant about turning in a tax cheat as my reader. Maybe you took to heart childhood taunts about tattletales. Maybe you don't care about any reward and just want to see tax justice done.
OK, I went a bit overboard with that last maybe.
But regardless, a new law could help you get over your unease.
"The Informants' Rewards Program has significantly contributed to the IRS' efforts to enforce tax laws, but additional management focus could enhance the effectiveness of the Program as an enforcement tool and make the process more accommodating to informants. … Additional management focus could also assist in reducing the processing time for paid claims, which would make the Program more attractive to future informants wishing to report violations of tax laws."
Sen. Charles Grassley, the Republican from Iowa who last year headed the Senate Finance Committee, then issued his own statement calling for a "clear road map of reform so Treasury and the IRS no longer treat whistleblowers like skunks at the picnic."
Well, the air was cleared a bit in December, when the Tax Relief and Health Care Act of 2006 became law. It includes provisions that increase rewards (now up to 30 percent of recovered unpaid taxes vs. the previous 15 percent limit) and also establishes a whistleblower office within the IRS.
Since the law was signed just a little over a month ago, don't expect the new office to be up and running yet. The law gives it 12 months to be in place.
But the new whistleblower rules are definitely something to keep in mind the next time you hear someone brag about how they pulled a fast one on Uncle Sam at tax time.
Update: On Feb. 2, the IRS appointed a director for the new Whistleblower Office. Details here.