Criminal investigation on your tax returns or fraudulent tax activity is usually initiated by the Criminal Investigation Division of the IRS. The following is a non comprehensive list of causes and indicators which may imply that you are under a criminal investigation for tax fraud:
- IRS Special Agent contacts you directly to investigate your taxes. At this stage it is very likely you are a target of criminal investigation.
- Your partner or business associate is charged for criminal tax fraud. IRS often obtains tax evasion and other suspicious activities while prosecuting guilty tax offenders whose web of friends and colleagues may also be implicated through their association with the guilty tax offender.
- Informants hoping to gain financial reward will often notify the I.R.S. of friends and associates of falsifying tax returns.
- Banks are also obligated to notify the Internal Revenue Service of certain questionable transactions. In addition, if your bank advises you that the IRS' Criminal Division is trying to obtain your bank transaction records, it is very likely that IRS has you on their radar for criminal investigation.
- During your audit, if the IRS discovers large discrepancies between your tax returns and their audit investigations, your case may be "referred" to the criminal division for investigation. This is one of the main reasons why most informed taxpayers will not hire anyone other than an attorney to handle their audits.
IRS regards tax fraud and tax evasion as very serious criminal matters. Misrepresenting your income or failing to pay appropriate taxes can carry severe monetary penalties, jail time, and criminal felony convictions which could seriously damage your reputation and livelihood. There are substantial legal and financial penalties if you are caught in criminal tax activities. It is very important to take pro-active measures if you believe that there are problems with your tax case. If you have any questions about your taxes, or the possibility of a criminal tax matter, you need to consult a tax attorney immediately.