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2018 was a good year for tax snitches

Whistle_shutterstock_129630356Most of us don't cheat on our taxes. And by cheating, I mean intentionally enter false information on our returns.

Sure, we don't like paying taxes, even after they're trimmed a bit via periodic federal tax law changes. Still, we suck it up every spring and do our tax duties.

But most is not all.

Some folks do fiddle with the figures they put on their 1040 forms.

The Internal Revenue Service does what it can to stop and/or catch such evasive entries. Budget cuts and staff attrition, however, hamper such audit efforts.

That's why the IRS takes all the help it can get.

And in some instances, Uncle Sam pays for tips leading to the discovery and conviction of tax evaders.

Boom times for tax snitches: Such tipsters are known as rats or snitches, especially by those whose tax tactics get turned into the tax agency.

The IRS prefers the term whistleblower .

Regardless of what you call it, these are boom times for folks who turn in tax cheats, according to Wall Street Journal tax reporter Laura Saunders.

Saunders took a deep dive into the IRS Whistleblower Program's fiscal year 2018 annual report and in an article for the newspaper last week shared these tidbits:

  • The IRS awarded more than $312 million to tipsters last year.
  • That amount far outstrips the previous record of $125 million awarded in 2012.
  • One tipster in FY18 was awarded about $100 million, nearly one-third of the total, for turning in a multinational corporation. 

Her piece on the literal rewards of tax snitching earns this weekend's Saturday Shout Out.

Tax snitching isn't quick: While such payouts for ratting out tax cheats make for fun (and envious) reading, Saunders notes that the whistleblower rewards are not quick cash.

The IRS typically rejects around three-quarters of the tax cheat tip claims from whistleblower claims right away.

Most of the reward potential is for smaller whistleblower payouts.

It takes years for the claims to be processed and paid.

When you do get a reward, you likely will pay a portion of it to the professionals that most whistleblowers hire to help make the claims.

And remember, if you do eventually get some whistleblower cash, your eventual net amount will be subject to federal income tax, too.

If you know of someone or some company that's been skimming taxes due the U.S. Treasury, make Saunders' story part of your weekend reading.

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