"In a down economy, the temptation to cheat on taxes is much stronger because people are in more desperate situations more often," said Bill Raabe, a tax expert at Ohio State University's business school.
More people may be just as desperate to turn in a business, rat out an ex–spouse or report a colleague to collect a reward.
Small–time crooks: The IRS's informant program has been around for more than 140 years. If you suspect a person is committing tax fraud and report it, you could receive up to 15% of the amount that has been underpaid, with a maximum award of $10 million.
Informants are required to complete a claim, which is available on the IRS Web site, and mail it to the agency or call the IRS tip line at 1–800–829–0433. While you must reveal your identity to the IRS, your name will not be made public.
Because there is no minimum requirement for the amount in question, anyone can file a report in hopes of making an extra buck off of a cheating boyfriend or obnoxious neighbor...
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Becoming An IRS Informant Can Make You Money
The reward has been around since the 60s, but a few years ago the rules changed. The IRS is now required by law to pay whistleblowers up to 30% for information, if it collects two million dollars or more. “Its probably not an endeavor for amateurs,” says Edward DeFrancheschi, a prominent Boston tax attorney who once worked for the IRS. He is currently representing a whistleblower who is hoping for a pay out. He says it is a long and involved process and informants have to go all in, “you have to give a lot of details about yourself. You have to identify yourself. Anonymous complaints, I’ve been told, are historic dead ends. People come in with an anonymous complaint never gets anywhere,” DeFranceschi says...
