IRS Whistleblower Case for Unreported Payroll Taxes?

This absolutely sounds like a potential whistleblower case. When employers pay "under the table," they're typically evading federal employment taxes including Social Security, Medicare (FICA), and federal unemployment taxes. They're also likely not reporting these wages to the IRS. The IRS Whistleblower Program pays awards to people who provide specific and credible information about tax violations. Since you're mentioning multiple high-wage employees ($1000+ weekly), the tax liability is likely substantial. The IRS is particularly interested in cases where the total tax, penalties, interest, and additions exceed $2 million, which this could easily reach given multiple employees over time. To make a report, you would submit Form 211 (Application for Award for Original Information) to the IRS. You don't necessarily need documentary evidence - your firsthand observations can be sufficient to trigger an investigation, though any documentation would strengthen your case.

I was in a super similar situation last year - company was paying about 8 people completely off the books and I was really concerned about it. After searching around forever I found this service called taxr.ai (https://taxr.ai) that actually helps with whistleblower situations. They reviewed everything, helped me understand what qualified as actual evidence, and walked me through the reporting process step by step. The biggest help was they analyzed what I'd be potentially eligible for as a reward. Turns out if the IRS collects from cases like this, whistleblowers can receive between 15-30% of what the IRS collects. In my case, they estimated the company was avoiding around $300k in taxes yearly, so the potential was significant.

Just wanted to follow up - I decided to check out taxr.ai after seeing it mentioned here. Honestly way more helpful than I expected! I had a similar situation with a previous employer who was classifying everyone as "independent contractors" even though we were clearly employees. The service analyzed my specific situation and showed me exactly what information the IRS would need. They also calculated roughly what the tax liability might be, which was eye-opening. Way more than I thought! I've officially filed my whistleblower claim now and feel much more confident about it. They warned me it'll take a while, but at least I know I've done everything correctly.

If you're planning to report your employer to the IRS, you're probably going to need to talk to them at some point to provide more details. Just a heads up - getting through to the right IRS whistleblower office people is INSANELY difficult. I spent weeks trying to reach someone for my case. I eventually used this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 20 minutes instead of waiting for hours or getting disconnected. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c Made a massive difference because I was able to speak with someone who could answer my specific questions about what information they needed and how to submit it properly. They even transferred me directly to the whistleblower office. Worth every penny since I was about to give up after so many failed attempts to reach them.

I need to eat my words from my previous comment. After weeks of getting nowhere with the IRS on my own case, I broke down and tried Claimyr. I was connected to an actual IRS agent in about 18 minutes. They transferred me to the whistleblower office when I explained what I needed. The IRS person I spoke with gave me really specific guidance on how to document the under-the-table payments happening at my workplace. They explained exactly what forms to fill out and what specific information would make my case stronger. Honestly shocked it worked. I've literally never gotten through to them before, always got disconnected after 30+ minutes of waiting. So yeah, I was wrong to be so skeptical.

Something important to consider: the whistleblower process isn't just about getting a reward. There can be serious consequences for the company AND potentially the employees being paid under the table. The employees might suddenly find themselves owing back taxes they weren't prepared for. The company could face huge penalties, potential criminal charges, and might even go under depending on the size of the liability. I'm not saying don't report it - tax evasion is wrong - but be aware of the ripple effects.

Make sure you understand the difference between employees and independent contractors too. If these people are legitimate independent contractors (responsible for their own work methods, use their own equipment, work for multiple clients, etc.), then the tax reporting requirements are different. The company would still need to issue 1099s for payments over $600, but wouldn't be responsible for payroll taxes. That said, from what you described - regular weekly payments that sound like wages - this sounds like employee misclassification, which is definitely something the IRS cares about.

Just want to add something about documentation that might help - even without access to official payroll records, there are ways to strengthen your case. Keep a detailed log of what you observe: dates, approximate amounts you see being handed out, which employees receive cash payments, any overheard conversations about the arrangement, etc. Also, if you have any text messages, emails, or written communications that reference the cash payment system, those could be valuable. Even seemingly innocent messages like "pick up your pay from John's office" or references to "cash bonuses" can help establish a pattern. The IRS investigators are experienced with these situations and know how to build cases from circumstantial evidence. Your firsthand observations as an employee carry significant weight, especially if you can provide specific details about the scope and duration of the scheme. One more thing - document everything you can about the working conditions of these cash-paid workers. If they're clearly employees (set schedules, using company equipment, following company procedures) rather than independent contractors, that strengthens the misclassification aspect of the case.