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.
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.