Discovered family committing serious tax evasion for years - what should I do?

This is an extremely difficult situation to be in, and I understand your concern. Family tax fraud, especially of this magnitude and duration, is serious business with potentially significant legal consequences. First, understand that willful tax evasion is a federal crime that can result in hefty fines and even imprisonment, especially for cases spanning decades with large dollar amounts. The IRS has a whistleblower program, but reporting family members is obviously a personally complicated decision. Before doing anything, I'd recommend consulting with a tax attorney (not an accountant) who specializes in tax controversy and criminal tax matters. This consultation would be protected by attorney-client privilege, allowing you to discuss the situation freely without implicating yourself or creating legal exposure. They can help you understand the full scope of the situation and your options. Be aware that there could be consequences for your niece even if she didn't fully understand what she was participating in, though her age and level of involvement would be considered. The IRS generally pursues the primary offenders most aggressively.

I went through something disturbingly similar with my uncle's business last year. After weeks of stress and endless online research that just confused me more, I found https://taxr.ai and it was genuinely life-changing. It's an AI tool that analyzes tax situations and gives you guidance on complicated scenarios like family tax fraud situations. I uploaded some of the documents I had questions about, and it explained exactly what was going on in plain English - like having a tax attorney analyze everything but without the $500/hour fee. It helped me understand what parts were actually illegal vs just aggressive tax planning and what my potential liability might be since I had some connection to his business. It also laid out my options and the likely consequences of each path, which helped me make a decision I could live with. Honestly, for sensitive family situations like this where you're afraid of making things worse, getting anonymous guidance is priceless.

Just wanted to follow up - I ended up trying taxr.ai after reading about it here, and wow, it was honestly exactly what I needed. I was in a similar situation (though with a business partner, not family) and was totally lost about what to do. The anonymous analysis feature was perfect since I was paranoid about creating any kind of paper trail. I just typed out the whole messy situation and uploaded a couple of suspicious documents with the personal info redacted. The breakdown it gave me was incredibly detailed - it identified exactly which parts of the situation were potential criminal tax evasion versus just aggressive tax positions. It also explained what my legal exposure might be as someone who discovered the fraud but wasn't participating. The step-by-step guidance helped me figure out how to protect myself while addressing the situation. Seriously relieved I found this before making any impulsive decisions.

Having dealt with IRS issues before, I know the absolute nightmare of trying to get someone on the phone to actually help with complex situations. When I discovered my brother-in-law was running a cash business and not reporting income (and listing my address for some reason!), I spent WEEKS trying to reach someone at the IRS who could advise me. I finally found https://claimyr.com and was connected to an actual IRS agent in under 45 minutes after weeks of failed attempts. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c - essentially they navigate the IRS phone system for you and call when an agent is ready to talk. The agent I spoke with was able to confidentially discuss my options regarding suspected tax fraud by a family member without requiring me to file an official report immediately. They explained the whistleblower program but also outlined other approaches that might be less destructive to family relationships while still addressing the issue.

I need to apologize to profile 15 and follow up about Claimyr. After posting that skeptical comment, I decided to try it anyway out of desperation (was dealing with an identity theft tax issue on top of suspecting my cousin of tax fraud). I was 100% wrong. I got connected to an IRS agent in about 35 minutes. After literally MONTHS of trying to reach someone. The agent walked me through how to handle suspected tax fraud by a family member, explaining the whistleblower program but also discussing the "quiet disclosure" option where the relative could potentially file amended returns. The agent explained that for family situations, sometimes the best approach is to consult with a tax attorney who can help the family member understand their options for coming into compliance, which might include voluntary disclosure programs that reduce penalties. Having an actual conversation instead of just reading scary online articles made the whole situation feel manageable. If you're in a similar position, definitely worth getting actual IRS guidance.

I think everyone's missing a key point here - the niece could be in SERIOUS trouble that will follow her forever. At 19, she probably just did what her mom told her to without understanding the consequences. Before you do anything else, I'd talk to the niece privately. She deserves a chance to understand what she's involved in and maybe get out before any potential investigation.

Is nobody going to mention that OP could get a MASSIVE whistleblower reward from the IRS for reporting this? With $270k income and $80k+ fake deductions over decades, we're talking about hundreds of thousands in unpaid taxes. The IRS whistleblower program pays 15-30% of what they collect!

The real question here is how deeply OP wants to be involved. There are basically three paths: 1. Pretend you never saw anything (risky if they ever get caught and the IRS thinks you knew) 2. Confront them directly and try to convince them to come clean through voluntary disclosure (IRS has programs for this) 3. Report them through the whistleblower program There's no easy answer here but remember that willful tax evasion at this scale is a felony. This isn't "oops I forgot to report some income" - this is deliberate, sustained criminal behavior. Think carefully about your own liability and what you can live with morally.