When Does the IRS Pursue Criminal Charges?

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Tax fraud and tax evasion are federal crimes that involve the willful attempt to avoid paying taxes. The penalties for a tax crime conviction can be severe and may include significant fines, payment of interest, penalties, and forfeiture of property. Federal criminal tax charges may result in substantial jail time. In order to obtain a conviction for federal tax fraud or evasion, the government must prove knowing and wilful conduct.

Federal criminal defense attorney Hope Lefeber is routinely called upon by tax preparers, accountants, CPAs, businessmen and women, and others who are under investigation or facing criminal charges for tax fraud, tax evasion, and other white-collar crimes. Ms. Lefeber, together with expert forensic accountants, analyzes and deconstructs the government’s criminal tax fraud cases in order to achieve the best, possible outcome for her clients. She examines her clients’ financial situation from every angle in order to determine the most beneficial outcome for her client with a singular goal in mind- to reduce or eliminate the criminal tax loss her client is facing. She has more than 30 years experience representing people accused of federal financial crimes and has earned a reputation as a fierce and tenacious advocate who consistently achieves superior results on behalf of her clients. To put her expertise to work for you, contact Hope Lefeber today.

What Crimes Does the IRS Investigate?

Typically, the IRS does not pursue criminal charges unless a person exhibits a pattern of intentionally violating tax laws. This may include repeatedly failing to file tax returns, falsifying information on a tax return, or not paying taxes.

Common factors that can trigger criminal charges include:

  • Significant Underreporting of Income: The IRS may pursue charges for tax fraud when someone repeatedly fails to report a substantial amount of income.
  • False or Fraudulent Information: Providing false information on tax returns, such as fake or embellished deductions, credits, or exemptions, can trigger criminal charges.
  • Failure to File Tax Returns: Willfully failing to file a tax return, particularly over several years, can lead to criminal charges, especially if you have significant income.
  • Use of False Documents: Submitting fake documents to support fraudulent tax claims can lead to criminal charges for tax fraud.
  • Engaging in a Tax Evasion Scheme: Participating in a complex scheme to evade taxes, such as using offshore accounts or fake business entities, can lead to criminal prosecution.
  • History of Non-Compliance: If a taxpayer has a history of non-compliance or prior convictions for tax-related offenses, the IRS is more likely to pursue criminal charges for further violations.
  • Misrepresentations on an Offer in Compromise (OIC) - Misrepresenting your assets and making false statements on the OIC can result in tax evasion charges.

Allegations of tax fraud are investigated by the IRS Criminal Investigation Division (CID), which investigates potential violations of the Internal Revenue Code and related financial crimes, including tax evasion, tax fraud, and money laundering. If the CID finds sufficient evidence of a crime, they will refer the case to the Department of Justice (DOJ) for prosecution.

What Are the Penalties for a Tax Crime Conviction

A conviction for a tax crime carries severe penalties, including hundreds of thousands or millions of dollars in fines, restitution, and jail time. The amount of jail time depends upon the amount of tax loss. This amount can significantly increase if there is a tax loss that occurs each year for many years. In fact, the tax losses for years that are beyond the statute of limitations can be added into the amount of tax loss for sentencing purposes, resulting in draconian sentences.

Signs You May Be Under Investigation for a Tax Crime

The IRS CID operates discreetly, and most people are unaware they are under investigation for tax fraud until government investigators have already gathered substantial evidence. However, there are signs you may be under investigation by the IRS.

Unusual Bank Activity

Unusual activity in your bank account can be a sign of an IRS Investigation. Frozen accounts, a bank refusing a transaction with a clear reason, or inquiries from your financial institution about a specific transaction are potential signs you may be under investigation by the IRS. You may also receive a notice from the bank that documents have been subpoenaed.

Direct Contact from the IRS

Direct contact from an IRS special agent is a sign that you are likely under investigation for a tax crime. IRS special agents are part of the CID and carry badges and other credentials. Their visits are often unannounced so they can catch a suspect off-guard and gather information to aid in their investigation. You may also receive a call or a visit from an IRS revenue agent who is conducting a preliminary investigation prior to the referral to the CID.

IRS Interviews Business Partners

The IRS CID may contact your colleagues, business partners, financial advisors, or accountants as part of their investigation. The IRS often interviews third parties as part of its efforts to collect evidence and build a case for tax fraud.

Receipt of a Subpoena

Receiving a subpoena is a clear sign you are under investigation. A subpoena is often used in later stages of a criminal investigation and legally requires that you provide the requested information. The IRS commonly asks for bank statements, tax returns, and other financial documents.

Changes in Your Accountant’s Behavior

If the behavior of your accountant, tax preparer, or financial advisor changes suddenly without a clear explanation, they may have been contacted by the IRS. Tax preparers are legally required to cooperate with the IRS and are often interviewed as witnesses.

Proving Intent

The most critical issue in federal criminal tax cases is intent. To prove a tax crime, the IRS must prove an individual or business acted intentionally to defraud the government by not paying taxes. A simple mistake, a misunderstanding, or negligence typically do not rise to the level of criminal activity, although they can lead to significant civil penalties.

Hope Lefeber: Experienced, Aggressive Defense Against Tax Crime Charges

If you believe you are under investigation or have been charged with a tax crime, it is crucial that you hire experienced, aggressive legal representation. Hope Lefeber has defended people under investigation or accused of federal tax crimes for more than 30 years. She began her career as an enforcement attorney with the Security and Exchange Commission, where she learned first-hand how the government investigates, prepares, and prosecutes federal white-collar crimes. Today, she uses that experience to defend people charged with tax crimes to get the best results.

Feel like the IRS is Pursuing Charges Against You? Contact the Law Offices of Hope Lefeber Today

To put the expertise of an experienced federal criminal defense lawyer to work for you, contact the Law Offices of Hope Lefeber today.