Understanding how the IRS Initiates Criminal Investigations

criminal investigations on taxpayers

The Criminal Investigation Division of the Internal Revenue Service conducts criminal investigations on taxpayers if they commit tax evasion or allegedly violate the Bank Secrecy Act, the Internal Revenue Code, and various money laundering statutes. If a taxpayer has committed tax evasion, the IRS can prosecute within six years, but if they have committed tax fraud, the IRS has unlimited time to prosecute the case. Continuing on the topic, in this blog post, we take a closer look at how the IRS initiates criminal investigations. Read on!

IRS Special Agents

Criminal investigations are initiated from information obtained from IRS revenue officers who may sniff out cases of possible fraud. The findings and outcomes of these investigations are transferred to the Department of Justice for recommended prosecution. If taxpayers receive a notice about an IRS tax investigation, they must immediately seek assistance from a tax resolution attorney who can communicate and negotiate with the IRS on their behalf to come up with a mutual solution.

Preliminary Analysis

The special agents within the IRS analyze the information obtained by IRS revenue officers to establish whether or not a taxpayer has committed any criminal tax fraud or financial crime. This process of evaluating all the relevant information is called a primary investigation. The special agent then transfers preliminary information to front-line supervisors who decide if the case needs to be approved for further investigation. If the supervisor approves, the special agents initiate a subject criminal investigation. During the preliminary investigation, at least two levels of CI management review the information of ‘primary investigation’ and determine if it should go for further investigation depending on the evidence and proof.

Related Blog: 4 Ways a Tax Lien Can Affect You

Criminal Investigation

Once the IRS special agents receive approval to carry out a criminal investigation, they start obtaining all the critical facts and evidence which can establish strong elements of criminal activity or tax violation. For this purpose, they use many investigative techniques such as executing search warrants, interviews of witnesses, subpoenaing bank records, reviewing financial data and tax filing history, and conducting surveillance. The IRS agents work with the IRS Chief Counsel Criminal Tax Attorneys and other IRS resolution attorneys so that they do not make any mistake in addressing all the legal aspects of the investigation.

Related Blog: Understanding the Various Types of IRS Levies

Prosecution Recommendations

After the facts and evidence are analyzed by the IRS special agents, they will determine whether or not they substantiate criminal activity. In case they do not, the investigation is discontinued. If there is evidence of a criminal activity or significant tax rules violation, the agent can prepare a written ‘special agent report’ that lists the findings of law violations and recommends prosecution. The report is reviewed by supervisory special agents, a criminal investigation quality review team, and CI special agents and their assistants. All the officials decide if the case should be criminally prosecuted and forwarded to the United States Attorneys, Department of Justice, and Tax Division if it is a tax-related investigation. Once the Department of Justice and attorney accept the prosecution, the special agent will start preparing for trial. Once all the evidence is gathered, the IRS Criminal Investigation prosecution then proceeds to obtain a conviction, by either a guilty verdict or a plea.

Wrap Up

The Internal Revenue Service cannot tolerate tax violations and financial fraud and has complete authority to take action against offending taxpayers. It is, therefore, important to remain in good books with the IRS by filing your taxes on time and not getting involved in any financial activity that is considered fraudulent. In the event that you or someone you know is involved in a tax violation, you must immediately seek IRS tax help from the team of Dallas IRS tax lawyers at the Law Offices of Nick Nemeth, PLLC. Our experienced Fort Worth tax attorneys specialize in helping taxpayers get favorable outcomes to a range of IRS tax problems. To speak with one of our Dallas tax attorneys, call (972) 426-2553, or email jamie@myIRSteam.com. You can also fill out our contact form.

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