Can I Be Fired for Reporting My Employer to the IRS?
Our law firm is constantly hearing about cases where an employer retaliated against an employee for taking certain actions that the employee was legally entitled to take. Our lawyers are here to make sure that justice is served.
Everyone has to pay their taxes to Uncle Sam. This includes individual people like you or me, and it also applies to companies of every size. No matter how you make money, you have to pay taxes. While most employers do pay their taxes, unfortunately – and unsurprisingly – there are some companies and corporations and individuals that do anything they can in order to avoid paying their dues. If they can avoid paying taxes, that’s more money in their pocket to spend on quite literally whatever it is they want. There may be some employees who are aware of the company’s illegal, unjust, and unethical treatment of the law but still do not report it because they fear retaliation from their employer. It’s not hard to imagine why: a powerful employer who avoids paying taxes and provides the employee’s living salary does not seem like someone anyone would want to report in fear that they will lose their job or their employer will retaliate in some other way. The employee may have a family to provide for and their life to maintain. If they have a mortgage, student loans, kids in college, credit card debt, car payment, and other expenses to which they have to attend, they may be inclined to look the other way and let their employer continue to get away with tax evasion.
On the other hand, the employee may feel they have to do the just thing, and report their employer for breaking the law and not paying their taxes. A feeling that will nag at them, and they may know that there is an award for those individuals that help the IRS. They may wonder if they have any rights or protections if they report their employer. Or does the employer have a right to fire their employer for being disloyal and reporting them? Our Los Angeles attorney provides the answers below.
Reporting illegal employer activity to a government agency is considered “whistleblowing,” and there are federal and state laws which protect whistleblowers from retaliation in any way, shape, or form. But the IRS has different rules regarding what an employer can or can’t do. So what happens if you suspect or know that your employer is not paying their taxes? We at the California Labor Law Employment Attorneys Group help people in your position every day and get asked questions about employee rights. Examples of such questions include:
- Can I be fired for reporting my boss to the IRS? If that happens, can I hire a lawyer to sue my boss?
- If I report my employer to the IRS, can they legally fire me?
- Am I considered a whistleblower if I report my employer to the IRS? What are my rights? Can I be fired for this?
- After I reported my boss to the IRS, he fired me. Is this wrongful termination? Can I get an attorney and sue my boss?
- How to turn someone into the IRS anonymously?
- How to report an employer for paying under the table?
- What are IRS whistleblower protections?
- How do I report someone to the IRS for paying under the table?
- What are the rules regarding IRS whistleblower confidentiality?
What Laws Protect Whistleblowers?
The Internal Revenue Service (IRS) is an agency which ensures that everyone is paying their taxes on time, the right amount, and correctly reporting the flow of their money. The IRS considers Whistleblowing laws in effect when the amount in dispute exceeds $2 million. If the employer is an individual and you report them to the IRS, the individual’s gross income must exceed $200,000 for any taxable year. For example, if you have reasonably and legally acquired evidence to believe that your employer is avoiding paying taxes for $2.1 million and report a claim to the IRS, your employer cannot retaliate against you for doing so. Retaliation can be straight out termination from employment, or otherwise making life very difficult (like sending you to undesirable or unsafe locations to perform your employee duties or giving you particularly difficult assignments) for you which eventually forces you to quit on your “own” volition. Additionally, employers cannot remove any promotions, bonuses, raises, benefits, or any other forward movements for which you were in consideration prior to you reporting them for a violation of the law. So if you were being considered for a promotion and then your employer discovered you filed a claim with the IRS against them, they cannot remove you from contention.
The allegation need not be true in order for you to be protected against retaliation. So if your suspicion of your employer hiding from the hands of Uncle Sam is found to be untrue by the IRS, your employer cannot retaliate against you.
It is important to note that if the amount in question does not meet or exceed what the law demands, you are not protected under the Whistleblowing laws for reporting an employer to the IRS, meaning that your employer – if they find out about your activity – may have the grounds to retaliate against you.
Examples of claims that should be reported to the IRS include such things as tax fraud, under-reporting income or revenue, using illegal tax shelter, non-payment of income, payroll, corporate, and other dues, and other such avoidances.
How Do I File a Claim with the IRS?
If you believe that your employer is partaking in an activity that the IRS finds unlawful, the IRS encourages you to file a claim against your employer. The IRS considers the following activities in which a business partakes of being noncompliant with the tax laws:
- False exemptions or deductions
- Failure to pay tax
- Organized crime
- Failure to withhold
- Altered/false documents
- Unreported income
If you suspect that your employer is partaking in any of the activity that is listed above and you want to report your employer to the IRS, then you use Form 3949-A. You can print and fill out the form and mail it to:
Internal Revenue Service
Fresno, CA 93888
In addition to sending Form 3929-A, you can send a letter to the IRS in order to report your employer. It is important that you add as much information as you can in order for your claim to be as processed as possible and for the investigation to begin. The following information should be included in your letter:
- Your name, address, and telephone number.
- The name and address of the employer whom you are reporting;
- The business’ employer identification number, or the individual’s Social Security number;
- A description of the activity which you believe your employer is involved, and how you became aware that your employer’s violation;
- The years involved;
- An educated guess as to the amount that was not reported;
An amount of over $2 million for businesses or over $200,000 for individuals usually has a reward for the person who reported the illegal activity to the IRS. The IRS typically awards 15 to 30 percent of the money they collect from the employer if it used the information that you provided for them. There is no limit to the reward which you may receive. The IRS will determine the amount of your reward based on the quality of information you provided, and other factors, of course.
Employers need to know that they are not above the law; they have to follow the rules and pay taxes just like everyone else. If you believe that your employer has retaliated against you for exercising your right to file a claim against them to the IRS, then you may have the grounds to file a lawsuit against them.
Our Los Angeles attorneys are here to protect employees just like you who are wrongfully disciplined for exercising their rights and bringing justice to this world. We offer free consultation and promise a zero-fee guarantee. With the free consultation, you can sit down with one of our qualified attorneys and explain your case to them. They will give you their initial thoughts on whether you have a strong case or if they want to take it in the first place. If you want to hire our services after the free consultation, you are free to do so. If not, that’s OK, too. There is no obligation if you partake in the free consultation!
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