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Tax Crimes FAQ

What is a Criminal Tax Investigation?

A criminal tax investigation is different than an audit. In a tax audit, the IRS is attempting to determine if you have correctly reported your tax liability. In a criminal tax investigation , the government is preparing a case so that the U.S. Attorney can PROSECUTE you and put you in JAIL. Criminal tax investigations are primarily conducted by the IRS Criminal Investigation Division (CID). However, many cases also involve criminal investigators from the FBI, Postal Service, DEA, BATF, ICE and state and local criminal enforcement agencies.

When Do I Need to Worry About a Criminal Investigation? Just because you don't think that you have committed any crime does not mean that the IRS will not institute a criminal investigation. Many people charged with tax crimes don't believe they have done anything wrong. Furthermore, many people charged with tax crimes are found to be not guilty. Therefore, even if you believe that you have done nothing wrong, you need to be on the look-out for signs of a criminal investigation. You should be concerned about the possibility of a criminal investigation if:

  • You or anyone you know are visited by a Special Agent, FBI Agent, or other law enforcement officer. If you or anyone you know are contacted by a Special Agent, FBI Agent or other law enforcement officer regarding anything to do with your tax return or finances, you need to worry about a criminal investigation. These individuals are likely investigating a tax crime. No matter what they say, they are likely NOT part of any routine audit.

  • Returns are being audited that you know to be false. If you are under audit and you know that the information on that return is false or fraudulent, you need to worry about a criminal investigation. Auditors are trained to refer cases to CID when they discover false or fraudulent information on a return.

  • You have not been filing returns. If you have not been filing your returns you need to worry. This is true even if you believe that you have paid the all the tax you owe through withholding by your employer or otherwise. Willful failure to file your
    return is a criminal offense.

  • A grand jury subpoena is served on your accountant, bank, employer, employee, customers, or any other person seeking information related to youA grand jury’s sole purpose is to determine whether sufficient evidence exists to indict a someone for a crime. If a grand jury is seeking information about you, your tax return, or your financial affairs, you are likely a target of a criminal investigation.

  • You have had trouble with state tax authorities. Often the IRS and state tax authorities have information sharing agreements. Therefore, if you have trouble with state tax authorities, it is likely that the IRS is aware of the situation and will likely look into the matter.

  • A CID summons is served on your accountant, bank, employer, employee, customers, or any other person seeking information related to you.The CID’s sole purpose is to gather evidence related to a crime. If the CID is seeking information about you, your tax return, or your financial affairs, you are likely a target of a criminal investigation.

  • You have any indication of a non-tax criminal investigation that involves money or property. Many criminal cases begin as investigations into some other criminal matter, especially cases that involve money, drugs, or property. Since taxpayers owe taxes on all their income, both legal and illegal, tax cases often evolve from these other types of criminal investigations. In fact, often it is easier to prove the tax case than the underlying crime.

How Do Criminal Investigations Get Started?

  • Informants. The IRS uses both paid and unpaid informants to develop many tax cases. These informants are often someone angry at the taxpayer, such as former spouses, former employees, neighbors, etc. In fact, the IRS has a specific form (Form 211) that people can file to provide the IRS information about another person. If this is original information previously unknown to the IRS and they collect taxes, the informant is entitled to a reward based on a portion of the taxes the IRS collects.

  • Revenue Agents. Revenue agents conduct audits. They are trained to turn over cases to CID when they think they have discovered false, fraudulent or criminal activity.

  • State Tax Authorities. State tax authorities and the IRS often have information sharing agreements and state tax authorities often provide CID information of suspected taxpayer criminal conduct.

  • Other Law Enforcement Agencies. Many other federal and state law enforcement agencies provide information to CID about suspected criminal activity. Likewise, CID often works joint cases with other agencies.

What Should You Do If You Think You Are the Target of a Criminal Investigation?

  • Remain Silent. You have the Constitutional Right to remain silent. You do not have to answer ANY questions without your attorney present, so SHUT YOUR MOUTH until you have your lawyer present. What you say can and will be used against you.

    Obviously you should not talk to Special Agents, FBI Agent, other law enforcement personnel or IRS personnel.

    Just as importantly, you should not discuss the situation with your accountant, tax preparer, or anyone else. These people can be subpoenaed and forced to disclose what you have told them. Accountants and tax preparers CANNOT have confidential or privileged communications with you regarding a criminal matter. They have a limited privilege that provides confidentiality regarding tax matters but NOT legal or criminal matters. The only way you can have confidential communications regarding a criminal matter with your accountant is if your criminal defense attorney hires your accountant as a part of the defense team and therefore the attorney’s privilege is extended to your accountant.

  • Get Help. Criminal investigations should not be taken lightly. Hire a qualified attorney IMMEDIATELY upon suspicion that you are under criminal investigation. You need an attorney with specialized skills. This attorney needs to be competent in both tax issues and criminal issues. A tax lawyer won't do and a criminal lawyer won't do. You need a lawyer that has experience in BOTH criminal trials and tax law. You need David Jacquot.