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Fraud: Reporting it to the IRS

October 27, 2016 / 1 min read

If you’ve been defrauded, there are two steps to bringing the fraudster to justice. First, tell the police. Then, the IRS.

 Stones in water 

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?

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.”

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