How to Report a Cash-Only Business to the IRS

To report a cash-only business to the IRS, file Form 3949-A, the Information Referral, which you can complete and submit online at IRS.gov. You can file anonymously. If the suspected tax fraud is large enough to meet the whistleblower thresholds, you can also file Form 211 with the IRS Whistleblower Office and potentially collect an award of 15 to 30 percent of what the IRS recovers.

What to Gather Before You File

A vague tip won’t give investigators much to work with. The more specific your information, the more useful your report. Pull together as much of the following as you can:

The full legal name of the business, any “doing business as” name on signage or receipts, and the complete street address.
What the business sells or what services it provides.
Specific dates and times you observed the business refusing cards, the absence of card-processing equipment, or posted “cash only” signs.
Patterns that suggest unreported income, such as high apparent volume with no visible record-keeping, or cash-only discounts.
Signs of structuring, meaning multiple smaller bank deposits that look designed to stay under the $10,000 federal reporting threshold. Structuring is itself a federal crime, separate from tax evasion.¹

You don’t need ironclad proof. The IRS investigates based on credible tips, and your observations give them a starting point. Specifics matter far more than hunches.

How to File Form 3949-A

Form 3949-A is the standard tool for reporting suspected federal tax violations. The IRS accepts it for unreported income, bogus deductions, failure to file, and related issues.² You can fill it out and submit it entirely online through the IRS website.³

The form asks for the name and address of the business, a description of the suspected violation, and the tax years involved. You can report anonymously. The IRS states there are “several ways to report fraud and scams, including anonymously,” so you are not required to identify yourself.² That said, leaving contact information lets investigators follow up if they need clarification, which can make your tip more actionable.

Claiming a Whistleblower Award With Form 211

If the tax fraud is large enough, you may be entitled to a financial reward. The IRS Whistleblower Office pays awards to individuals whose information leads to a successful enforcement action. The mandatory award program applies when the IRS collects more than $2 million from the action and the target is either a business entity or an individual with gross income above $200,000.⁴

When those thresholds are met, the award ranges from 15 to 30 percent of the total amount collected, including penalties and interest.⁴ To claim an award, you file Form 211 with the IRS Whistleblower Office. Unlike Form 3949-A, this process is not anonymous. You must provide your identity, sign under penalty of perjury, and explain how you obtained the information.⁵ You can submit Form 211 online or by mail.

Not everyone qualifies. Current and former Department of Treasury employees are ineligible, as are federal employees who learned about the violation through their official duties.⁵ For cases below the $2 million threshold, the IRS has a discretionary award program, though payouts tend to be smaller and less predictable.

When Another Agency Is the Right Place

The IRS handles federal tax violations. Some conduct at a cash-only business falls outside that lane, and reporting to the wrong agency can slow everything down.

If the business appears to be avoiding state income tax, or collecting sales tax from customers without remitting it, your state’s department of revenue handles that. Most state tax agencies have an online fraud-reporting portal or a phone hotline.
If workers are being paid under the table, the business may also be dodging payroll taxes, paying below minimum wage, or avoiding overtime. The U.S. Department of Labor’s Wage and Hour Division accepts complaints by phone at 1-866-487-9243 or through its online portal, and both employees and third parties can file.⁶
If the business is operating without a required license or permit, contact your city or county’s business licensing department or consumer protection office.

When the conduct spans more than one area, there is nothing wrong with reporting to more than one agency. A business paying employees in cash off the books is likely committing both a wage violation and a tax violation, and the IRS and DOL pursue those independently.

What Happens After You Report

Don’t expect a follow-up call. Federal law makes taxpayer return information confidential, and the IRS is prohibited from disclosing whether it examined someone, what it found, or what action it took.⁷ You won’t hear whether your tip led to an investigation, an audit, or nothing. The IRS prioritizes referrals based on the credibility and specificity of the information.

If you filed Form 211 for a whistleblower award, you will eventually hear back, but the timeline is often measured in years. The Whistleblower Office notifies you once the case and any related appeals are fully resolved.

Avoid confronting the business directly or trying to investigate further on your own. Once you have filed the report, the matter is in the hands of investigators with subpoena power and access to financial records. If they need more from you and you left contact details, they will reach out.

Protections If You Are Reporting Your Own Employer

If you are an employee reporting your employer’s tax fraud, federal law protects you from being fired, demoted, suspended, harassed, or otherwise punished for providing information to the IRS, the Treasury Inspector General, the Department of Justice, or Congress. If an employer retaliates, you can file a complaint with OSHA and ultimately pursue a federal lawsuit. Remedies include reinstatement, 200 percent of lost back pay, full restoration of benefits, and reimbursement for attorney fees and litigation costs.⁴

1
Office of the Law Revision Counsel. 31 U.S. Code 5324 – Structuring Transactions to Evade Reporting Requirement
2
Internal Revenue Service. Report Tax Fraud, a Scam or Law Violation
3
Internal Revenue Service. About Form 3949-A, Information Referral
4
Office of the Law Revision Counsel. 26 U.S. Code 7623 – Expenses of Detection of Underpayments and Fraud
5
Internal Revenue Service. Submit a Whistleblower Claim for Award
6
U.S. Department of Labor. How to File a Complaint
7
Office of the Law Revision Counsel. 26 U.S. Code 6103 – Confidentiality and Disclosure of Returns and Return Information