Tax Evasion Reporting Procedure

Tax evasion typically includes intentional misrepresentation of financial information or concealment of assets to reduce tax liability. These acts are severely penalized under the District of Columbia Official Code, Title 47 (Taxation, Licensing, Permits), and include key categories such as:

• Unreported income: This involves omitting various forms of earnings from tax returns, such as wages, rental income, or business profits.
• False deductions: Deliberately inflating expenses or claiming non-existent costs to significantly reduce the net taxable income.
• Double books: Maintaining separate financial records—one accurate set for actual operations and a manipulated set for tax reporting purposes.
• Nominee accounts: Utilizing the name or account of another individual or entity to hide or obscure the true ownership of earnings.
• Real estate underreporting: Employing fake or manipulated purchase contracts to record property values lower than the actual sale price, thereby minimizing transfer or property tax.
• Offshore concealment: Failing to properly report overseas income, foreign bank accounts, or other international financial assets as required by law.

Effective reports must provide specific, credible, and detailed information to be acted upon by the OTR or IRS. Whistleblowers should strive to include the following key data points to strengthen their claim:

• Parties Involved: Full identification of the individual or business being reported, including their name, address, and any available identification numbers (e.g., business registration number, SSN, or TIN).
• Time and Place: Specific details regarding when (dates/timeline) and where (location of activity, relevant properties) the alleged evasion occurred.
• Method of Evasion: A clear description of how the evasion was carried out (e.g., claiming fake deductions, using shell companies, or diverting sales revenue).
• Intent and Evidence: An explanation of why the whistleblower believes the act was intentional and any supporting documentation to prove the allegations (e.g., bank records, receipts, contracts, or emails).

Whistleblowers have several options for submitting their information, ensuring various levels of anonymity and documentation. The appropriate method depends on the jurisdiction of the tax violation:

• Federal Tax Evasion (Seeking Reward): Individuals wishing to claim a monetary award for information leading to tax collection must submit their report using the IRS Form 211, "Application for Award for Original Information." This form requires a signature and is essential for reward eligibility.
• Federal Tax Evasion (Anonymous Report): For those who are not seeking a reward, the IRS encourages reporting using Form 3949-A, Information Referral, which can often be submitted anonymously by mail.
• District of Columbia Taxes: For issues related to D.C. taxes, the OTR's Criminal Investigation Division (CID) requires that all alleged tax law violations be submitted using the Tax Fraud Information Referral D-3949A form, available online or by mail. The OTR generally no longer accepts tax violation referrals over the phone.
• Physical Mail: Documentation for D.C. tax fraud can be securely sent by mail to the Office of Tax and Revenue, specifically addressed to Attn: Tax Fraud Hotline, 1101 4th Street SW, Washington, D.C. 20024.
• Telephone Contact (General Inquiries): The number 202-727-4829 is primarily used for general D.C. tax customer service inquiries and is not the official hotline for submitting fraud allegations.
• In-Person Filing: A sealed report can be submitted by visiting the OTR Customer Service Center, though the information must still be provided on the required D-3949A form.

Once a report is submitted, the relevant authority (OTR or IRS) performs an initial evaluation of the claim’s credibility. If the information is deemed sufficiently reliable, an investigation may be launched to determine if tax non-compliance or evasion has occurred. The entire process is confidential, with legal protections in place to safeguard the personal identity of the whistleblower, who may be notified if the investigators require further corroborating evidence.

Currently, Washington D.C. does not operate a dedicated standalone whistleblower reward program for local tax matters. However, D.C. residents reporting substantial federal tax evasion may qualify under the federal IRS Whistleblower Program, which applies nationwide. This program generally requires the amount successfully collected by the IRS to exceed $2 million and the taxpayer’s gross income (if an individual) to surpass $200,000 annually. The potential reward is calculated as a percentage of the recovered amount.

Whistleblowers frequently face complexities when documenting admissible evidence or navigating the intricate process of securing compensation, especially in high-value cases. Considering hiring a tax attorney is highly recommended, particularly if:

• Your personal or professional identity risks exposure or retaliation from the reported party.
• The alleged scheme involves complex financial instruments, corporate structures, or international fund transfers.
• The IRS or D.C. OTR requests your continued and direct cooperation during the investigation.
• You need to prepare formal documentation, such as the required IRS Form 211, or wish to appeal a denied reward determination.

Lawyers ensure full procedural compliance and protect the client’s legal interests throughout the entirety of the reporting and reward application process.