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IRS Criminal Investigations

Experienced Legal Representation When the
IRS Launches a Criminal Investigation

An IRS criminal investigation is not the same as a routine tax audit. When the IRS suspects serious tax violations or other financial crimes, its Criminal Investigation division (IRS-CI) may become involved. These investigations can carry significant consequences, including criminal charges, substantial fines, and potential imprisonment.

If you've been contacted by an IRS special agent or have reason to believe you're under investigation, how you respond can affect what happens next. Getting an experienced criminal tax attorney involved early can help protect your rights and shape how your case moves forward.

At Robert J. Fedor, Esq., LLC, we represent individuals and businesses facing complex federal tax investigations. Our attorneys understand how the IRS builds criminal cases and know how to challenge the evidence, respond to investigators, and defend clients facing serious allegations.

Don't wait for an investigation to escalate. Speak with our team about your situation and your legal options.

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What Is an IRS Criminal Investigation?

An IRS (Internal Revenue Service) criminal investigation is a federal law enforcement investigation into suspected criminal violations of tax laws and certain other financial crimes. These investigations are conducted by IRS Criminal Investigation (IRS-CI), the criminal law enforcement division of the Internal Revenue Service.

Unlike a routine IRS audit, which generally focuses on verifying the accuracy of tax returns and determining whether additional taxes are owed, a criminal investigation seeks evidence of intentional wrongdoing that could lead to prosecution.

IRS-CI special agents investigate suspected violations involving individuals, businesses, and other entities. Their work may involve reviewing financial records, interviewing witnesses, and gathering evidence to determine if criminal charges should be recommended.

Not every tax problem is a criminal matter. Errors, unpaid taxes, and even significant discrepancies do not automatically indicate criminal conduct. The distinction often comes down to whether there is evidence of willful wrongdoing.

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What Can Trigger an IRS Criminal Investigation?

IRS criminal investigations may begin when the agency identifies signs of intentional tax violations or receives reports of suspected wrongdoing. Referrals may come from IRS audits, government agencies, financial institutions, or individuals. Common triggers for an investigation include:

  • Underreporting or concealing income: Deliberately omitting income from tax returns or hiding sources of earnings.
  • Filing false or fraudulent tax returns: Knowingly reporting inaccurate information, fabricating deductions, or falsifying financial records.
  • Willful failure to file tax returns: Intentionally failing to meet filing obligations, particularly when other evidence suggests deliberate noncompliance.
  • Payroll tax violations: Suspected intentional misuse of withheld employment taxes or fraudulent payroll reporting.
  • Offshore financial activity: Concealing foreign accounts, assets, or income to evade U.S. tax or reporting requirements.
  • Other financial crimes: Suspected money laundering and related financial offenses that fall within IRS-CI's investigative authority.

These circumstances do not automatically lead to criminal charges. The IRS must distinguish between mistakes, negligence, and potentially willful violations.

How Does an IRS Criminal Investigation Work?

An IRS criminal investigation can take months or even years, depending on the complexity of the case. While each investigation is different, the process generally follows several stages. Certain warning signs may indicate that an investigation is already underway.

  1. Investigation Initiation: IRS-CI reviews information suggesting possible criminal activity and determines whether to open a formal investigation.
  2. Evidence Gathering: Special agents may examine tax returns and financial records, interview witnesses, conduct surveillance, and use subpoenas or search warrants when legally authorized.
  3. Case Evaluation: Investigators analyze the evidence to determine if it supports potential criminal violations. If warranted, IRS-CI may recommend the case for prosecution.
  4. Prosecution Review: The Department of Justice reviews referred cases and determines whether to pursue criminal charges. Some investigations conclude without prosecution.

Not every IRS criminal investigation results in criminal charges. Some cases are closed without a recommendation for prosecution.

For more information about specific tax offenses, explore our resources

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Could You Be Facing Criminal Tax Fraud Charges?

If the IRS suspects tax fraud, understanding what investigators look for is important. Our free eBook, Will I Be Charged with Criminal Tax Fraud?, explains the difference between civil tax issues and criminal violations, the IRS's “Badges of Fraud,” and the potential penalties associated with tax fraud.

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What Should You Do If an IRS Special Agent Contacts You?

Being contacted by an IRS special agent can be unsettling, particularly if you're unsure why the IRS is interested in you. What you say and do during these early interactions can have a significant impact on the investigation.

If an agent contacts you, start by verifying their identity and obtaining their contact information. Before answering substantive questions or providing documents voluntarily, consult an experienced criminal tax attorney. Even seemingly routine conversations can become part of a criminal investigation, and you may not know if you're being approached as a witness or a potential subject.

It's also important to preserve relevant financial records and communications. Never destroy, alter, or conceal documents that may be connected to an investigation. Formal requests, including subpoenas or summonses, should be reviewed promptly with legal counsel to understand your obligations and any applicable deadlines.

Having legal counsel involved early can help you avoid missteps that could complicate your case.

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How Fedor Defends Clients During IRS Criminal Investigations

By the time IRS-CI special agents contact a taxpayer, they may already have gathered substantial evidence. Understanding what investigators are looking for, and how to respond, is critical to building an effective defense.

At Robert J. Fedor, Esq., LLC, our criminal tax attorneys represent individuals and businesses throughout the investigative process. We work directly with IRS-CI special agents and federal prosecutors, assess the government's evidence, respond to investigative requests, and develop a defense based on the circumstances of each case.

Our representation may include challenging the government's interpretation of financial transactions, addressing allegations of willful misconduct, negotiating with federal authorities, and defending clients if criminal charges are filed.

Our goal is to challenge unsupported allegations and pursue opportunities to resolve matters before criminal charges are filed.

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Frequently Asked Questions About IRS Criminal Investigations

You may learn about an investigation when an IRS-CI special agent contacts you, requests an interview, or serves a subpoena or search warrant. However, some investigations begin without the taxpayer's knowledge. An attorney can help assess potential warning signs and determine an appropriate response.

Yes. IRS-CI may conduct investigative activities without immediately notifying the individual or business being investigated. Agents may review records, interview third parties, or gather other evidence before making direct contact.

There is no standard timeline. Some investigations conclude within months, while complex cases involving extensive financial records, multiple parties, or international transactions can take years. The duration depends on the nature of the allegations and the evidence involved.

Yes. If an IRS auditor identifies indications of potential criminal activity, the matter may be referred to IRS-CI for evaluation. However, most IRS audits remain civil matters and do not result in criminal investigations.

No. Some investigations close without criminal charges. IRS-CI may recommend prosecution when the evidence supports it, but federal prosecutors ultimately decide whether to pursue charges.

Facing an IRS Criminal Investigation? Contact Fedor Tax Law.

An IRS criminal investigation can threaten your finances, reputation, and future. The decisions you make early in the process can affect what happens next.

At Robert J. Fedor, Esq., LLC, our attorneys represent individuals and businesses in Cleveland, Chicago, New York City, and nationwide. We understand the complexities of federal criminal tax investigations and provide strategic legal representation.

If you're under investigation or have been contacted by an IRS special agent, don't wait to seek legal guidance. Contact our team to discuss your situation and next steps.