What to Do if You Are Under Criminal Tax Investigation?

What to Do if You Are Under Criminal Tax Investigation?

Are You Under Criminal Tax Investigation?

While the majority of the time, violations of international tax laws are typically going to be civil in nature and not criminal — sometimes depending on the level of intent or willfulness, a violation may become a tax crime. In recent years, the Internal Revenue Service and Department of Justice have significantly increased the investigation, enforcement, and prosecution of international tax-related matters such as criminal FBAR, criminal FATCA, and offshore tax evasion. Whether it is due to offshore tax havens, unreported foreign accounts, overseas cryptocurrency, or simply hiding assets in a foreign jurisdiction — willful Taxpayers need to be prepared in case the Special Agents approach them in an international criminal tax matter or are concerned that their civil audit may lead to criminal ramifications. Here are five (5) important tips about preparing for a criminal investigation.

Use an Attorney

In general, if a Taxpayer is involved or potentially involved in a criminal investigation then they are going to want to retain an attorney to assist them. That is because the only way that the client has an attorney-client privilege is when they use an attorney. While there is an accountant privilege, that privilege is much more limited and does not provide protection and criminal tax matters.

Be Careful What You Divulge to the Government

Taxpayers would be amazed and how often a Taxpayer’s own words are responsible for them getting into criminal trouble. If a Taxpayer is approached by a Special Agent or is in the middle of an IRS audit and believes they may self-incriminate, it is essential to take necessary action. If the Taxpayer retained an attorney, hopefully, they have already counseled them about self-incrimination. Taxpayers must be very careful regarding the type of information they provide the IRS or Department of Justice because those words can be used against Taxpayers at a later time.

Taxpayers May Already be Under Government Surveillance

If the US government believes the Taxpayers committed an international tax crime, there is the added concern of whether or not funds are being moved overseas or if the taxpayer may leave the country, making it difficult for the US government to come after them. As a result, the government may use additional surveillance methods when investigating an international criminal tax matter. Taxpayers who may have committed a crime should presume that they are under investigation or surveillance so that they can move more carefully.

Sudden Change of Behavior May Infer Criminal Avoidance

It is not uncommon for taxpayers to approach us when they believe they have committed a tax crime and their immediate knee-jerk reaction is to either empty out the foreign account or make a large transfer of money between the United States and foreign accounts. The problem is if a Taxpayer is already under surveillance and they conduct actions that are not representative of their typical behavior, it may lead the IRS or Department of Justice to believe that the Taxpayer is trying to skirt the law – and all they will end up doing is digging themselves into a deeper hole. In other words, if a Taxpayer thinks they may have committed a tax crime and are concerned that they are possibly under surveillance, they have to be very careful about how they maneuver going forward.

Watch Who You Trust

It is impossible to know whether anybody that a Taxpayer may have worked with or who has assisted with in committing a tax crime has already turned Government witness. It is important to make sure that Taxpayers limit communications with third parties. In other words, if a Taxpayer has committed an international tax crime the best thing the Taxpayer could do is keep the information themselves and keep those communications with their attorney or spouse so that the privilege applies.

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 that 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.