Criminal Investigations by the IRS

Criminal Investigations by the IRS

Investigations of tax crimes such as tax evasion and the pyramiding of payroll taxes are conducted by the Internal Revenue Service (IRS). The civil enforcement procedures that the IRS employs to collect unpaid taxes can have devastating consequences, but these consequences pale in comparison to the consequences of criminal investigations which can lead to incarceration.

The various crimes related to taxpayers are outlined in Chapter 75 of the Internal Revenue Code. The crimes include an attempt to evade or defeat taxes imposed by statute, failure to file a return, filing fraudulent reports of employee’s income and withholding or willfully failing to file such a report, filing a fraudulent tax return, failure to collect or pay payroll taxes, and filing false or fraudulent information to your employer to decrease the amount of withholding.

For these crimes, the IRS assesses fines between $1,000 to $100,000 and maximum terms of imprisonment between 1 and 5 years. The harshest penalties, $100,000 in fines and a maximum of 5 years in prison, are reserved for attempting to evade or defeat taxes imposed by statute.

If the defendant is convicted, in addition to fines and potential terms of imprisonment, the IRS will seek a restitution order as part of the sentencing. The restitution order will require the defendant to repay the full amount of tax found through criminal proceedings that have been evaded, either willfully under reported or willfully not collected or paid over to the IRS. The restitution order is paid as a term of sentencing and also collectible through IRS civil enforcement.

Civil enforcement officers, including Revenue Officers, Revenue Agents, whistleblowers, and other governmental agencies, provide the information used by the IRS in criminal investigations. The data is analyzed by the investigators to determine if a crime has been committed. After the primary investigation is complete, if it is warranted, a subject criminal investigation will be opened. During this phase, the investigator will begin gathering evidence to use against the taxpayer in a criminal prosecution.

During a criminal investigation, evidence will be gathered by means of summons and subpoenas for financial investigations, witness interviews, search warrants, and surveillance. When the investigation is complete, the IRS Criminal Investigator will make a recommendation for prosecution to the Department of Justice and United States Attorney’s Office or discontinue the investigation. The Department of Justice Tax Division is the ultimate authority in determining to move forward with an indictment on criminal charges.

When an IRS criminal investigation has been initiated against a taxpayer, the stakes could not be higher. Through their criminal conduct, taxpayers face fines of up to $100,000, imprisonment up to 5 years, and restitution orders to pay taxes owed.

Our Tampa Tax Attorneys Can Help with IRS Criminal Investigations

If you have been made aware that you are a subject of an IRS criminal investigation, do not delay in speaking with our tax attorneys in Tampa, FL who can assist in preserving your rights through the criminal process.

Click here to schedule a no-cost, no-obligation consultation.