Taxation & Estate Planning

What an IRS criminal investigation for tax fraud looks like

By howardlevy

With tax season in full bloom, a little reminder to avoid making false or fraudulent claims on your tax return is in order.   

If you want to see what a criminal tax case looks like, the IRS makes it easy - here are the fact patterns and sentencing results of over 50 criminal tax cases from the last six months - business owners, physicians, public officer holders, ministers, and accountants included.

A primary purpose of criminal investigations is to protect the integrity of the tax system - like those listed, you will be exposed to deter others.  

Overall, the IRS does not undertake a significant amount of criminal investigations - in 2008, there were 3,749 investigations initiated.  But make no mistake, this is serious territory.  Once the IRS digs in, there is a 75% chance you will be referred for prosecution.  You do not want to go there.   

Having two IRS criminal investigators make an unannounced visit to you, flash a badge and request to sit down and ask you questions will make your world spin. 

If an IRS Special Agent contacts you, stop.  State that you do not wish to answer any questions without retaining professional representation.  There is a right time and way to properly respond to this type of IRS investigation, and answering alone, on the spot, without understanding the implications of what is transpiring is dangerous.  The IRS may know more than you think at this point. There is no benefit to letting them compare notes.  

An IRS criminal investigation can bring financial and social ruin, loss of career and incarceration.  The perceived gain from the act is simply not worth it.  

Full post as published by IRS and the Law on April 03, 2009 (boomark / email).