Last week a federal judge approved the IRS issuing “John Doe” summonses requiring FedEx, DHL,…
Visited by IRS Special Agents?
IRS Special Agents are employed by the Criminal Investigation Division (CID) which is the law enforcement arm of the Internal Revenue Service (IRS). Special Agents conduct tax investigations that are intended to result in criminal prosecutions. They conduct criminal investigations concerning alleged violations of the Title 26 of the United States Code and other related violations involving various types of currency transactions and money laundering that fall under Title 18 of the U.S. Code. While civil tax consequences are linked to the outcome of tax prosecutions, the Special Agent is focused on the criminal prosecution implications of the tax charges as opposed to other civil administrative tax functions. Therefore, Special Agent is not primarily concerned with the tax amount due or collection thereof.
Conduct of a Criminal Investigation
During the course of a criminal investigation, the investigating agents will attempt to secure information from many different sources, including the taxpayer (or subject), the accountant, family members, business associates and third parties. Most criminal tax investigations take at least 1-2 years to complete so that it is likely that a significant time will elapse from the date an investigation starts until the filing of an criminal Indictment.
In most instances, the target of a criminal investigation will be notified soon after investigative activity commences. The IRS Special Agents (usually two agents) will often attempt to surprise the subject by an attempted interview at to his/her residence or place of business (often in the morning). The IRS Special Agents try to elicit admissions or other information to further the investigation by catching the subject off guard or before the subject can consult with counsel. Depending on the nature of the investigation, the initial contact may be made in connection with the execution of a search warrant. Many defendants unknowingly provide the government with incriminating evidence by engaging in discussion with the IRS Special Agents. Therefore, you should immediately ask the IRS Special Agents to contact your attorney instead of speaking with them.
Shortly before or after contacting the subject, the agents will also contact the subject’s tax return preparer. It should be noted that the federal government does not respect any accountant client confidentiality or privilege and that the return preparer/accountant is a prime witness. Consequently, any communications between the subject of an investigation and the return preparer/accountant should be prohibited.
A tax attorney should attempt to secure information from any other individuals and or entities who may have been contacted by the Special Agent. Oftentimes, individuals who are friendly with the subject will notify the subject of any contacts. Financial institutions must notify any customers whose records have been requested by the government. In the event that records are seized during the execution of a search warrant, counsel should arrange to inspect these records as soon as reasonably practicable in order to ascertain their evidentiary potential. A document inventory should be prepared and copies of all relevant records should be secured.
Patel Law Offices has consulted with hundreds of clients regarding tax fraud issues. Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems.