What Triggers an IRS Criminal Investigation?

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Staff Writer - Angela
October 30, 2018

Dealing with the Internal Revenue Service (IRS) can be intimidating for many taxpayers, and this is especially true if you’re involved in an IRS criminal investigation. If you are contacted by an IRS special agent, it means that there is some evidence that you may have committed a crime, which could possibly lead to you facing criminal charges and a potential prison sentence. Here are a few facts that you should know when facing an IRS criminal investigation, including how you should interact with the special agent.

How Are Investigations Initiated?

An IRS criminal investigation can begin in one of several different ways. Understanding how these investigations work will help you better prepare for the possibility that a special agent will one day knock on your door. The most common reason for a criminal investigation is that a revenue agent or officer suspects that a taxpayer has committed fraud. After fraud has been detected, the revenue agent will pass the information along to an investigator.

A special agent may also decide to initiate a criminal investigation after receiving information from the public. For example, if you accidentally reveal to someone that you have committed fraud, and that person decides to alert the IRS, you may soon face a criminal investigation. Finally, an IRS criminal investigation may be started because of information revealed during an investigation by another law enforcement agency.

The Investigation Process

Now that you know a few of the reasons that a criminal investigation may be initiated, it’s time to learn how these investigations progress. As you might expect, a criminal investigation by the IRS can be a long, complex process, due in large part to the type of financial information involved.

Before a criminal investigation can begin, there will first be a primary investigation. During a primary investigation, an IRS special agent will research and analyze a wide array of information to determine if a financial crime such as tax fraud has taken place. The special agent must present the information that they have gathered to their supervisor, who will determine if the investigation will proceed. Next, the supervisor will present the information to the head of the office for final approval.

After the supervisor and the head of the office have given their approval, the special agent is able to move forward with the criminal investigation. Most of the agent’s time will be spent collecting evidence that demonstrates a crime has occurred. A special agent can gather this evidence in several different ways:

  • Interviewing witnesses.
  • Surveilling the suspect.
  • Carrying out a search warrant.
  • Seizing and analyzing financial data such as bank records.

During the course of the investigation, the agent will work directly with IRS tax attorneys. The reason for this is to make sure that the investigation is carried out correctly and that all relevant issues are being addressed.

The Special Agent’s Recommendation

Once the special agent has collected and reviewed all the pertinent information, they will determine if there is sufficient evidence to prove a crime. If the evidence does not fully demonstrate criminal activity, the agent will recommend discontinuing the investigation. If there is strong evidence of a crime, the special agent will write a report that includes the findings of the investigation and a recommendation that the suspect be charged.

Before a criminal charge takes place, however, the agent’s report will be reviewed by several parties to verify the information:

  • The special agent’s supervisor.
  • A quality review team comprised of other criminal investigators.
  • The head of the office and their second in command.

If the head of the office decides that a criminal prosecution is warranted, they will send their recommendation to one of two agencies. If the crime is related to a tax investigation, the recommendation is sent to the Tax Division of the Department of Justice. Recommendations for prosecution related to other investigations are sent to the United States Attorney.

After the Department of Justice accepts the recommendation, they will begin preparing to prosecute the case. Generally, the special agent who handled the investigation will assist with the preparation process. Once preparation is complete, however, the special agent will no longer be involved in the case. Department of Justice attorneys are solely responsible for prosecuting the case.

Dealing With a Special Agent

If an IRS special agent suspects you of committing a crime, they will usually want to get in touch with you. In most cases, you will be approached with a special agent without prior warning. The reason the agent won’t notify you is to catch you off-guard so that you will hopefully reveal information that will help them with their investigation. If an agent approaches you at your home or workplace and asks you about your involvement with a crime, don’t say anything. Contact an attorney as soon as possible to make sure that your rights are protected.

It’s also important to remember that special agents don’t have the power to charge you with a crime. When they contact you, their goal is to gather information for their investigation, not to arrest you. Don’t say anything to the agents that could help with their case, even if you know that you’re innocent. If you have committed no crime, this will bear out during the course of the investigation.

At this point, you might also be wondering if a civil audit can lead to a criminal investigation. The answer to this question, unfortunately, is yes. If a crime is detected during your civil audit, a criminal investigation will soon be initiated. The IRS does have to follow a strict procedure, however. For instance, if the civil audit reveals a crime, you cannot be immediately arrested. First, the civil audit must end, and then a criminal investigation will take place. This means that you will have some time to prepare for the possibility of facing criminal charges.

Facing an IRS criminal investigation can be extremely nerve-racking, and so can dealing with tax debt. If you owe back taxes and are struggling to make payments, Solvable is here to help you. We have a library of research articles that can help you understand the different ways to get out of tax debt, and we also provide tax debt relief company reviews so that you can choose the solution that’s right for you.

 

 

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