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What is a criminal Tax Case?

A criminal tax case is an investigation of a person or company who 1) allegedly has evaded the assessment of tax. Often time this is done by understating income or overstating expenses; 2) evaded the payment of taxes already due. Often times these cases involve hiding assets to keep them from IRS; 3) failed to pay tax that was assessed; or 4) failed to pay taxes collected from another on behalf of IRS. These often involve employment taxes. There are many variations of these basis types of cases.

How does a criminal tax case get started?

There are many sources. Some from examinations or audits conducted by the Examination Division, some from Revenue Officers who are attempting to collect tax that is due. Frequently, cases come from other agencies investigation some other conduct, for example the Department of Labor Investigating Wage and Hour violations. Sometimes a case starts from an informant. Cases have also started from newspaper articles, even positive ones, and even observations by IRS Special Agents, such as a young person driving an expensive car. Finally, IRS projects, such as the investigation of offshore banks or people involved with cryptocurrency frequently generate criminal tax cases.

Who investigates criminal tax cases?

The Internal Revenue Service’s Office of Criminal Investigations (CI) employs highly trained investigators known as Special Agents who conduct criminal tax investigations. An IRS Special Agent is patient, and thoughtful. Investigations often take years and have almost always been going on for a longtime before the Special Agent contacts the taxpayer. By the time the Special Agent approaches the taxpayer, the sole purpose is to trap the taxpayer. The request for an interview is like a professional golfer asking the taxpayer to play a round of golf for their life – the ultimate pro-am competition.

How do you defend a criminal tax case?

Obviously, each case turns on its own facts, but there are some things that give an advantage to one taxpayer over another. At the first hit of trouble, even if it is only an audit, engage an experienced lawyer who has experience handling criminal tax cases. Do not submit to an interview. The revenue agent and/or Special Agent know what they are looking for and you do not know what they know. It is better to decline to speak with them. If you change your mind, you can do so later, but you can never take back what you have already said.