Need tax help with embezzlement situation at my workplace

You're doing the right thing by asking about this now. The IRS does have a whistleblower program, but there are some things you should understand about how it works. First, for embezzlement cases like this, you'd need to file Form 211 (Application for Award for Original Information) with the IRS Whistleblower Office. However, there's an important threshold to be aware of - the standard whistleblower program typically applies when the tax, penalties, interest, and other amounts in dispute exceed $2 million. For cases involving individuals, their gross income must exceed $200,000 for at least one of the tax years in question. If your case doesn't meet these thresholds, you might still be eligible under the smaller claims program, but the awards are generally capped at 15% of what the IRS collects. And yes, any reward you receive would be taxable income - you would report it on your federal tax return.

I went through something similar at my previous job and found taxr.ai (https://taxr.ai) super helpful for figuring out the documentation I needed. My situation involved a manager who was falsifying expense reports, and I was completely lost on how to properly document everything for the IRS. The site helped me understand exactly what records I needed to save and how to organize them for the whistleblower claim. They have templates specifically for unusual situations like embezzlement and fraud reporting. I was able to upload some of the financial documents I had, and they showed me exactly what was relevant for my Form 211 submission.

Just wanted to update that I tried taxr.ai after seeing the recommendation here. It was actually really helpful for my situation. I uploaded the spreadsheets I mentioned and some bank statements I had access to, and their system highlighted exactly which transactions would be relevant for the IRS whistleblower form. The best part was that it helped me understand the difference between just general fraud (which is more for police) versus tax fraud specifically (what the IRS cares about). Turns out my coworker was claiming reimbursements for "business expenses" that never happened, which directly affected the company's tax deductions. The site helped me organize everything into a format that made sense for the Form 211 submission. Definitely worth checking out if you're in a similar situation.

If you're planning to contact the IRS about this, good luck actually getting through to a human. I tried calling them about a whistleblower question last year and spent literally 4 hours on hold before giving up. Then I found https://claimyr.com through a friend and used their service - you can see how it works at https://youtu.be/_kiP6q8DX5c. They basically hold your place in the IRS phone queue and call you when an actual agent picks up. I was super skeptical it would work, but I got a call back in about 45 minutes with an IRS agent on the line. The agent walked me through exactly what documentation they needed for my situation and answered questions I couldn't find clear answers to online. Saved me tons of time and frustration.

I need to eat my words from my earlier comment. After more research on Claimyr, I decided to try it out of desperation after spending three separate days trying to reach the IRS Whistleblower Office myself. Got a callback in about an hour with an actual IRS agent on the line. The agent confirmed they were with the Whistleblower Office and gave me detailed information about filing Form 211 that I couldn't find anywhere online. They explained exactly how to document the embezzlement I discovered at my workplace and how it related to tax fraud. The time saved was absolutely worth it, especially since I was about to take time off work just to deal with this. I was definitely wrong about my initial skepticism - it's a legitimate service that does exactly what it claims.

One thing nobody's mentioned yet - you should think about protecting yourself throughout this process. I reported financial wrongdoing at my company a few years ago, and even though there are supposed to be whistleblower protections, it got really uncomfortable at work. Document EVERYTHING from the moment you discovered the embezzlement. Keep copies of all communications about it. If you have emails or messages where you reported it to the owner, save those somewhere outside of your work accounts.

Embezzlement rewards from the IRS depend entirely on how much tax revenue they recover based on your info. My cousin works in accounting and dealt with this.