Actual or Possible Criminal Investigation?
Unfiled taxes, fraud or other misrepresentations on your tax return can be a criminal offense and may be investigated by the IRS. They are punishable by Federal law and can lead to prison sentences.
There are many different types of fraud, including:
- Employment tax evasion
- Gaming related fraud
- Non-filer enforcement
- Questionable tax refunds
Stages in the criminal tax process.
The first stage of this process is an audit, which is just a civil tax assessment process.
If you are being audited and are complying with the IRS, typically you will have nothing to worry about beyond taxes, civil penalties, and interest thereon. But when the IRS discovers what it believes to be a criminal violation, they may make a referral to the IRS criminal investigation division (“CID”).
The CID investigation is the second state of the criminal tax process. The CID is staffed by IRS special agents. IRS special agents investigate cases referred to them by IRS personnel or tax returns that are flagged by the IRS computer systems as being suspicious.
If you receive a notice from or are contacted by the CID, this means that you are being investigated for a crime and should consult a criminal tax attorney for representation as soon as possible.
How IRS criminal investigations work.
Suspicious information on tax returns or practices that tend to indicate that there is tax evasion or fraud often lead to criminal referrals or investigations.
If suspicious, the IRS will conduct a primary investigation and then decide, based on the investigation, whether to continue pursuing the criminal case. This is often handled by revenue agents and revenue officers. These IRS employees must generally get management approval to refer the case to the CID and proceed with the case as a criminal investigation.
During the criminal investigation, IRS special agents will attempt to gather possible evidence from everyone around you, such as your family and people who can be found at or associated with your place of work. They may also investigate and collect computer documentation, check into your social media accounts, subpoena your bank records, and perform various surveillance activities. Special agents are also trained to use highly specialized security measures to investigate secure and encrypted electronic data.
When the CID is conducting a criminal investigation, the case will go through several administrative levels before being evaluated by the IRS’s national office in Washington, D.C. This can be a slow process–which is good to the extent that it means there are a lot of opportunities to stop the process and have the case switched back to a civil tax investigation.
Act now if you suspect the IRS is going to pursue a criminal case.
Whether you are at the initial phases of being contacted by the IRS or if you are actively being investigated for a tax crime, you have the right to representation. You need to know your rights and have a criminal tax attorney on your side.
We are former IRS attorneys, appeals officers, and auditors who help taxpayers with criminal tax matters. We offer compassionate, individualized service at manageable rates.
If you suspect you are being investigated for a tax crime or will be, call today for a confidential consultation. Our number is 800-521-0230.
More About Criminal Tax Defense
- Juror in Tax Crime Case Removed for Religious BeliefWhat do you do if you are being tried for a criminal tax charge and the court removes one of the jurors for saying that you should be found not guilty? What if the juror is removed by the court because the Holy Spirit told him that you were not guilty given the evidence presented? If you are found guilty after he is removed, did you get a fair trial? The court addresses this in United States v. Brown, No. 17-15470 (11th Cir. 2020). Facts & Procedural History The defendant was charged with conspiracy to commit mail and wire fraud, mail… Continue reading Juror in Tax Crime Case Removed for Religious Belief
- Can a Tax Crime Sentence Impact a Related Crime?If someone commits a financial crime and, at the same time, commits a tax crime, can the tax crime sentence be used to enhance the sentence for the financial crime? The court addresses this in United States v. Smith, No. 18-3222 (8th Cir. 2019). The answer may surprise you. Facts & Procedural History The defendant was an investment advisor. He stole client funds. The defendant used the funds by having his investment firm use the funds to invest in a business that owned a refinery. The majority owner of the refinery business delegated the payroll functions for the refinery to… Continue reading Can a Tax Crime Sentence Impact a Related Crime?
- Sentence Enhancements in Criminal Tax CasesThe federal sentencing guidelines help the courts set criminal sentences. These guidelines have to be considered when deciding whether to accept a plea agreement and how to handle the trial. The recent United States v. Kushimo, No. 18-3222 (3d. Cir. 2019), case provides an opportunity to consider two of the sentencing enhancements that often apply in tax cases. Facts & Procedural History The defendant participated in a fraudulent tax return scheme. The scheme involved obtaining social security and bank information and using the information to file false tax returns. The tax returns reported refunds, which went to the defendant. The… Continue reading Sentence Enhancements in Criminal Tax Cases