We often discuss IRS criminal investigations. Real-world examples are a good way to examine choices made by those who deceive the IRS and often see prison time and financial penalties as a result. So how does one of these criminal tax matters get rolling?
The branch of the Internal Revenue Service that oversees investigation of tax crime is the Criminal Investigation Division. This department looks at violations of the Bank Secrecy Act, tax and money laundering laws, and the Internal Revenue Code itself.
According to its website, the agency relies on approximately 2,500 special agents and other personnel to run its investigations and staff its operations. As you might expect, special agents are trained to define and detect tax fraud in the physical and digital world, at home and offshore. The process looks something like this:
- Pursuing a criminal tax matter is a lot like any other criminal matter—it starts with a barely noticeable financial irregularity, or a large gap in tax payments. It could be a bank report, information from a collaborating agency, or an anonymous tip. It could be one-time, or it could be a pattern of fraudulent tax behavior that makes itself visible just once. Sometimes once is just long enough to unravel what could become a significant offshore tax investigation.
- When information is received, special agents review and analyze a case for presentation to a supervisor with the authority to approve or decline the opportunity to investigate a potential tax fraud. The initial review is known as a “primary investigation.” If the investigation gets the green light from two supervisory layers, the special agent can then develop a “subject criminal investigation.”
- An investigation explores and obtains facts which may substantiate the claim. This could include interviews, subpoenas for financial or other information, forensic data evaluation, or surveillance, among other methods.
- Throughout the investigation, a special agent works with IRS Chief Counsel Criminal Tax Attorneys to ensure the investigation aligns with regulations and recommendations. Once evidence is gathered and reviewed, the case is discontinued if evidence is insufficient to support allegations. If charges are warranted, the special agent report is reviewed at several levels and may be advanced to the Department of Justice (DOJ) for prosecution.
The aim of the IRS is to uncover and pursue a wide array of tax crime, from filing fraudulent tax returns to failing to file a FBAR or FATCA form when needed. The agency is very good at what it does. If you become aware of the attention of the IRS, speak with an experienced tax lawyer to correctly and strategically do your best to avoid becoming a defendant in a real-life IRS criminal tax matter.
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With offices in Chicago, Cleveland, Robert J. Fedor, Esq., LLC provides strong and strategic legal tax defense for persons or entities notified of an IRS investigation or other tax challenge. Contact us or call 800-579-0997 today.