Most people expect to pay the Internal Revenue Service. Not Gregory C. Krug. He expected the IRS to pay him.

Well why not? He helped them collect millions of dollars.

Krug had heard about the IRS snitch program. It says the agency pays as much as the lessor of 15 percent of collections or $100,000. The amount depends on the information's value.

Krug told the IRS about taxes due by seven delinquents. The agency investigated and recovered millions.

Salivating at the thought of getting $700,000, he filed claims with the IRS. Results: zero, zilch, nada.

The IRS denied each claim with a form letter, in its usual obscure style, listing these reasons for refusing:

• · Recovery was too small to warrant a reward.
  
• · Information was previously known to the IRS or available in public records readily available to the IRS.
  
• · Information furnished did not cause the investigation.
  

Krug couldn't believe what he read. None of these excuses applied.

When he brought legal action against the IRS, the government admitted he almost qualified. He had caused the investigation, it collected millions and it could not have gotten the information without his help. But, it said, it didn't owe him anything-- because he had no contract.

He conceded he had no contract in writing. But, he said, a contract was implied in IRS Publication 733, Rewards for Information Provided by Individuals to the IRS. Krug had filed Form 211, as directed.

The court ruled: no contract, no reward. Without a written contract, the judge added, the IRS has the discretion to pay or not to pay, and this time it decided not to.

Tips are important to the IRS. Annually, it collects more than $100 million. For this it pays out from $2 million to $5 million to snitches. However, don't think this is the path to riches; only a few people ever collect. Since 1960, only about 8 percent of claims filed resulted in rewards.

Surprisingly, the reason for most claims is not profit. It's revenge. The most common tattletales are fired employees and former spouses.

The Moral: If you're going to kiss and tell, get a legal contract.