Where to Report Tax Evasion and Payroll Fraud

If you are aware of organizations evading paying taxes…

…here is a current list of federal and state offices, as well as elected officials, who want to hear from you.

More will be added:

More links will be added shortly along with automatic email forwarding to report Tax Evasion.

Image:  Flickr/ElectonicFoundation

The IRS Whistleblower Office

From the IRS Website

Source:  www.irs.gov

“The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.

Who can get an award?

The IRS may pay awards to people who provide specific and credible information to the IRS if the information results in the collection of taxes,penalties, interest or other amounts from the noncompliant taxpayer.

The IRS is looking for solid information, not an “educated guess” or unsupported speculation.

We are also looking for a significant Federal tax issue- this is not a program for resolving personal problems or disputes about a business relationship”

For additional information visit the following page on the Internal Revenue Services website:

http://www.irs.gov/compliance/article/0,,id=180171,00.html 

What the IRS says about Proper Worker Classification

(Link) – Listen to “What the IRS says about Proper Worker Classification” here

The following is an excerpt of the transcript Basic Definitions:

One of the biggest tax challenges for companies is determining whether workers are employees or independent contractors. If a worker is an employee, then the employer is responsible for withholding income tax and the employee’s portion of Social Security and Medicare tax from amounts paid to the worker. The employer is also responsible for paying over to the IRS the employer’s portion of Social Security and Medicare tax, as well as paying the federal unemployment tax.

On the other hand, the business is not responsible for any payroll taxes for independent contractors. Many companies believe that they can choose whether to treat any given worker as an employee or independent contractor. However, there are laws that determine whether the worker is an employee or an independent contractor. So the first step is to properly classify the worker.

An employee is an individual who performs services for you, and who is subject to your control regarding what will be done and how it will be done. If the employer retains the right to direct and control the means and details of the work, then the worker is an employee. We call this the right to direct and control. It is the only definition, outside of court cases, you will find, and it can be found in Treasury Regulations Section 31.3121(d)-(1)(c), paragraphs (1) and (2). Remember this term, right to direct and control, because you will hear it throughout this presentation.

In contrast, an independent contractor is an individual who performs services for you, but you control only the result of the work, not the means and methods of accomplishing the result.

The information that we are covering is discussed in the Publication 1779, titled Independent Contractor or Employee, and is available on the IRS Web site.

Employee versus Independent Contractor

IRS Revenue Ruling 87-41 contains factors, commonly referred to as the twenty common law factors, that assess whether or not a business has the right to direct and control the actions of the worker.

Although this revenue ruling is still valid today, the IRS has grouped the more relevant ones into three main categories of evidence that show whether a worker is an employee or an independent contractor:

  1. One: behavioral control
  2. Two: financial control, and
  3. The third is the relationship of the parties.

Read the rest of this IRS program transcript here >>

Independent Contractor or Employee?

Language Line ServicesLanguage Line Services of Monterey, California, provides interpretation and translation services in 170 languages to emergency services operators, online retailers, banks and other businesses across the country.  One corporate decision the $300 million company made, however, involves the difference between two common English business terms – “employee” and “independent contractor.”

More than 97 percent of the company’s nearly 5,000 interpreters – people who’ve mastered languages from Afrikaans to Yiddish – are employees eligible for health care and other benefits. The company also pays its share of federal and state employment taxes and withholds taxes from employee paychecks.

Less than 3 percent of Language Line’s interpreters are independent contractors who get called in for special project work on rare languages such as Woloff, Visayan or Fukienese.

Not all translation companies follow suit.

In fact, Language Line attorney Steven Marc Weinberg says many of the company’s competitors classify all of their interpreters as independent contractors. As contractors, interpreters handle their own taxes and aren’t eligible for employee benefits. Weinberg argues that translation companies using such a set up are able to unfairly undercut prices charged by firms like Language Line. “Some businesses that classify workers as independent contractors end up increasing their bottom line unfairly,” says Weinberg. “It’s tough enough in this economy without so many folks being denied the support they’re rightly owed.”

Read the rest of this American Express “Inside Edge” story by Elizabeth Wasserman here >>

Related links: