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Make Money by Turning in Tax Cheats

Written by Nickel - 21 Comments

Make Money by Turning in Tax Cheats

If you’re looking for a way to earn extra money, you should seriously consider becoming an IRS whistleblower…

While I’m (mostly) kidding when I say this, it appears that there’s big money available to those with information on big-time tax evaders. More specifically, you can qualify for whistleblower payments if you turn in a tax cheat that owes at least $2M in unpaid taxes.

According to an AP report, former Swiss banker Bradley Birkenfeld exposed widespread tax evasion at Swiss bank UBS AG. Birkenfeld wound up spend 2.5 years in prison for conspiracy to commit fraud, but was ultimately awarded $104M in whistleblower payments.

Given that whistleblowers typically receive 15-30% of the taxes due, Birkenfeld’s information appears to have led to the recovery of somewhere between $350M and $700M in unpaid taxes. That being said…

Sen. Chuck Grassley has gone on record stating that the amount recovered was in the “billions”, though politicians have been known to exaggerate and/or stretch the truth every once in awhile. ;-)

Source: AP News

Published on September 11th, 2012
Modified on September 18th, 2012 - 21 Comments
Filed under: Taxes

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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21 Responses to “Make Money by Turning in Tax Cheats”

  1. 1
    jim Says:

    Grassley may have been talking about the “collateral impact on other enforcement activities” and/or the future taxes collected from UBS customers that wouldn’t have been.

  2. 2
    Dan B Says:

    Wow, it’s really difficult to come up with stuff to write about continually isn’t it? How about advice on saving money on interior decorators,how to pick a psychic advisor. Or better something useful like how to locate & engage a legitimate masseuse & the costs involved. Then the next article could be how to locate & engage illegitimate ones…………& the costs involved. All very useful posts & way more interesting than the one above.

  3. 3
    Alyssa Says:

    Wow Dan B really has his panties in a bunch. I thought it was kind of interesting.

  4. 4
    Nickel Says:

    Alyssa: Everyone is entitled to their opinion. :-)

  5. 5
    Dan B Says:

    Alyssa……Some people find watching a refrigerator defrost in real time interesting as well.

    I’ve never actually experienced panties achieving the bunch state……….but I’m not opposed to attempting it or reading about it if you care to describe the process and specifics. That would also be far more interesting than the article.

  6. 6
    Dustin Says:

    Dan, I encourage you to start a blog and write an article on any topic you want. Better yet, you can always search for another blog to follow if you aren’t satisfied with the wealth of information that is posted here. I thought it was a interesting article :) . But it’s obviously not for everyone…

  7. 7
    Dan B Says:

    Thanks Dustin. As politicians would say, I will take your suggestion under advisement. Of course we all know what that really means, don’t we? :)
    I suppose that you & I have a different threshold as to what constitutes “interesting”…….as well as a different understanding of the expression “wealth of information”.

  8. 8
    Janice Says:

    I hope Nickel will not feel obligated to leave comments published from obvious trolls.

  9. 9
    Dan B Says:

    Janice…….If you bothered doing any research at all you would have realized that in the past few years I’ve written a number of comments/responses on this blog…………a few of which have arguably been more enlightening & instructive than the original published posts. Of course it’s much easier & a lot less work to come here & dismissively call someone a “troll” & suggest that they be censored. Dissent, discussion & varying opinions are healthy, or are those concepts too difficult to grasp? Thankfully for the readers here, Nickel understands that.

  10. 10
    Janice Says:

    While varying opinions are healthy, being mean-spirited is not. I’ve subscribed to this blog for over two years, but there is a plethora of personal financial blogs that do not allow obvious trolling. I guess it’s time I moved over to one of those. So you win.

  11. 11
    Dan K Says:

    Dan B, knock it off… You’re making all Dan’s look bad. Just sayin’

  12. 12
    Nickel Says:

    Janice, Dan, et al…

    Dan is correct that he has made valuable comments on a number of topics here and, as I said above, everyone is entitled to their opinion.

    Do I agree with Dan in this case? Obviously not. If I thought this was a boring topic unworthy of discussion I wouldn’t have posted it. Do I wish he’d been more constructive in his comments, as opposed to simply complaining because he didn’t happen to find the topic interesting. Yes, I do.

    But I have a thick skin (comes with the territory) and I understand that when you have thousands of subscribers, not everyone will like everything that you write. And when you have an open commenting system, people will sometimes express that opinion.

    Personally, when I run across something on the web that doesn’t interest me, I close the window and move on. But not everyone thinks that way.

    As long as people don’t start overtly attacking each other and calling each other names, I tend to give them a wide berth.

    I read every single comment posted here and, every once in awhile, things do cross the line. When that happens, I step in and stop it. But that’s rare, and it typically involves temporarily locking comments on a specific post until things cool down.

    At this point, we’re spinning our wheels. Thus, I’d like to ask that people respect Dan’s right to be bored with what I write, and I’d ask Dan to respect the fact that he’s had ample opportunity to share his thoughts on this post. We get it. At this point, you’re really just repeating yourself, which bores *me* (and probably others).

    Here’s a deal: I won’t write repeated posts about this topic if you won’t write repeated comments saying that you find it uninteresting. Once is enough. As I said, I read all comments, so there’s no risk that I’ll miss it the first time.

