Author Topic: Would you report someone for welfare or tax fraud?  (Read 2742 times)

Bird In Hand

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Would you report someone for welfare or tax fraud?
« on: October 30, 2019, 07:06:36 AM »
Suppose you knew about someone who was committing welfare and tax fraud.  This person has four young kids, and receives public assistance (cash, food, and healthcare) based on the number of children -- but two of the children live full-time with a relative in a different home.  In addition to raising the two children, the relative provides free housing and other assistance as needed to the person.  This person also claims four (vs two) dependents on state and federal taxes, and gets a commensurately larger tax refund.

Under what circumstances would you report this fraud?  What type of factors that would sway you one way or another?  Some examples:

Would your decision change if the person were a stranger/someone in your neighborhood/a childhood friend/a family member?  If it's someone you know, would you be more likely to report if you disliked the person?

If the person were saving the fraudulent tax refund and welfare $$ to try to get out of poverty or improve circumstances for the children involved (e.g. move to a safer neighborhood), would you be less likely to report?

If the person were a freeloader spending every extra dollar of the ill-gotten $$ on MJ and tattoos, would you be more likely to report?

If you suspected the person had a mental illness would you be less likely to report?

Padonak

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Re: Would you report someone for welfare or tax fraud?
« Reply #1 on: October 30, 2019, 07:21:52 AM »
I would if this person pissed me off. Wouldn't do to someone who hasn't done any harm to me because I'm not a snitch.

Cannot Wait!

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Re: Would you report someone for welfare or tax fraud?
« Reply #2 on: October 30, 2019, 07:22:21 AM »
Money is such a weird thing, isn't it?
Rock stars and pro sports figures "earn" gazillion of dollars and yet innocent children are left to the mercy of parents making poor decisions.  In the big picture,  nothing is fair.  I would not report fraud in this situation a) because children are involved,  b) not my business,  c) our monetary system doesn’t make any sense so why focus on welfare recipients, d) possible harm to myself.

SwordGuy

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Re: Would you report someone for welfare or tax fraud?
« Reply #3 on: October 30, 2019, 07:22:59 AM »
That's not the sort of info that mere acquaintences tend to know, so be prepared to lose that person from the list of "people friendly to me".

Suppose you knew about someone who was committing welfare and tax fraud.  This person has four young kids, and receives public assistance (cash, food, and healthcare) based on the number of children -- but two of the children live full-time with a relative in a different home.  In addition to raising the two children, the relative provides free housing and other assistance as needed to the person.  This person also claims four (vs two) dependents on state and federal taxes, and gets a commensurately larger tax refund.

Under what circumstances would you report this fraud?  What type of factors that would sway you one way or another?  Some examples:

Would your decision change if the person were a stranger/someone in your neighborhood/a childhood friend/a family member?  If it's someone you know, would you be more likely to report if you disliked the person?

If the person were saving the fraudulent tax refund and welfare $$ to try to get out of poverty or improve circumstances for the children involved (e.g. move to a safer neighborhood), would you be less likely to report?

If the person were a freeloader spending every extra dollar of the ill-gotten $$ on MJ and tattoos, would you be more likely to report?

If you suspected the person had a mental illness would you be less likely to report?

It's a tough call for me.    People in poverty in the US have the shit end of the stick in our society.   It can be really hard to get out of poverty and even a minor setback can totally destroy any forward progress they've made.

Those kids cost money to raise and it's perfectly possible that they are providing the welfare money to their relative.   I'm guessing the kids in the other home might be the youngest and thus the ones most likely to interfere with them working?
Unless I had information to the contrary I would mind my business.

The only exception would be if the parents weren't taking good care of the kids because they are scum.   Then I would report them because the kids deserve better.

rothwem

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Re: Would you report someone for welfare or tax fraud?
« Reply #4 on: October 30, 2019, 07:25:47 AM »
If the two children that aren’t in the home aren’t being claimed as dependents by the person watching them, then it isn’t tax fraud.

I don’t know about welfare fraud.

