I just returned from the American Bar Association Section of Taxation’s annual National Institute on…
Top Six Criminal Tax Questions Asked
We get many questions from clients (and their advisors) about criminal tax. So I have compiled the six questions that come up the most frequently.
Frequently Asked Questions: Addressing IRS Criminal Investigations
Q: What course of action is recommended if I am unexpectedly visited by special agents of the Internal Revenue Service (IRS) at my residence or place of business?
A: In the event of an unanticipated visit from IRS special agents, it is imperative to maintain composure and refrain from engaging in any conversation without seeking legal counsel. These agents are members of the Criminal Investigation Division (CID), and their presence typically signifies a potential criminal investigation. It is crucial to understand that any statements you make can be used against you in court. Therefore, politely obtain their business cards, inform them of your intention to consult with an attorney, and assure them that your legal representative will establish contact. Even if you believe you are merely a witness, exercise caution, as the scope of the investigation may be broader than initially apparent.
Q: What should I do if I have reason to believe my tax preparer is currently under investigation by the IRS?
A: If you suspect your tax preparer is under investigation, it is of paramount importance to take immediate action to protect your interests. Being associated with a preparer facing scrutiny can expose you to potential audits and even criminal liability. As an initial step, cease all communication with the preparer. Next, consult with an attorney specializing in criminal tax matters. They can assess your individual risk profile, advise you of your legal rights, and guide you through the necessary steps to safeguard your financial and legal well-being.
Q: What actions are advisable if I am contacted by the IRS regarding the tax matters of another individual?
A: Being contacted by the IRS regarding someone else’s tax situation does not absolve you from potential scrutiny. The agents may be investigating you as well, even if they have not explicitly stated so. It is recommended to politely decline the initial interview, obtain their contact information, and promptly seek legal counsel. Bear in mind that the agents may not be entirely forthcoming about their intentions, and your words can be used against you, even if you believe you have nothing to hide.
Q: In the event of an IRS criminal investigation, should I engage the services of a criminal defense attorney or a criminal tax attorney?
A: It is advisable to seek counsel from both a criminal defense attorney and a criminal tax attorney. Criminal defense attorneys are well-versed in navigating the complexities of criminal court procedures, constructing a robust defense strategy, and representing clients in court. Criminal tax attorneys, on the other hand, specialize in tax laws and regulations, possess an in-depth understanding of IRS procedures, and can offer valuable insights into the nuances of your specific case. By combining the expertise of both types of attorneys, you establish a well-rounded legal team that can provide the most comprehensive and effective defense possible.
Q: Can I resolve a criminal investigation by simply paying my taxes?
A: No, settling your tax debt will not resolve a criminal investigation. Once the case has been escalated to the IRS’s Criminal Investigation Division (CID), it is no longer about the tax liability itself but rather your alleged criminal conduct. However, paying your taxes can potentially mitigate the severity of the charges by demonstrating your willingness to cooperate and reducing the tax loss. It is strongly recommended to consult with an attorney before making any payments, as they can help you develop a strategic plan that aligns with your overall defense strategy.
Q: Why is it imperative to engage legal counsel for an IRS criminal investigation?
A: Engaging legal counsel is not merely advisable; it is essential when facing an IRS criminal investigation. An experienced attorney can elucidate your rights, protect you from self-incrimination, navigate complex legal procedures, construct a robust defense, negotiate with the IRS, and represent you in court if necessary. Their expertise can significantly influence the outcome of your case and potentially mitigate the legal and financial ramifications you may face.
Please note: Early intervention by legal counsel can be instrumental in protecting your rights and achieving the most favorable resolution possible. Do not hesitate to seek professional assistance if you are facing an IRS criminal investigation.
Patel Law Offices offers a strategy session to discuss how to resolve your legal problem. Conveniently schedule online today with our online scheduler and questionnaire.