Tax Fraud

Tax fraud is theft

When someone deliberately falsifies a tax return to either reduce the amount of tax owed, or obtain a refund that isn’t deserved, that’s tax fraud. And tax fraud is really theft.

Tax fraud occurs in many ways, including:

  • Inflating deductions on an income tax return to get a bigger refund
  • Claiming withholding that a person isn’t entitled to
  • Stealing someone’s identity to gain that person’s tax refund

Most Idaho taxpayers file accurate returns on time and pay the tax they owe as required by law. But a few taxpayers purposely evade their responsibility, and this increases costs for everyone.

Online referral form

If you suspect or know of an individual or business that’s violating Idaho tax laws, you can report this activity online through Taxpayer Access Point (TAP).

You can also use our downloadable form pdf Form IRF – Information Referral Form

Information Referral Form instructions

Please provide as much information as possible about the person or business you’re reporting. This voluntary report helps us determine if there’s been a violation of Idaho tax law.

Person or business being referred for suspected tax violations

Include as much information as you know. If you’re reporting a business and its owner, complete both parts (person and business).

If you consider this person dangerous, check the “yes” box and provide more information in the comments area immediately below.

Identity theft

If you suspect you’re a victim of identity theft, please complete IRS Form 14039. This is available on our Identity Theft page. Follow the instructions on our Identity Theft page rather than continuing with a fraud referral. The Tax Commission can use the information on this form as a starting point and take immediate action to safeguard your information.

What tax types are involved?

Check any box you think may be involved.

What violations do you think are happening?

For more information, read Guidance on types of violations. Check all that may apply.

Are there other tax types or violations involved?

Provide information on any other issues. Examples may include:

  • Filed more than one tax return to receive fraudulent refunds.
  • Reported false income from an unverifiable source to claim a false refund.
  • Collected taxes (e.g., sales, use, income tax withholding, excise) but didn’t report and/or pay taxes to the Tax Commission.
  • Didn’t report income received from wagering (legal or illegal), gambling, or a raffle. Income received as a prize or award is considered earned income and must be reported on an income tax return.
  • Purchased goods outside Idaho where sales tax wasn’t charged or paid. Use tax is due when any item is brought into, used, or stored in Idaho. Some exemptions may apply. Use tax for Internet sales should be reported on an income tax return or pdf Form 850-U.

How do you know about this information you’re providing?

Briefly describe the facts of the alleged tax law violation(s) as you know them. Include your relationship to the person or business you’re reporting (e.g., victim, employee, neighbor).

Can you provide more details?

Use the form to indicate any information you may have on the person or business you’re reporting, including financial or other records.

Your contact information

While your contact information isn’t required, it’s very helpful if we need more information or need to clarify the information you’ve provided. Your identity is never shared with the person or business.

Your identity will be kept confidential. However, it helps if you provide your contact information in case we have questions about the information you submitted. Idaho law prohibits disclosing the status of any investigation and/or any resulting civil or criminal case. We can’t give rewards for information.

The IRS has more information about reporting suspected tax fraud on its website, irs.gov

Fairness is our goal

We review every referral to determine the issues involved and whether a violation has occurred. The Tax Commission is dedicated to investigating allegations of tax fraud and helping victims of identity theft in order to promote public confidence in the tax system.

How to recognize tax evasion or fraud

Fraud is the intentional misrepresentation or concealment of information in order to deceive or mislead.

This includes individuals, businesses, or tax preparers who:

  • File false returns or refuse to file returns
  • Don’t get necessary permits
  • Collect tax but don’t report and pay it
  • Don’t charge tax when it’s required
  • Don’t report all income
  • Deal in cash and don’t report it
  • Treat employees as contract labor
  • Falsely overstate deductions or expenses

Warning signs may include:

  • Keeping two sets of accounting books
  • Concealing assets, sometimes asking others to help in doing so
  • Claiming fictitious dependents
  • Claiming to be a resident of another state (while appearing to be an Idaho resident)
  • Businesses that keep poor records and/or repeatedly open and close their business
  • Purposeful destruction of records
  • Spending much more money than is typical for their circumstances
  • Engaging in illegal activities

Examples of violations

Please provide as much information as possible about the person or business you’re reporting. This voluntary report helps us determine if there’s been a violation of Idaho tax law.

If you suspect you’re a victim of identity theft, visit tax.idaho.gov/idtheft for more information.

Violations may include:

  • “Off the books” (cash) wages – Also known as paying wages “under the table.” Cash wages that aren’t reported to the Tax Commission, the Internal Revenue Service (IRS), and/or the Idaho Dept. of Labor.
  • No permit – Not getting needed permits. Many permits are required to do business in Idaho (e.g., amusement device, beer, cigarette, fuels, sales/use, temporary seller, travel & convention, tobacco, wine, income tax withholding).
  • Falsely claiming grocery credit – Claiming the grocery credit when not entitled. The grocery credit can’t be claimed for any month or part of a month a person received federal food stamp assistance, was in jail, or lived illegally in the United States. Members of the armed forces living in Idaho but not residents of Idaho must meet certain criteria. For more information, visit our Idaho Grocery Credit page.
  • Not withholding income tax – Not withholding legally-owed taxes from income paid to employees.
  • Drug income – Income received from illegal drugs or narcotics and/or unstamped illegal drugs or narcotics.
  • Identity theft – Using another person’s identity, typically to fraudulently claim refunds or benefits or to commit other crimes. Visit tax.idaho.gov/idtheft for more information.
  • Not reporting income – Receiving cash, goods, or services, but not reporting them as income. May include barter receipts, gambling income, and/or prizes and awards.
  • False/altered documents – Manipulating a document, such as a Form W-2 or Form 1099, or creating fake documents, to claim a refund or other benefit.
  • Employees treated as contractors – Misclassifying workers. Treating employees as independent contractors, often by issuing Form 1099 (with no tax withheld) instead of Form W-2. See A Guide to Idaho Income Tax Withholding for more information on this topic.
  • False exemption/deduction – A false exemption includes claiming dependents when not entitled. A false deduction may be false or exaggerated to reduce taxable income.
  • Dyed diesel – Tax-exempt diesel fuel is dyed red and may only be used in unlicensed (off-road) vehicles or equipment or for specific activities. Dyed diesel can’t be used in licensed vehicles running on public roads or highways because state tax or federal excise tax hasn’t been charged.
  • Not reporting sales – Not reporting all retail sales on sales tax returns and/or income tax returns.
  • Deducting personal expenses – Subtracting as a business expense a personally-used product or service.
  • Not filing returns – Not filing an income tax return when required to file based on level of income or other criteria. May also include buying items out of state (or buying online) but not reporting and paying use tax when required.
  • Not collecting tax – Conducting sales or other transactions but not collecting tax (e.g., sales tax, use tax, beer tax, cigarette tax, income tax withholding).
  • Misuse of public funds – Using public funds for personal or business purposes. Transferring public funds to a private or personal account without authorization. Using a public position for personal gain.

Contact us

You can reach us by phone, mail, email, or fax.