Either way, I wouldn’t say anything. It’s not your business and if they’re really breaking the tax laws, they’ll get audited at some point.

ontheway2

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Re: Would you report someone for welfare or tax fraud?
« Reply #5 on: October 30, 2019, 07:27:18 AM »
I'm pretty sure you don't have to report gifts as income, but I'm not 100%

I would not report since they are the person's kids. If the person actually taking care of the kids does not have issue not receiving the tax deduction, then why should I. I do have issue with people working for cash and not claiming it, but I have yet to report that so...

Bird In Hand

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Re: Would you report someone for welfare or tax fraud?
« Reply #6 on: October 30, 2019, 07:52:03 AM »
If the two children that aren’t in the home aren’t being claimed as dependents by the person watching them, then it isn’t tax fraud.

I believe that is incorrect: https://www.irs.gov/publications/p501#en_US_2018_publink1000220886.  Except in certain cases (e.g. divorced or separated parents) the child must live with the guardian for > 1/2 the year order to be claimed as a dependent.  The financial support part of that publication isn't straightforward, but I think "claiming a child as a dependent when the child is living full-time with a relative and being fully financially supported by relative" would not pass the IRS smell test.

PoutineLover

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Re: Would you report someone for welfare or tax fraud?
« Reply #7 on: October 30, 2019, 08:25:03 AM »
I wouldn't report because it's none of my business and I probably don't know the whole story. The only report I would make is if I suspected abuse or neglect of the kids. If I was close enough to this person to know that many details about their personal and financial situation, I expect there would be other avenues to help them if needed, and I don't think reporting them would do anything to improve the situation.

jwright

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Re: Would you report someone for welfare or tax fraud?
« Reply #8 on: October 30, 2019, 10:02:27 AM »
There's no way you have all the information.  I'd rather give the family the benefit of the doubt.

BlueHouse

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Re: Would you report someone for welfare or tax fraud?
« Reply #9 on: October 30, 2019, 11:40:51 AM »
Nope. Not under the circumstances you've described. 


SimpleCycle

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Re: Would you report someone for welfare or tax fraud?
« Reply #10 on: October 30, 2019, 12:04:57 PM »
None of your business, unless you are the relative caring for the children and want to claim them as dependents.  In which case I would work it out with them directly, not report them.

Mr. Green

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Re: Would you report someone for welfare or tax fraud?
« Reply #11 on: October 30, 2019, 12:11:46 PM »
A dependent isn't required by law to live with you. My father was 66 when he just recently passed away and he was our dependent. He lived in a house we owned, but not with us, and we helped him financially. Unless you know for certain that the guardian is not providing enough financial assistance to declare them as a dependent, you are assuming. You know what they say about assumptions, right?

"It makes an ass out of you...and umption." - Samuel L. Jackson

Maybe the situation just looks weird to you and it's totally above board.

Bird In Hand

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Re: Would you report someone for welfare or tax fraud?
« Reply #12 on: October 30, 2019, 12:43:15 PM »
A dependent isn't required by law to live with you. My father was 66 when he just recently passed away and he was our dependent. He lived in a house we owned, but not with us, and we helped him financially.

Condolences on the recent loss of your father.

Your father wasn't a qualifying child, he was a qualifying relative -- different rules (see https://www.irs.gov/publications/p501#en_US_2018_publink1000196863).  For a child to be considered a "qualifying child" for the purposes of claiming a tax dependent, the child must live with the filer for > 1/2 the year (there are a handful of exceptions, none of which apply to the case I mentioned to open the thread).

Kronsey

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Re: Would you report someone for welfare or tax fraud?
« Reply #13 on: October 30, 2019, 01:30:32 PM »
A dependent isn't required by law to live with you. My father was 66 when he just recently passed away and he was our dependent. He lived in a house we owned, but not with us, and we helped him financially.

Condolences on the recent loss of your father.

Your father wasn't a qualifying child, he was a qualifying relative -- different rules (see https://www.irs.gov/publications/p501#en_US_2018_publink1000196863).  For a child to be considered a "qualifying child" for the purposes of claiming a tax dependent, the child must live with the filer for > 1/2 the year (there are a handful of exceptions, none of which apply to the case I mentioned to open the thread).

Bird in Hand is correct. The subject isn't whether or not they can be claimed as a dependent. It is whether or not they can claim the child tax credit and the earned income credit. Living for half the year is most definitely a requirement for both credits. The deduction for dependent(s) has been done away with anyways with the TCJA. Higher standard deductions, no personal exemptions for dependents and taxpayer(s).

Regarding if I would turn them in... No, I wouldn't. If I was being paid to prepare their return, I would disengage and instruct them to find another preparer. I don't have the time or energy to try to police the welfare state, but I'm certainly not helping anyone commit tax fraud.

Boll weevil

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Re: Would you report someone for welfare or tax fraud?
« Reply #14 on: October 30, 2019, 01:39:51 PM »
No on the tax issue because I don’t think they’d care. My understanding is that the IRS flat out isn’t interested until the fraud is on the level of millions of dollars... just not worth the time it would take to investigate.

Beyond that, I would guess that even if the person receiving the public assistance isn’t able to claim the credits, the relative probably would be, so the net result to the government would be zero, or pretty close to it.

And if both the person you’re talking about and the relative are both claiming the child as a dependent, I would think (hope?) that the IRS would realize that a SSN is being claimed on two tax forms and initiate an audit on their own.

Bernard

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Re: Would you report someone for welfare or tax fraud?
« Reply #15 on: October 30, 2019, 02:31:44 PM »
I carry a concealed firearm daily, yet I would not actively do anything that could put another person for years in prison unless there's grave danger to another person's life or health. Our own government is made up of crooks, so who am I to point fingers to a working fella who tries to play the game.

TL8

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Re: Would you report someone for welfare or tax fraud?
« Reply #16 on: October 30, 2019, 03:02:38 PM »
Let's say you're acquainted with a wealthy, self-employed businessman who regularly records his meals and travel spending as business expenses even when (you strongly believe based on reliable evidence) the primary purpose of the meal/trip is not business-related. Would you report him to the IRS for tax fraud? I think this would be pretty similar to the situation you describe, and I have a hard time imagine anyone making such a report to the IRS.

2Birds1Stone

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Re: Would you report someone for welfare or tax fraud?
« Reply #17 on: October 30, 2019, 03:20:34 PM »
Snitches get stitches, yo.

Bird In Hand

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Re: Would you report someone for welfare or tax fraud?
« Reply #18 on: October 30, 2019, 04:10:58 PM »
I appreciate the feedback from everyone.

As several of you have correctly surmised, the scenario I outlined in the first post involves a relative I know quite well.  I withheld many details (including gender, which hopefully explains much of the awkward phrasing) because I didn't want to bias the responses.  I had hoped that people would play along more with the hypothetical and give some examples of situations that would lead them to report or not report.

To provide some context, this person is (IMO) nothing short of a toxic fiend with no redeeming qualities whatsoever: a self-serving free-loader who has repeatedly taken advantage of and caused lasting damage to many who tried to help.  This person treats family (particularly those doling out the endless help) with savage cruelty, using the children as pawns and leverage to get what they want.  The welfare and tax fraud bother me on principle, but the compelling reason to report would be to get the children out of the care of this person -- a horrendous parent, psychologically abusive for sure, likely physically abusive, and certainly negligent due to the drug and alcohol abuse.

I have not reported this person primarily because I'm concerned that others (especially the relatives who are the de-facto guardians of two of the children) will suffer some hardship, including legal consequences, as a result.  The two children under the care of this person would almost certainly be better off in any other environment, even if they were put into the foster care system.  And I'm saying that with eyes wide open; I'm aware of how awful the outcomes can be in foster care.

I admit I'm a little surprised that most of the responses were along the lines of "...it's none of my business/I might not have the facts so I would not report".  Though I suppose if one assumed an incomplete understanding of the individual and/or situation, then one could imagine summoning sympathy for this person.  For the record, states providing public assistance benefits are typically very interested in hearing about potential fraud and abuse.

Lady Stash

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Re: Would you report someone for welfare or tax fraud?
« Reply #19 on: October 30, 2019, 04:51:42 PM »
I wouldn't report it.   Maybe they have some agreement between them and work this out in other ways.

There's another way you could handle this if you want to get involved...If you are close to the person taking care of the kids, encourage them to claim kids on their tax returns.  Encourage them to file early (eg before the non-custodial parent).  When the 2nd person files, the IRS will raise questions and get to the bottom of the issue without you needing to report.