  13. 13
    Nickel Says:

    And no, it hasn’t escaped my notice that the comment that I just wrote is longer than the original article that spurred this entire discussion.

    Getting back on topic… How about someone shares their view of the IRS whistleblower (bounty) program?

    While it runs the risk of turning neighbor on neighbor, it seems like a pretty good deal from the perspective of the IRS. 15-30% is a good bit cheaper than a collection service — and they’re collecting on debts that might not have even known about if this program didn’t exist in the first place.

  14. 14
    Dan B Says:

    Nickel…….Actually I only made 1 response to your post. The rest were reactions/responses to the response & one could say semi-attack on me. I’m not the one calling anyone a “troll”, though frankly I’d rather be that than some of the more colorless individuals that populate lots of blogs.

    Having said that, I’m certainly not interested in driving anyone away from your blog……….though some loses would frankly be no big loss, except perhaps from a numbers/traffic angle.

    As for the article itself, I could give you more reasons why I feel it uninteresting, but unless someone wants to prod me further, I’ll take your suggestion & close the window & move on. Suffice it to say that while it certainly plays into the whole naive populist notion of lets stick it to the wealthy crooks who are probably all cheating on taxes angle, encouraging people to spy on their neighbors in hopes of financial rewards is a slippery slope. Collection agencies are encumbered by knee high piles of regulations, individuals aren’t. Collection agencies have deep pockets. If they violate your rights, you have recourse. Individuals often have shallow pockets. But someone with a lot of time on their hands can get it in their head & make your life unpleasant. Perhaps you’d understand that if you thought it through. Things can then get very ugly for both sides from then on……..or need I spell it out.

    But anyway, I’ll let you all go back to thinking this is oh so “interesting” even though I still contend that my suggestions were infinitely more so……….to say nothing of having the bonus of driving some fresh blood & perhaps a little less boring crowd to this site as well.

  15. 15
    SW Says:

    One does not need to “spy on their neighbors” to know when someone is cheating on taxes. Sometimes we happen upon the information. For example, I know my former mother-in-law has been cheating on her taxes for YEARS – she bragged about it all the time, even before I married her son. She was quite proud of how “smart” she was.

    But she isn’t the only one. There are plenty of people who share so freely how they steal cable, swindled a corporation, or cheat on their taxes because these are so-called “victimless crimes.” Most people have learned to turn a blind eye to these “confessions” because they feel these are harmless “crimes” against corporations/gov’t (instead of crimes against people).

    Rather than “spying,” you just need to know when and how to take advantage of the “opportunity” given to you to earn money by turning someone in.

    But nickel, don’t you need to know the tax-cheat’s social security number in order to turn them in the IRS? Or is that where the spying comes in?

    ;)

  16. 16
    Dan B Says:

    SW…..Really? The magic number is $2 million. Unless you just happen to know that your former mother in law owes $2 million in taxes, the IRS isn’t going to pay you a dime even if you turn her in & they are able to find any wrongdoing. Now I don’t know your circumstances but considering that 98% of people don’t owe $2 million in total federal taxes in their entire working lives combined, I’d say it’s a fair assumption that this program doesn’t apply to casual tax cheats. Besides it’s not about picking up the phone & calling the IRS & saying so & so is a tax cheat. It’s about documentation.

  17. 17
    SW Says:

    I will not waste much time arguing with you, Dan B, but might I suggest you consider spending half the time researching a topic as you do arguing it. You CAN get a reward for turning in ANY tax cheat. straight from the IRS website:

    What are the rules for getting an award?
    The law provides for two types of awards. If the taxes, penalties, interest and other amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15 percent to 30 percent of the amount collected. If the case deals with an individual, his or her annual gross income must be more than $200,000. The IRS also has an award program for other whistleblowers – generally those who do not meet the dollar thresholds of $2 million in dispute or cases involving individual taxpayers with gross income of less that $200,000. The awards through this program are less, with a maximum award of 15 percent up to $10 million.

    http://www.irs.gov/uac/Whistle.....mant-Award

    Sorry for calling out your ignorance, Dan B.

    Best Regards
    ;)

  18. 18
    Dan B Says:

    SW………..My apologies, I did not know that. So is it just a matter of supplying names or do you actually have to have evidence, documentation etc. Because if all it takes is a name, based on something someone said I think I’m going to start with your name. Hey, what’s the harm right? :)

  19. 19
    SW Says:

    sure…go ahead and submit my name. What’s the harm? Just a perjury charge ;) but again, you would have known that if you decided to read a little on the topic before you posted…

    P.S. before you decide to argue more and further embarrass yourself, I should tell you something…I’m a CPA.

    :)

  20. 20
    Dan B Says:

    A CPA? My condolences. You know, it’s been my experience that the “experts” at a topic are often the best candidates at evasion within that same topic. Hence for example, cops often make good thieves etc. So a CPA huh? Gee I wonder what a CPA would hypothetically be good at evading? It’s not traffic tickets, or bad relationships (the boring factor would surely torpedo most relationships. Not yours of course :)
    Oh wait, I know. I bet a CPA could be real good at cheating on taxes. Not you personally, of course. Oh, perish the thought, I bet you’ve never even told a lie. :)

  21. 21
    BG Says:

    Nickle) Thanks for posting this, never heard of this program before. Income taxes are rife with fraud I suspect, which is why I prefer us to move to a national VAT (sales) tax — harder to cheat that system.

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