Seven Tips To Avoid Having To Check Into “Club Fed” For Tax Evasion

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Many criminal investigations start as a result of a referral from the civil side of the IRS. That is why for most taxpayers, a criminal investigation isn’t a first step, but rather the last step in a lengthy process to get you to resolve your tax debt even if it means that an IRS Special Agent will show up on your doorstep one day with cuffs in hand.

Additionally, while tax evasion and related charges are an important piece of the IRS Criminal Investigation Division (CID) charges, the government tends to link to other criminal activities like fraud, drug offenses, and money laundering. When it comes to criminal activities, other federal agencies – like the Federal Bureau of Investigation (FBI) and the Financial Crimes Enforcement Network (FinCEN) – can pursue these violations.

Tip # 1: File and Pay Your Taxes on Time

This seems obvious. But failing to file and pay on time happens all of the time for all kinds of reasons. With all the balance due notices the IRS will issue, it should be clear that the IRS just wants to get paid. Yet, time and again, once an investigation has been initiated, taxpayers either refuse to pay or don’t pay the tax due. While there may be valid reasons for nonpayment, when it appears that resources are available, not filing and/or nonpayment just makes a bad situation worse. At sentencing hearings, judges take note of whether taxpayers have made arrangements to resolve ongoing liabilities.

Tip # 2: Open Your Mail and Respond On Time

Whatever you do, don’t think that by not claiming or opening mail from the IRS that your tax problems will go away by themselves. If you’ve been chosen for examination or if the IRS has asked you to provide additional information about your return, it means you’re on their radar. In most cases, it does not mean that you’ve been targeted for criminal investigation, just that additional information is required. But failing to respond – especially if you have good reasons for your behavior – doesn’t help and in most cases, it raises the level of inquiry.

Tip # 3: Cooperate During an Examination

Nobody likes IRS audits. They trigger all sorts of strong emotions. Indeed, they make people angry, defensive, and combative. But none of that helps. And it could make a bad situation worse. Procedurally, criminal investigations are generally initiated from information obtained when a Revenue Agent (auditor) or Revenue Officer (collection) detects possible fraud. While there are guidelines that lead to criminal inquiries, there may be some wiggle room – but not for taxpayers who thumb their nose at the IRS and are not cooperative.

Tip # 4: Be Consistent

Very simply, no privilege applies when speaking to or making disclosures to the IRS. If you report sales of $500,000 to the state for purposes of sales tax, the IRS will want to see these numbers accounted for on the Federal Income Tax Return. It is not unusual for the IRS to exchange information with other law enforcement agencies — local and federal — throughout the country. Don’t assume that because you have not yet heard from one tax agency information provided to another tax agency is not being shared. Be consistent in your reporting. This is the only sure way of not waiving any red flags in front of the bull.

Tip # 5: Don’t Destroy Records

Destroying records can be a crime. And if there’s anything you don’t need, that’s additional charges. Once an investigation is opened, an IRS Special Agent will attempt to gather facts and evidence. This may include interviews of third party witnesses, conducting surveillance, executing search warrants, subpoenaing bank records, and reviewing financial data including cash register receipts, bank statements, and deposit and withdrawal slips. Special Agents have even gone undercover to observe the lifestyle of many taxpayers, most especially those who own cash-based businesses to determine whether the business was hiding cash.

Tip # 6: Take Any Confrontation With IRS Special Agents As A Serious Matter

While there might be a temptation to roll the dice and see what happens, once criminal charges are filed, you have to take the matter seriously. Failing to file and failing to pay can result in criminal charges. Lying to federal investigators can result in additional criminal charges. It’s called perjury. Be smart. You have a right to remain silent – so use it!

Tip # 7: Hire a Criminal Tax Defense Attorney

Once a criminal investigation has begun, the wheels have been set in motion. After all the evidence has been collected, the IRS Special Agent will determine whether to recommend your case for prosecution or return it back to the field for completion of the audit. At this point, you’re not talking yourself out of charges. Your case will be referred to either the Department of Justice, Tax Division, or to the United States Attorney. At that point, it’s not a matter of simply mitigating penalties. You need to hire a criminal tax defense attorney who has experience in tax crimes and who has a solid reputation for being a zealous advocate.

Conclusion

If CID recommends prosecution, it will give its evidence to the Justice Department to decide the special charges. Individuals are typically charged with one or more of three crimes: tax evasion, filing a false return, or not filing a tax return. All of which are tax fraud.

The sooner you hire tax counsel experienced with criminal tax matters, the higher the chance that further escalation of your case in the criminal arena could be avoided or limited.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco and elsewhere in California defend you from the IRS.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems and minimize the chance of any criminal investigation or imposition of civil penalties.

 

Are You Under Investigation For An Alleged Tax Crime? Protest Yourself!

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What is a Tax Crime?

Tax crimes include all crimes that are under the jurisdiction of the Criminal Investigation Division (CID) of the IRS. While there are dozens of criminal offenses defined in the Federal tax code, they generally all fall under one of two categories: crimes related to the filing of the return and crimes related to the failure to file a return. The most common crime related to the filing of a return is criminal tax evasion, which, at the Federal level, carries a maximum penalty of 5 years in prison and a $250,000 fine for individuals, plus the cost of prosecution. For taxpayers charged with criminal tax fraud for failing to file a return, the penalties can be just as severe: up to five years in prison plus a fine of up to $25,000. In addition to the tax crime provisions of the Internal Revenue Code, CID is also charged with enforcing certain other financial crimes, including: money laundering, structuring transactions to avoid reporting requirements, or aiding and abetting another in the commission of tax evasion. Tax preparers who file fraudulent returns for their clients can be charged with aiding and abetting tax fraud. Given the fact that return preparer fraud is one of the CID’s top operational priorities for this year, more preparers than ever are being charged tax crimes than ever before.

What to do if contacted by a criminal investigator

If you are contacted by a criminal investigator with the IRS, the best thing to do is indicate that you do not want to speak to the investigator, and immediately contact a California tax evasion lawyer. You will know that this person is from CID by checking his credentials and seeing that he or she is a “Special Agent”. A carefully crafted response from a qualified criminal tax fraud attorney can make the difference between being prosecuted for a tax crime and walking away from the investigation unscathed. While you are constitutionally protected against being forced to incriminate yourself, it is important to note that this right must be asserted. Simply ignoring the investigators will usually result in a summons being issued and you will be required to respond to the investigators or face criminal prosecution for failing to comply with the summons. If you have been contacted by the IRS and think you may be the subject of a criminal tax fraud investigation, you should contact a qualified criminal tax attorney before speaking to anyone else about the matter. It is important to note that conversations with an accountant, CPA, or “tax professional” are not always privileged and the other party may be forced to disclose what you have said to them. However, conversations with a criminal tax fraud attorney, even one that you have not retained, pertaining to your case are generally covered under the attorney-client privilege. Your tax fraud lawyer can never be forced to disclose your confidential conversations to anyone.

The differences between white collar crime attorneys and tax fraud attorneys

There are many white-collar crime attorneys who are willing to take tax evasion cases. However, only a full-time criminal tax lawyer is qualified to handle most tax cases. Because the existence and severity of most tax fraud crimes depends on the amount of the tax evaded, a thorough understanding of the tax code is indispensable to comprehensive representation. Unlike white-collar criminal lawyers, tax fraud attorneys are trained in and have extensive knowledge of the various provisions of the federal tax laws. Sometimes, the charge of tax evasion can be defeated by simply finding deductions and tax credits that the taxpayer failed to take advantage of, countering the effect of any omitted income or inflated deductions elsewhere on the return. A taxpayer who intentionally omitted income, or fabricated deductions on a tax return is not guilty unless they understated their tax due. A qualified tax evasion lawyer who knows the ins and outs of the Internal Revenue Code may be able to find enough other deductions and credits to offset the understatement of income, and beat a charge of tax evasion.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco and elsewhere in California defend you from the IRS.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems and minimize the chance of any criminal investigation or imposition of civil penalties.

Careful What You Say And Who You Speak To When Under Criminal Tax Investigation

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Tax evasion stories aren’t covered in the news very often but the IRS still aggressively pursues tax cheats, particularly those who are accused of serious crimes such as filing a false return. It’s wise for all taxpayers to learn about the procedure and the possible penalties that come along with being prosecuted for tax fraud. Finding out how seriously the agency views these matters serves as a real deterrent against skimping on income tax forms.

Be Careful Who You Speak To

If you’re ever investigated by the IRS for possible tax crimes, it’s essential that you never speak to any of the agency’s representatives. If you owe a tax debt, communication with the IRS is usually helpful, since you can negotiate a possible settlement. In case of a criminal tax investigation, though, the IRS is not interested in assisting you to pay off your balance. The agency’s main goal is to gather evidence of your crimes and use it against you during the trial.

