What to Do If You Are Contacted by IRS Criminal Investigation (CI)

What if I Receive Contact from the IRS Criminal Investigation

What if I Receive Contact from the IRS Criminal Investigation  

While the majority of IRS tax violations are civil in nature, sometimes a U.S. Taxpayer may run afoul of the law, and that violation may result in a criminal investigation by the IRS. Each year, the Criminal Investigation Department (CI) of the IRS investigates thousands of different types of potential criminal violations to determine which violations they may recommend pursuing by interviewing the taxpayer and potentially referring the matter for prosecution. But, just because the taxpayer receives a letter from the Criminal Investigation Department of the IRS does not mean that they have been indicted or that a complaint has been initiated. Still, it is very important that when taxpayers do receive a letter from the IRS (CI), they take certain precautions. Let’s take a look at three common issues to consider for taxpayers who receive a letter from the IRS Criminal Investigation Department.

Do Not Speak to the IRS (CI) Without an Attorney

If a taxpayer receives a letter from the criminal investigation department of the IRS, it is important that they do not engage in direct communication with them, but rather retain an attorney and communicate through the attorney. That is because the purpose of the CI letter is that the IRS Criminal Investigation Department believes that the taxpayer may have committed a crime — and any information the taxpayer may provide may be used against them later down the line. While some taxpayers believe that they can convince the IRS Special Agents or other representatives of the IRS that they did nothing wrong, oftentimes all they will really be doing is providing the IRS Agents with more information that the Department may not have had in the first place, and possibly sealing their own fate.

Do Not Disregard the Letter or Communication

One common human reaction to stress is to try to avoid that stress by burying their head in the sand. It is important to note, that many of these initial letters and communications from the Criminal Investigation Department are time-sensitive and require a response within a specific amount of time. If the taxpayer does not respond timely, it could be seen as a taxpayer’s attempt to avoid the matter and not cooperate. This could lead to more complicated and serious issues for the taxpayer, which is why once the taxpayer receives the letter they should retain an attorney and have the attorney communicate directly with IRS.

Can I Use an Accountant/CPA Instead of an Attorney?

The problem with using a CPA or an accountant instead of an attorney in a criminal investigation is that there is no attorney-client privilege in criminal matters between the taxpayer and the CPA. With the CPA, there is a limited privilege on civil matters, but even that privilege is not as strong as the attorney-client privilege and it does not extend to criminal tax matters. This also means that the CPA could possibly be investigated and forced to testify in a case against the taxpayer, which is another reason why it is important to work with an attorney and not a CPA in criminal tax matters.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.