IRS Snitch Must Include Reward in Income

In Ellis v. Commissioner, T.C. Summary Opinion 2004-170 (12/20/04), a Colorado disc jockey received a $7,000 reward from the IRS but did not not include it in income. Not surpisingly, the taxpayer was audited, caught, and forced to include the reward in income:

Petitioner does not dispute that during 1998, he received a reward from the IRS of $7,138.20. He testified that this amount was shared with several of his coworkers. The letter the IRS issued to petitioner identifying the reward was addressed solely to petitioner and did not indicate that he had an obligation to share the reward with anyone else. Petitioner did not present any argument that this amount is not includable in income. The Court therefore concludes that petitioner is required to include this amount in gross income.