The IRS encourages citizens to blow the whistle on tax scofflaws by offering a reward somewhere in the range of 1% to 15% of the total amount collected. The total reward cannot exceed $2 million.
Although the tax agency wants to hear about citizens who are avoiding taxation, the quantity of rewards actually paid is rather low. In the fiscal year ended September 30, 2000 the IRS paid 382 rewards to informants for a total of approximately $10.8 million.
Potential informants should remember that the leads they provide the IRS must be concrete and must lead to actual tax collection. "You only get paid if the IRS gets paid," said Larry A. Campagna, partner and tax attorney at Chamberlain, Hrdlicka, White, Williams & Martin in Houston, Texas.
Tips for the IRS should be phoned in to the IRS's criminal investigation informant hotline at 1-800-829-0433.