Blowing the whistle on wrongdoing doesn't always offer big rewards. Some whistleblowers in history have lost their jobs, and others have merely been forgotten. But many whistleblowers can actually make money, and not go to jail. You can be one of them -- if you turn in a tax cheat.
America's corporate history is full of whistleblowers:
- Jeffrey Wigand blew the whistle on Brown & Williamson's nicotine use practices, causing grief for many tobacco companies.
- Bunnatine Greenhouse of the Army Corps of Engineers alerted America to a Halliburton (NYSE: HAL) subsidiary being awarded billion-dollar, no-bid contracts.
- The FDA's David Graham raised the flag over risks surrounding Merck's (NYSE: MRK) drug Vioxx.
- In 1994, Douglas Keeth exposed billing improprieties at United Technologies' (NYSE: UTX) Sikorsky division and reportedly turned down a $1 million offer to keep mum about it. He ended up with $22.5 million as part of the company's settlement with the government.
- Bradley Birkenfeld, who blew the whistle on Swiss bank UBS (NYSE: UBS), got recognition and a prison sentence for his part in the company's tax scandal.
These folks and many others have generally improved our lives, and in some cases, have saved lives. The exposure of financial shenanigans is important, too, because it stops waste and, in the case of tax fraud, saves our government money.
Be a tax whistleblower
If you know of someone who is cheating the government out of taxes, perhaps by not reporting some income, for example, you can let the IRS know about it. If your report pans out, you may be able to receive 15% to 30% of the amount collected by the IRS, depending on how much money is involved and the taxpayer's income.
You'll need to provide specific information, and ideally evidence. You'll also need to be OK with confirming your story under penalty of perjury. You can start the process by reading IRS Publication 733 and then filing IRS Form 211 -- "Application for Award for Original Information."
Note that most applications for rewards don't result in any -- but some do. Note, too, that you can report someone without providing your name, though you won't be able to collect a reward anonymously. Still, you'll have the satisfaction of helping your country collect its due. After all, when billions of tax dollars go uncollected, the country has to find needed dollars elsewhere, and that's often from the tax-paying public.
For simpler and less stressful ways to make or save money, visit our Tax Center to get tips and practical guidance.
Dan Caplinger explains how you can still save thousands on your taxes.
