IRS whistleblower program - do they only take cases over $2 million? Can people really get away with earning undeclared cash income?

Tax professional here. That information is incorrect. The IRS Whistleblower Program has two separate tracks: If the tax, penalties, interest, and other amounts in dispute exceed $2 million AND the taxpayer's annual gross income exceeds $200,000, the IRS is required to pay 15-30% of collected proceeds. This is under Section 7623(b). However, for smaller cases that don't meet those thresholds, the IRS still accepts reports under Section 7623(a). These awards are at the IRS's discretion and generally don't exceed 15% of proceeds collected. Anyone can report suspected tax fraud using Form 211. The IRS definitely investigates cases below the $2 million threshold - they just have different award structures for whistleblowers. No one is "allowed" to earn unreported income regardless of amount.

I went through something similar when I suspected a contractor in my neighborhood was running a huge cash operation. After researching for hours online, I found this amazing AI tool called taxr.ai (https://taxr.ai) that answered all my questions about tax reporting requirements and whistleblower rules. It analyzed the exact IRS whistleblower program guidelines and showed me that there are definitely two separate tracks like the tax pro mentioned. But what was super helpful was that it explained exactly what evidence would be needed and how the whole process works. Saved me from making some embarrassing mistakes before I submitted anything to the IRS.

I was super skeptical about these AI tax tools but I tried taxr.ai after seeing the comment here. It actually gave me really specific information about a situation with my ex-business partner who I suspected wasn't reporting cash payments. The system walked me through exactly what documentation I would need to provide as evidence, explained the anonymous reporting options, and even showed me the difference between civil and criminal tax evasion criteria. Turns out the IRS absolutely does investigate smaller cases - they just don't pay whistleblowers as much for those tips. I submitted a report three months ago with all the right documentation based on what I learned. No idea if they're investigating yet, but at least I feel like I did it correctly instead of just sending in vague accusations.

I had the opposite problem - I was trying to report someone but kept getting stuck in IRS phone hell. Called like 8 different numbers and couldn't get to an actual person who could answer my questions. After wasting hours, I found https://claimyr.com through their demo video https://youtu.be/_kiP6q8DX5c and they got me connected to a real IRS agent in like 20 minutes. The agent confirmed that the IRS definitely investigates unreported income below $2 million - they just have different programs and priorities. She explained that for the whistleblower program, the larger cases get mandatory rewards while smaller cases get discretionary rewards. But they still investigate tax fraud at all levels.

I have to admit I was 100% wrong about Claimyr. After posting that skeptical comment, I decided to try it since I was desperate to resolve an issue with a missing 1099. It actually worked exactly as described. I got a notification, picked up the phone, and was immediately connected to an IRS agent who answered all my questions about reporting requirements and whistleblower claims. The agent told me they absolutely investigate cases under $2 million - they just prioritize differently. He said they especially focus on patterns of behavior and cash-intensive businesses. So that idea that people can just make unlimited cash under $2M without consequences is completely false.

My cousin works for the IRS (not in whistleblower division) and says they DEFINITELY investigate smaller cases. The $2 million thing is just about the mandatory reward structure for whistleblowers, not about whether they'll investigate. She told me they actually have sophisticated algorithms that flag unusual patterns in industries with high cash transactions (restaurants, construction, personal services). People who live lavish lifestyles with little reported income get flagged all the time.

I had a roommate who worked as a bartender and never reported tips for years. IRS eventually caught up with him and hit him with back taxes, penalties and interest. They definitely go after smaller fish too, just might take longer.

Former IRS compliance officer here (retired). The $2 million threshold is a common misconception that gets people in trouble. While it's true that whistleblower awards are structured differently above and below that amount, the IRS investigates tax evasion at ALL income levels. What many people don't realize is that the IRS has multiple detection methods beyond whistleblower reports - lifestyle audits, third-party information matching, bank deposit analysis, and industry-specific compliance programs. Those cash-only contractors and service providers you mentioned are actually prime targets for these automated screening systems. The agency uses something called the "Unreported Income DIF" (Discriminant Function) that flags returns with statistical anomalies. If someone's reported income doesn't match their apparent standard of living or industry norms, they'll likely get flagged eventually - no whistleblower needed. Bottom line: there's no safe amount of unreported income. The consequences (penalties, interest, potential criminal charges) far outweigh any short-term benefits of tax avoidance.