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  1. #1
    Join Date
    Mar 2010
    Posts
    18

    Default Knowledge of Tax Evasion by Others

    State: PA
    I'm not sure if this is posted in the correct place.

    A) I worked for a firm that does not properly record some of their expenses (i.e.:food as only 50% deductible; not recording funds paid to an employee as payroll but instead given to the employee tax free through fake expense reimbursements).
    Additionally, they overstated their expenses by at least $100-$200 per year for the last three years, which would reduce their taxable income.

    B) There are a few employees in this firm, making over $200k/year, who received anywhere from $5,000 to $50,000 per year for at least the last three years as reimbursement for expenses that they either: a) enterd for and received payment for twice, or b) never turned in expense receipts---meaning no receipts at all were turned in.

    I happened to read that the IRS will pay people a percentage of whatever the IRS gets from tax evaders. I am wondering if this is something I should seriously look into (turning in the company and the employees I am aware of). I have some info to confirm the activity. I think the amount recovered from a business has to be at least $2 million, but I'm not sure if I read that correctly. I do recall reading that the incomes of the person tax evaders has to be at least $200,000.

    I would meet with a lawyer if there may be something to this.

    What type of lawyer would be helpful for consultation? A tax lawyer? Is there such a profession as tax lawyer? Or should it be a lawyer who deals with commercial companies or a "family" type lawyer?
    Any suggestions would be greatly appreciated.
    Thanks.

  2. #2
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: Knowledge of Tax Evasion by Others

    Meals are recorded at 100% on the books and 50% is taken as a deduction on the tax return. They are not recorded at 50%. Companies can give employees expense reimbursements under a non-accountable plan and no expense report or receipts are required. Do you have access to the company's books, tax returns, and W-2 filings? If not, you may not have the full picture in this. You don't need a lawyer to report fraud to the IRS. Just report it.

  3. #3
    Join Date
    Mar 2010
    Posts
    18

    Question Re: Knowledge of Tax Evasion by Others

    Quote Quoting Bubba Jimmy
    View Post
    Meals are recorded at 100% on the books and 50% is taken as a deduction on the tax return. They are not recorded at 50%. Companies can give employees expense reimbursements under a non-accountable plan and no expense report or receipts are required. Do you have access to the company's books, tax returns, and W-2 filings? If not, you may not have the full picture in this. You don't need a lawyer to report fraud to the IRS. Just report it.
    I am aware that meals are recorded at 100% and deducted at 50%. What I was trying to say is that meals were not being deducted at 50% on tax returns (because the employees were reporting them as 'hotel' or 'flight' expenses). The company gives reimbursements under an accountable plan. Receipts are required for all expenses over $25.00.
    I had access to the company's employee reimbursements-I was the manager of travel expense reimbursements and I saw how the employees were cheating the company and the government by double-dipping expense reimbursements and by not turning in receipts.
    I know I don't need a lawyer. I wrote that I wanted to consult with a lawyer if this is something that is worth it, in order to give the lawyer the specifics and get the lawyer's take on things. I wanted to run it through this forum to see if a lawyer would laugh at me or not.
    I still would like to know what kind of lawyer to go to for a consultation. Can anyone else help me?

  4. #4
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Knowledge of Tax Evasion by Others

    Quote Quoting Jane0218
    View Post
    I am aware that meals are recorded at 100% and deducted at 50%. What I was trying to say is that meals were not being deducted at 50% on tax returns (because the employees were reporting them as 'hotel' or 'flight' expenses). The company gives reimbursements under an accountable plan. Receipts are required for all expenses over $25.00.
    I had access to the company's employee reimbursements-I was the manager of travel expense reimbursements and I saw how the employees were cheating the company and the government by double-dipping expense reimbursements and by not turning in receipts.
    I know I don't need a lawyer. I wrote that I wanted to consult with a lawyer if this is something that is worth it, in order to give the lawyer the specifics and get the lawyer's take on things. I wanted to run it through this forum to see if a lawyer would laugh at me or not.
    I still would like to know what kind of lawyer to go to for a consultation. Can anyone else help me?
    You do realize that if you were the manager of travel expense reimbursements and you allowed that to happen, that YOU could be prosecuted by the company?...that the company could pin all the blame on you if you report them to the IRS?

