Report Tax Fraud and Receive a Reward

Tax Fraud - False Billing Schemes 

False Billing Schemes have been classified as Abusive Tax Shelters by the IRS and are usually high dollar schemes used by (non) taxpayers to underpay taxes.  This is typically an area that the IRS is interested in pursuing as part of the Tax Whistleblower Program. 

As former IRS attorneys, we are familiar with how the False Billing Scheme works and can assist you in putting the proper information and documents together and in writing up the case so that it may be accepted into the Tax Whistleblower Reward Program and be eligible for the maximum reward.  Under the Tax Whistleblower Reward Program (I.R.C. § 7623), the whistleblower is entitled to between 15% and 30% of the amount of tax, penalty, and interest ultimately collected by the IRS.

Therefore, if the IRS were to collect $10,000,000, the whistleblower would be entitled to between $1,500,000 and $3,000,000.

Note:  There is no maximum dollar limitation under the Program.

Pursuant to the Tax Whistleblower Reward Program, the IRS is interested in:

1.     Taxpayers that have implemented this scheme and/or

2.     Promoters of this scheme

If you are aware of any “False Billing Schemes” in which the total of tax, penalty, and interest is at least $2,000,000 and wish to claim a reward, or if you simply have questions as to whether the fact situation about which you are aware might qualify under the IRS Tax Whistleblower Reward Program, please feel free to call the attorneys at S & P Law Firm, LLL at 1.866.241.6771 or contact us through our secured web site.

Quick Summary - False Billing Schemes:  A taxpayer sets up an International Business Corporation (IBC) in a tax haven country with a nominee as the owner (usually the promoter).  A bank account is then opened under the IBC.  On the bank's records, the taxpayer would be listed as a signatory on the account.  The promoter then issues invoices to the taxpayer's business for goods allegedly purchased by the taxpayer.  The taxpayer then sends payment to the IBC that gets deposited into the joint account held by the IBC and taxpayer.  The taxpayer takes a business deduction for the payment to the IBC, thereby reducing his/her taxable income and has safely placed the unreported income into the foreign bank account.

*  *  *  *  *  *  *  *  *  *  *

False Billing Schemes for Dummies -- Billing schemes are a popular form of tax fraud mainly because they offer the prospect of large rewards.  Since the majority of most businesses’ payments are made in the purchasing cycle, larger thefts can be hidden through false billing schemes than through other kinds of fraudulent payments.  There are three principal types of billing schemes:

  1. False invoicing via shell companies (IBC/other);

   2. False invoicing via non-accomplice vendors; and  

    3. Personal purchases made with company funds.