Fraud: Reporting it to the IRS

Let’s say you’ve been a victim of fraud. You’ll want the fraudster to feel some of the pain you’re feeling. One way to accomplish this is to share this information with people who may find it of interest beyond the police. But who should you turn to?

If fraudsters stole from you, it’s likely that they’re also planning to defraud the IRS. Tax fraud is punishable by either civil or criminal penalties. 

How about the IRS? Did you know that ill-gotten gains are taxable income? If fraudsters stole from you, it’s likely that they’re also planning to defraud the IRS. Tax fraud is punishable by either civil or criminal penalties, depending on the severity of the fraud; therefore, unreported income can cause some heightened inquiry by IRS agents. So how do you report fraudsters?

• Fill out Form 3949-A
  Yes, the IRS has a form to report fraud, too. Form 3949-A (Information Referral) is a one-page document that can be completed quickly with the information available to you regarding the scheme. While you’re encouraged to provide your contact information (it won’t be provided to the fraudster), this information isn’t required. To make sure the form is processed correctly, mail it to the IRS at it's Fresno Service Center. Please note that the IRS will not provide updates on the status of your submission.
• Write a letter
  If you’re opposed to completing yet another IRS form, you can send a letter to the IRS office in Fresno. It should provide as much information about the scheme as is available to you. This includes the fraudster’s name, social security number, a description of the violation, and the years involved. Be concise and organized. While it may be tempting to share how hurt you are by what that the perpetrator did to you, the IRS is only interested in the facts.

Since the IRS will only take this information in writing, reporting fraud on the IRS’s hotline is not an option. And if the fraudster was an employee, the unlawful income gained through fraudulent means shouldn’t be reported on a W-2 or Form 1099, as these forms report only non-fraudulent compensation or fees.

It’s been said that writing a letter can help a victim release anger. Consider this reporting to the IRS to be that “letter.”