How to Report Retirement Account Fraud
The Internal Revenue Service encourages citizens to report taxpayers who use fraud to avoid paying taxes. The IRS considers underpayment of tax on retirement account distributions, such as early Roth IRA distributions, a top scam. A citizen can use an arranged procedure to report the taxpayer. If the citizen can identify the taxpayer and describe the violation, the report will likely help the IRS catch the violation.
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Instructions
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Gather information on the tax scam used to avoid taxes on retirement plan funds. Find all the information that identifies the taxpayer and describes his scam. Include information on the individual, and his business if he uses that in the fraud. Make sure you have the information on how the taxpayer avoided taxation, with transactions and dates, such as by reporting an early distribution paid on a date as a regular distribution at a later date.
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Get your forms and papers in order. Order Form 3949-A, Information Referral Form, by calling the IRS at 1-800-TAX-FORM, or by visiting www.irs.gov to download the form (See Reference 1.). Arrange your papers in date order.
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Review the information on the violation to find any missing facts or inaccuracies in numbers. Without having all the facts needed to know a named person committed a specific violation, the IRS might not be able to investigate. The IRS needs accurate information to support a successful investigation of an alleged fraud by a taxpayer.
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Complete Form 3949-A, or write a letter. You have a choice of using Form 3949-A or writing a letter to the IRS to make the report. Write a complete set of facts for the report. Begin with the specific identity of the taxpayer. The form has areas for name, address, date of birth, business name and business address, Employer Identification Number and type of business as well as for marital status and information on the spouse.
Describe the activity and how you came to know the violation occurred. Describe the activity with enough detail to enable the IRS investigator to specifically identify the tax violation; include specific transactions with full dates and the parties involved. When the activity occurred can make the difference between a fraudulent act and a responsible act. To permit the IRS to calculate tax sufficiency, specify the exact money amounts. Add any other information you believe will help an investigator find the crime and make the taxpayer accountable.
You can keep your identity confidential. Telling the IRS your name helps, but your identity is not necessary.
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Send the report to the IRS at Internal Revenue Service, Fresno, CA 93888.
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Tips & Warnings
The IRS encourages whistleblowers to report fraud and they may receive an award by submitting Form 211, Application for Award for Original Information. (See Resource 1.) The IRS awards between 15 percent to 30 percent of the proceeds of the taxes it collects in such cases.
