It should be quite clear that breaking any tax laws or regulations in the US will result in legal action and repercussions. Many people nevertheless manage to attempt to circumvent these laws, file false tax returns and profit illegally from such behavior. The US Internal Revenue Service is actively battling to stop such acts. The IRS has provided Form 3949-A that anyone can use if they believe that someone is trying to cheat on their taxes or is engaging in other fraudulent activity. So, whether a business or an individual is allegedly attempting to violate tax laws, the form is a simple way to report it.
What is Form 3949-A?
People can utilize this form as an information referral to notify any income tax irregularities perpetrated by other people or companies. Whistleblowers voluntarily fill out Form 3949-A and submit it to the Internal Revenue Service along with any relevant details and proof of the alleged tax fraud.
Remember that if you choose to submit this form, IRS agents will almost certainly undertake an investigation, and you will be a part of it. To ensure a thorough inquiry and accountability, you should be ready to give all the required information and communicate with the organization.
When Should You Use Form 3949-A?
The following are examples of tax law breaches that a whistleblower can report on this form, per the Internal Revenue Service.
- Systematic crime.
- Numerous filings.
- False exemptions or exclusions.
- Unreliable income.
- Earned income credit.
- False or manipulated papers.
- Public or political corruption.
- Failure to withhold tax.
- Neglect to pay tax.
- Neglect to file a return.
- Undeclared income.
- Income from drugs.
- Income from wagering or gaming.
- Other alleged breaches were not disclosed on another form.
Everyone can file form 3949-A for fraudulent activity. Also, there is no minimum requirement for the amount to be recorded as tax fraud. Informants can be former business partners or former workers or anyone else. The IRS mandates that informants complete Form 211, the Application for Award for Original Information, in order to distinguish between claims that are valid and those made by those who are only out to make money.
When to Not Use Form 3949-A?
You should not use the IRS Form 3949-A to report in the following circumstances, according to the form instructions:
- Identity fraud.
- Fraudulent tax preparer behavior.
- A tax preparer’s unlawful modification of your tax return.
- Unlawful Tax promotion.
- Misconduct by a tax-exempt organization.
- A piece of knowledge you’re hoping to get paid for.
- Phishing activity by individuals or groups posing as the IRS.
What Details are Required When Filing Form 3949-A?
Please review the directions on pages 2 and 3 of the document before completing your 3949A. Additionally, you will discover instances in which you are exempt from completing this report.
Commonly, you must submit the following information:
- Details about the offender should be provided. For specific violators, kindly provide their full name, birthdate, SSN or TIN, contact information, occupation, and marital status. Give the company name, phone number, and EIN for corporations.
- Specify the alleged violation’s type. Add a checkmark to a choice on the list. Additionally, list any unreported income for particular tax years and provide any knowledge you may have on the suspected infraction (who, what, where, and how you knew about it).
- Tell about yourself. If you want to remain anonymous, leave these fields empty. However, if the IRS needs to get in touch with you for more information or documentation, they advise that you provide specifics.
How to Fill IRS Form 3949-A?
Form 3949-A can be filled out electronically, but paper submission by mail is still necessary. We’ll go over each of the three sections on this one-page tax form.
Section A: Reporting Information About the Person or Business
- If you are simply reporting about a single person, finish Part 1.
- Complete Part 2 only if you are reporting a business.
- However, fill out both Parts 1 and 2 if you are reporting a business and the business owner.
Part 1: About Person
You must fill out the following details in Part 1.
- The person’s name and, if available, their Social Security number.
- Birthdate (optional).
- Email address.
- Marital status, and spouse’s name, if appropriate.
Part 2: About Business
You must fill out the following details in Part 2.
- Business name.
- Employer identification number.
- Phone number.
- Email address.
- Website URL.
Section B: Describe the Alleged Violation of Income Tax Law
Provide information about the tax breach in Section B.
Part 3: Alleged Income Tax Law Infringement
You should tick each applicable box in Part 3.
- Violation of Exemption: Claiming the person as dependent who has been claimed already.
- Mistaken Deductions: For claiming fictitious or inflated exclusions in an effort to lower their taxable income.
- Several filings: Submit multiple tax returns in order to get fake refunds.
- Not Filing a Return: A person or business has not made the required tax filings.
- Missing Tax Payments: A person or a company has not made the required tax payments.
- Organized Crime: A participant in a group of people who engaged in unlawful activities like drug use, gambling, loansharking, extortion, or the laundering of illicit funds through legal enterprises.
- Unsupported Income: For reporting fictitious earnings from a questionable source in order to obtain a fictitious refund.
- Credit for Earned Income: Claiming an Earned Income Credit (EIC) for which they were ineligible.
- Political and Public Wrongdoing: Politicians or public figures broke the law by abusing their position to further their own interests.
- False or Modified Documents: Altered or made phony documents, like a W-2 or Form 1099, to support a false return.
- Undeclared Earnings: Not reporting income after receiving cash or other undetectable payments for products or services.
- Drug Earnings: Receiving income through drugs or narcotics that are unlawful.
- Kickback: Receiving illicit kickbacks or payments in return for directing business to a government agency or influencing corporate choices.
- Wagering/Gambling: Did not disclose winnings from betting or gambling.
- Absence of Tax Withholding: Neither an individual nor a corporation withheld any legally required taxes, such as Medicare Or Social Security taxes, from the payment they made to their employees.
Part 4: Undeclared Income and Tax Years
List the approximate amount of delinquent taxes in this section, broken down by tax year and monetary amount.
Part 5: Comments
Give a concise description of the situation’s facts in clear words. Describe how you discovered this knowledge. Moreover, use additional sheets to include as much detail as you can.
Part 6: Additional Data
Provide any further details, such as
- Whether the claims can be backed by books and records.
- Whether you believe the taxpayer to be harmful.
- The financial firms and banks the taxpayer has utilized.
Section C: Personal Information
This section is optional. The IRS does not need the reporting person’s name or other personal information in order to initiate enforcement actions because it understands the value of protecting a whistleblower’s identity.
Frequently Asked Questions
Unlike other forms, the 3949-A form has no deadline for submission. Whistleblowers are free to submit this voluntary form to the IRS as soon as they have knowledge of any tax breaches.
You can send any supporting documentation to the IRS together with the printed and filled-out IRS form 3949 A to support the reported tax breach. However, if possible, you must mention any books or records that support your claim.
Form 3949-A, also referred to as an “Information Referral,” is used to tell the IRS about problems including incorrect exemptions or deductions and falsified tax records, tax evasion, undeclared income, and failure to withhold taxes. Moreover, you can also submit a letter to the IRS outlining the specifics of the possible violations in place of this form.
Your letter should include the following information:
● The name and address of the person or business you are reporting
● Social Security number of the person.
● Business employer identification number.
● A description of the accusation of misdeed committed.
● How did you get to know about the case?
● An approximate estimate of unreported income.
You have the choice of remaining anonymous if you do not want to disclose yourself to the IRS.
When IRS receives the form it will take specific steps. The procedure by which the IRS chooses who conducts the suspicious activity investigation is under the Internal Revenue Manual (IRM). IRM Part 3, Chapter 28, Section 2 in particular provides step-by-step instructions for the IRS to look into the claim.