Source: I was a foster parent for a few years.  I claimed the kids on my tax returns since they lived with me most of the year.  I never had any issues claiming them but I heard from multiple foster parents that they ran into situations where both the biological parents and the foster parents claimed the kids on their taxes.  The IRS flags this and sends questionnaires to both to determine who is actually entitled to claim them.  It delays your tax refund if you are the 2nd to file, but they do sort it out eventually.
« Last Edit: October 30, 2019, 06:27:15 PM by Lady Stash »

Lady Stash

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Re: Would you report someone for welfare or tax fraud?
« Reply #20 on: October 30, 2019, 06:09:41 PM »
Bird in Hand, I just noticed your response above.  I wrote my response before seeing yours.

Based on your response I would not report them.  Here's why: once they lose the tax benefit for the kids they aren't raising they may decide to take them back. 
It sounds like this is an unofficial arrangement and not a court ordered guardianship?  If so, the relative may be choosing not to push the money issue in order to keep the kids with them and safe.

Reporting this person for fraud won't change custody.  They will never lose custody of their kids for lying to the IRS/welfare. 

You could report them to CPS for physical abuse but be prepared that unless there is a significant injury or bruising they may not intervene.
You could report them to CPS for neglect but if there is food in the house and kids are old enough to heat a can of soup themselves, they may not intervene.  If they kids are very young and showing medical failure to thrive because they are not being fed that's when they intervene. 

I know this sucks but legally, it doesn't matter if the kids would be 'better off' somewhere else.  Unless there is serious abuse/neglect to the point that the children are in danger then the right of the parent to parent will trump everything else.  I know that sucks and I'm sorry.
« Last Edit: October 30, 2019, 06:26:04 PM by Lady Stash »

Lmoot

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Re: Would you report someone for welfare or tax fraud?
« Reply #21 on: October 31, 2019, 02:58:06 AM »
I wouldn’t report for the fraud (but would be watchful for opportunities to report them for child abuse).

The main reason I wouldn’t is because of unintended consequences that could hurt several people. Someone in that situation is most likely to act like a caged animal when confronted, and the stress of an inquiry and removal or reduction of benefits could cause them to hurt themselves, or worse others. And no matter how horrible they are, I wouldn’t want that on my conscience.

And as someone mentioned, the results would vary so widely that your hope it causes them to relinquish their children, is very slim, even unlikely. So you would be gambling that by reporting you could make the situation worse.
« Last Edit: October 31, 2019, 03:01:47 AM by Lmoot »

Bird In Hand

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Re: Would you report someone for welfare or tax fraud?
« Reply #22 on: October 31, 2019, 06:24:17 AM »
Based on your response I would not report them.  Here's why: once they lose the tax benefit for the kids they aren't raising they may decide to take them back.

It sounds like this is an unofficial arrangement and not a court ordered guardianship?  If so, the relative may be choosing not to push the money issue in order to keep the kids with them and safe.

The main reason I wouldn’t is because of unintended consequences that could hurt several people. Someone in that situation is most likely to act like a caged animal when confronted, and the stress of an inquiry and removal or reduction of benefits could cause them to hurt themselves, or worse others. And no matter how horrible they are, I wouldn’t want that on my conscience.

Excellent points, both of you.  And I hadn't considered that that this person might just take the two children back into the home to avoid losing benefits.  That would be awful for everyone involved...well, except for the relatives who are currently stuck watching the kids.  But they're doing it precisely to keep the kids from further harm.

There is a cautionary tale here related to our FIRE community as well.  The relatives who are raising the two children have worked hard, delayed gratification, and fastidiously saved throughout their lives so they could one day enjoy retirement.  I know they had plans to travel, volunteer, and generally live a rich life after their full-time/blue-collar working careers.  Out of charity they tried to help out a relative in a tough spot.  But they got sucked into this person's web of misery, both personally and financially.  Now it looks like they'll be spending the last few of their working years and probably the first 10+ years of retirement raising two kids with physical and severe emotional/behavioral problems.  And I wouldn't be surprised if they ended up taking in one or more of the other kids sometime down the road.

