TIGTA Reports that the Process for Individuals to Self-Report Suspected Tax Law Violations is Not Efficient or Effective.
TIGTA released their audit of the effectiveness and efficiency of the IRS’s process for individuals to report suspected tax law violations. According to the audit, approximately 68 percent of the 530 Forms 3949-A that were used as the statistical sample for this audit were found to have insufficient information or information not related to tax administration, or were being used for purposes other than the purpose Form 3949-A was intended.
The audit focused on Form 3949-A, Information Referral, not Form 211, Application for Award for Original Information, which was the subject of a different audit. TIGTA found that the reporting guidelines provided to taxpayers and IRS employees for Form 3949-A are confusing and inconsistent. The confusing and inconsistent instructions result in individuals using Form 3949-A for purposes other than reporting suspected tax fraud or tax law violations, and individuals completing Form 3949-A do not always provide the IRS with sufficient information for the IRS to take action. In fact, 27 percent of the statistical sample looked at for the audit was deemed unworkable because the individual completing the form did not provide sufficient information. The forms that lack sufficient information or information that is not related to the tax administration and cannot be acted upon by the IRS are retained for 90 days and then destroyed. (See Figure 3, below, from the TIGTA Audit 2012-40-106, The Process for Individuals to Report Suspected Tax Law Violations Is Not Efficient or Effective)
As is clear from this audit, individuals should consult with an attorney to ensure that the information they are proving to the IRS is done so in the most effective and efficient manner. By providing complete information pertaining to tax fraud or tax law violations on the correct form the information is more likely to make it into the hands of those who can use the information.