IRS Criminal Investigation and Litigation Representation
The IRS has a division called Criminal Investigation (CI) that conducts investigation of potential crimes involving taxation. Criminal Investigation investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. IRS Criminal Investigation (CI) is comprised of nearly 3,500 employees worldwide, approximately 2,500. IRS special agent’s investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. Also, CI is an aggressive division that can take actions that result in the disruption of your life and business.
Sources of Criminal Investigations
Criminal Investigations can be initiated from information obtained from within the IRS when a revenue agent (auditor in an IRS audit) or revenue officer (IRS collection case) detects possible badges of fraud. Information is also routinely received from the public as well as from ongoing investigations underway by other law enforcement agencies. In addition, a whistle blower may provide information to the IRS.
Conducting a Criminal Investigation
Once a criminal investigation is opened, the special agent will try to obtain the facts and evidence needed to establish the elements of criminal activity. The IRS investigator or auditor can use various investigative techniques to obtain evidence, including interviews of third party witnesses, conducting surveillance, executing search warrants, subpoenaing bank records, and reviewing financial data.
Prosecution Recommendations by the Special Agent
After all the evidence is gathered and analyzed, the special agent and his or her supervisor either make the determination that evidence does not substantiate criminal activity, in which case the investigation is ‘discontinued,’ or that the evidence is sufficient to support the recommendation of prosecution. If the special agent concludes that there is sufficient evidence, the agent will proceed with the preparation of a written report detailing the his or her findings and recommending prosecution. This report is called a “special agent report,” and it is reviewed by numerous officials, including:
- The agent’s front line supervisor, called the supervisory special agent
- A criminal investigation quality review team, Centralized Case Review;
- CI assistant special agent in charge
- CI special agent in charge.
If CI determines the investigation should be criminally prosecuted, CI will prepare a prosecution recommendation and forward it to:
- The Department of Justice, Tax Division, or
- The United States Attorney for all other investigations.
Each level of review may determine that evidence does not substantiate criminal charges and the investigation should not be prosecuted.
IRS Criminal Investigations: What You Need to Know
The IRS is the principal investigator of tax crimes. When CI conducts an investigation internally, without the involvement with any other agency, such an investigation is called an “administrative investigation.” The statute of limitations for most tax crimes is six years beginning from the date that the offense was completed. In addition, tax crimes require a specific mens rea meaning that the taxpayer must have acted willfully, not merely mistakenly or negligently, in order to have committed a tax crime. The IRS often proves willfulness with circumstantial evidence.
If you are the subject of a criminal investigation or a potential fraud charges, the most important thing to do is to talk to a tax lawyer before talking to a government agent. IRS agents make detailed reports of all communications they have with taxpayers. Everything you say to an auditor or special agent can be used against you. In IRS tax investigations, the government will often call one of the special agents who was involved in the investigation or another IRS agent to testify as a witness.
How Does the IRS Gather Information?
The IRS has the authority to issue a summons to gather information and documentation to build their case. Moreover, the IRS summons power extends to questioning taxpayers in person and requesting documents from the taxpayer. In addition, the prosecutor can issue a grand jury subpoena to fill any gaps in the IRS investigation. It is important to know whether you are a “target” or a “subject” of the grand jury investigation, but a “subject” can easily become a “target.”
A subpoena is self-enforcing, and the witness must appear before the grand jury alone without his or her attorney. However, the witness can leave the grand jury room to ask advice from his or her attorney. Once the grand jury has sufficient evidence that a crime has been committed, the prosecution may seek an indictment. An indictment is a formal charge against a taxpayer in which the prosecutor will outline the alleged violations.
Contact a Tax Attorney Today
If you are the target or subject of a criminal tax investigation, Contact a Los Angeles criminal investigation tax attorney today for a free consultation. Everything that you say to an IRS agent can and will be used against you. It is imperative that you speak to a tax attorney immediately before speaking to an IRS criminal investigation agent.