If you speak to an IRS agent on your own, the agent can use anything you said in the conversation as evidence to prove the agency’s claim. Simply agreeing that you owe a debt or that you neglected to file a return can sink your case. It’s also important to know that, if you have been working with a certified public accountant, you do not have any type of privilege to cover your communication. This means that your accountant can also be called as a witness against you during the trial.

Tax Perjury vs. Tax Evasion

You can be convicted of tax perjury simply by filing incomplete or incorrect information, even if it was unintentional. Tax evasion, though, is a far more serious charge. In this case, the IRS believes that you deliberately filed an incorrect tax return in order to avoid paying your rightful amount of income tax. Taxpayers who are found guilty of tax evasion often face stiff penalties, including fines and federal prison time.

The best way to handle your criminal tax defense during a tax investigation is to hire an experienced, qualified tax defense attorney who is familiar with both IRS tax law and your specific situation. He or she can give you both legal and financial advice that will help you navigate through the trial.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco and elsewhere in California defend you from the IRS.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems and minimize the chance of any criminal investigation or imposition of civil penalties.

Ten Things To Consider If You Are Worried About Criminal Tax Fraud Charges

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When it comes to committing tax fraud and other tax crimes, the IRS can leave you with nothing and even throw you in jail. Here’s some advice on how to protect yourself from the IRS, what to expect, and how to handle it.

1.         Get a lawyer. If the IRS criminally investigates you, this is crucial. Because of attorney-client privilege, communications between a client and his attorney are protected, keeping everything confidential. The accountant-client privilege does not extend to criminal tax matters.

2.         Tax crimes are most likely spotted during an audit. If you are caught by an auditor in a tax lie or fraud, you may be penalized or your case may be referred to the IRS’ Criminal Investigation Division (“CID”).

3.         Auditors will look for tax fraud. Also known as tax evasion, this is a willful act, with intent to defraud the IRS. For example, using a false social security number, keeping another set of financial books, or claiming a blind spouse as a dependent when you are single. Other examples which may not be as obvious are: not reporting all income on your tax return, overstating your deductions, or claiming phony deductions and exemptions. Any of these items could constitute a reason to be punished with a tax fraud civil penalty.

4.         Negligence and fraud are not always clear. A mistake on your tax return will cost you a 20% penalty on the increase in tax, while tax fraud will cost you a 75% penalty on the increase in tax. Tax fraud examples include multiple sets of books of record for a business, false receipts, and altered checks. Usually, the auditor will not tell you if a criminal tax fraud referral has been made.

5.         Alleged tax fraud cannot be combated easily. Defenses raised against tax fraud allegations are: cash hoard, nontaxable income, and honest mistake. The IRS does not typically accept any of these defenses at face value. In this case, a skilled attorney will be your most useful weapon.

6.         Lying will only make it worse. If an IRS auditor believes you’ve cheated on your taxes, they can either impose a penalty for fraud, or begin a criminal investigation. In this case, they can get information from law enforcement agencies, and even other IRS divisions. Also, to ask someone else to lie to the IRS on your behalf is a separate crime.

7.         Unless formally charged, you may not know of an investigation. But, you may hear from your friend, employee, accountant or lawyer. The CID will usually investigate cases involving $20,000 or more.

8.         You will be the last source. If the CID is building a case against you, chances are they have already contacted potential witnesses, and looked at thousands of records. If they still want to talk to you, you are probably recommended for prosecution. They will be looking for a confession from you.

9.         Know your rights. A special agent must contact you immediately if you are the target of a tax fraud investigation. He will read you a version of the Miranda rights—the right to remain silent, the right to have an attorney, and the warning that anything you say can be used against you. Know that it will be.

10.        If you are convicted, consequences are high. If you put the government through a trial, there is an 80% chance that you will be send to federal prison for tax fraud. However, if you reach a plea bargain without a trial, chances are that you could be fined and/or placed on probation, given home confinement, or sent to a halfway house.

Reasons You Can be Charged

If CID recommends prosecution, it will give its evidence to the Justice Department to decide the special charges. Individuals are typically charged with one or more of three crimes: tax evasion, filing a false return, or not filing a tax return. All of which are tax fraud.

The sooner you hire tax counsel experienced with criminal tax matters, the higher the chance that further escalation of your case in the criminal arena could be avoided or limited.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco and elsewhere in California defend you from the IRS.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems and minimize the chance of any criminal investigation or imposition of civil penalties.