  5. #5
    Join Date
    Mar 2010
    Posts
    18

    Default Re: Knowledge of Tax Evasion by Others

    Quote Quoting llworking
    View Post
    You do realize that if you were the manager of travel expense reimbursements and you allowed that to happen, that YOU could be prosecuted by the company?...that the company could pin all the blame on you if you report them to the IRS?
    Thanks for the response. Would you happen to know what type of an attorney would be best suited for me to have a consultation with? A criminal attorney? A tax attorney? A general corporate attorney?

    There is no blame to pin. I started working at the firm, found out what was going on, and advised my manager (within my first month of employment). He, in turn, advised upper management (CFO, HR Director, CAO).

    I documented everything I found. Every penny I found I took back from each employee who fraudulently took the funds. But I didn't see everything because the volume was too much for one person to handle. In a 6 month audited period, for example, I recovered $15,000 from one person. But there were 200 persons with expense reimbursements. I only saw about 30% of all reports. Not all cheated, but those who did were either very, very clever about it or tremendously stupid about it. No middle ground.

    I no longer work there, obviously.

    So, I believe my actions would not consitute negligence or in any way my being an accomplice to the situation, as I made the company aware of every penny I found, explained why it was illegal/fraudulent, and recovered the funds from the 'bad' employees. I made my manager aware the firm had been filing tax returns with overstated expenses. They ignored me, plain and simple.

    I happened to read I could get a piece of the pie if I turned in the company and the employees, and I wanted to check it out here in this forum.

    I think I did everything correctly to protect myself, but if I'm wrong, please let me know. I would do this anonymously, and they would know it was me, obviously. I'm more interested in the individual employees who stole from the firm. Not so much the firm itself, but would do it if it was worth it.

  6. #6
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Knowledge of Tax Evasion by Others

    Quote Quoting Jane0218
    View Post
    Thanks for the response. Would you happen to know what type of an attorney would be best suited for me to have a consultation with? A criminal attorney? A tax attorney? A general corporate attorney?

    There is no blame to pin. I started working at the firm, found out what was going on, and advised my manager (within my first month of employment). He, in turn, advised upper management (CFO, HR Director, CAO).

    I documented everything I found. Every penny I found I took back from each employee who fraudulently took the funds. But I didn't see everything because the volume was too much for one person to handle. In a 6 month audited period, for example, I recovered $15,000 from one person. But there were 200 persons with expense reimbursements. I only saw about 30% of all reports. Not all cheated, but those who did were either very, very clever about it or tremendously stupid about it. No middle ground.

    I no longer work there, obviously.

    So, I believe my actions would not consitute negligence or in any way my being an accomplice to the situation, as I made the company aware of every penny I found, explained why it was illegal/fraudulent, and recovered the funds from the 'bad' employees. I made my manager aware the firm had been filing tax returns with overstated expenses. They ignored me, plain and simple.

    I happened to read I could get a piece of the pie if I turned in the company and the employees, and I wanted to check it out here in this forum.

    I think I did everything correctly to protect myself, but if I'm wrong, please let me know. I would do this anonymously, and they would know it was me, obviously. I'm more interested in the individual employees who stole from the firm. Not so much the firm itself, but would do it if it was worth it.
    The company didn't necessarily file any inaccurate tax returns. Unrecovered money would be a theft expense. Recovered money would obviously be part of the profits in the year it was recovered.

    While the employees might have committed tax fraud, their bigger crime is embezzlement, and it would be up to the company to prosecute them for that.

    I really don't see you getting anywhere with this.

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