Tax Law Insights

The IRS investigates criminal violations of federal tax laws, including tax evasion, tax fraud, and not filing tax returns. Many people do not realize that simply not filing a tax return when it is due is a crime under federal law.

The IRS analyzes criminal violations of federal tax laws through its "Criminal Investigation Division," or "CID." CID agents are referred to as "Special Agents."

The CID examines individuals and businesses for potential criminal tax violations. CID receives information about possible criminal tax violations from a broad range of sources, including publically-reported information, and information from ex-spouses, former employees, and former business associates.

CID may initiate an investigation without informing a taxpayer that he/she/it is under investigation. By the time CID contacts a taxpayer and notifies the taxpayer that it is under criminal investigation, the investigation may have already been ongoing for some time, and CID has already developed a substantial amount of information. CID often does not seek to initiate contact with the "target" of the investigation until CID already has firm evidence of a potential tax crime.

CID will contact a taxpayer under investigation, typically by letter from a Special Agent. The Special Agent will ask to meet and interview the taxpayer.

Any taxpayer that may be the subject of a potential federal criminal tax investigation should never represent him or herself in a criminal investigation and also should not speak with the Special Agent. Every U.S. citizen has a Constitutional right against self-incrimination, and this applies to answering questions from an IRS Special Agent in a criminal investigation where the individual is a target of the investigation. If contacted by CID, an individual should decline to speak with the Special Agent, and also state that the individual wishes to speak with legal counsel (another Constitutional right). The Special Agent must stop asking any questions at that time.

Taxpayers who are contacted by CID must consult with a competent tax attorney. Federal tax laws are complex, and IRS Special Agents are trained criminal tax investigators. IRS criminal tax investigations can be lengthy and can impose significant burdens on any individual or business. Tax counsel will represent and advise the taxpayer through this process.