Boll weevil

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Re: Would you report someone for welfare or tax fraud?
« Reply #23 on: October 31, 2019, 01:42:13 PM »

 For the record, states providing public assistance benefits are typically very interested in hearing about potential fraud and abuse.

I’m guessing this comment was aimed at me, but if you look again, my answer was limited to the tax side of the question, or at least that was my intent.

But to be more specific, it’s my understanding that the IRS (federal level) does not bother with investigating tax fraud until it’s in the millions. If nothing else, it filters out a lot of vindictive ex-spouses, disgruntled ex-employees, etc.

I would guess that state tax agencies are the same.

The welfare agency, on the other hand, probably does care a lot about how their money is spent (or I would be very surprised if they didn’t). And on that side of the question (which I initially tried to dodge), I probably wouldn’t tell the welfare agency, not so much out of the “snitches get stitches” attitude/fear but more out of the “blood is thicker than water” sentiment and tendency to keep family issues private.

mistymoney

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Re: Would you report someone for welfare or tax fraud?
« Reply #24 on: November 01, 2019, 07:10:19 AM »


To provide some context, this person is (IMO) nothing short of a toxic fiend with no redeeming qualities whatsoever: a self-serving free-loader who has repeatedly taken advantage of and caused lasting damage to many who tried to help.  This person treats family (particularly those doling out the endless help) with savage cruelty, using the children as pawns and leverage to get what they want.  The welfare and tax fraud bother me on principle, but the compelling reason to report would be to get the children out of the care of this person -- a horrendous parent, psychologically abusive for sure, likely physically abusive, and certainly negligent due to the drug and alcohol abuse.


how do you think a tax or welfare fraud investigation is going to protect these kids?

Report the abuse for god's sake!

jpdx

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Re: Would you report someone for welfare or tax fraud?
« Reply #25 on: November 03, 2019, 11:42:23 PM »
How does one report tax or welfare fraud?

Bird In Hand

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Re: Would you report someone for welfare or tax fraud?
« Reply #26 on: November 04, 2019, 08:43:35 AM »
Report the abuse for god's sake!

I talked to the relatives currently raising the 2 kids, and apparently CPS has already been involved one or more times (I'm not sure why), but there wasn't sufficient cause to remove the kids.

Bird In Hand

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Re: Would you report someone for welfare or tax fraud?
« Reply #27 on: November 04, 2019, 08:47:08 AM »
How does one report tax or welfare fraud?

I just googled "state of ___ report welfare fraud", and every state I put in the ___ had a webpage about how to report fraud.  I'm sure the IRS has something similar.

historienne

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Re: Would you report someone for welfare or tax fraud?
« Reply #28 on: November 04, 2019, 08:55:53 AM »
There is a cautionary tale here related to our FIRE community as well.  The relatives who are raising the two children have worked hard, delayed gratification, and fastidiously saved throughout their lives so they could one day enjoy retirement.  I know they had plans to travel, volunteer, and generally live a rich life after their full-time/blue-collar working careers.  Out of charity they tried to help out a relative in a tough spot.  But they got sucked into this person's web of misery, both personally and financially.  Now it looks like they'll be spending the last few of their working years and probably the first 10+ years of retirement raising two kids with physical and severe emotional/behavioral problems.  And I wouldn't be surprised if they ended up taking in one or more of the other kids sometime down the road.

From another point of view, though, this is a success story.  Because they worked hard and delayed gratification, they have the resources to help kids who sound like they really, really need it. 

mavendrill

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Re: Would you report someone for welfare or tax fraud?
« Reply #29 on: November 04, 2019, 10:30:55 AM »
I would definitely report it.  Ultimately corruption of the system is a burden on society, and especially on vulnerable people's.

Buffaloski Boris

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Re: Would you report someone for welfare or tax fraud?
« Reply #30 on: November 10, 2019, 06:32:49 PM »
There isn't a situation out there that can't be made infinitely worse by involving the authorities.

Cassie

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Re: Would you report someone for welfare or tax fraud?
« Reply #31 on: November 10, 2019, 07:08:19 PM »
You will only hurt the kids if you do. I was a social worker.