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When it comes to tax matters, the Internal Revenue Service (IRS) has the authority to conduct investigations to ensure compliance with tax laws.
In cases where the government suspects willful tax evasion, taxpayers may find themselves facing an audit or, in more severe circ*mstances, a criminal investigation. It is crucial to be aware of the signs indicating that you may be the subject of an IRS investigation.
In this article, we will discuss some key indicators and emphasize the importance of seeking competent legal representation to protect your rights.
Signs that the IRS might be investigating you
- Abrupt change in IRS agent behavior. If an IRS agent who had been actively pursuing your IRS tax debt suddenly stops contacting you and does not return your calls, it could be an indication that your case has been referred to the Criminal Investigation Division (CID). This referral may occur when the IRS suspects tax evasion or other related crimes, such as making false statements or concealing income or assets.
- Disappearance of the IRS auditor. If you have been undergoing an audit and the IRS agent disappears for extended periods, it could be a sign that your case has been referred to the CID. Both the Collection and Examination Divisions typically suspend their activities during a criminal investigation to avoid jeopardizing potential criminal prosecution. In such situations, it is crucial to engage the services of an experienced IRS tax attorney, even if your case is still in the civil investigation stage.
- Bank records being summoned or subpoenaed. If you receive notice from your bank that your records have been summoned by the CID or subpoenaed by the U.S. Attorney's Office, it is a clear indication that you need legal representation. This step suggests that the government is gathering evidence for a potential criminal investigation.
- Accountant contacted by CID or subpoenaed. If CID special agents contact your accountant or subpoena them to appear before a grand jury and bring your tax records, it is a strong indication that a case is building against you. At this point, it is crucial to seek the assistance of an IRS tax attorney promptly. Remember, statements made to your accountant can be used against you in a criminal investigation, while conversations with your attorney are protected by attorney-client privilege.
- Selection of a previous tax return for audit. If the IRS informs you that one of your previous tax returns has been selected for audit, and it contains potential discrepancies in income or deductions, exercise caution when speaking with your accountant. Such conversations can be used against you if the investigation progresses from civil to criminal. IRS agents are skilled at identifying tax fraud and swiftly refer likely criminal cases to the Criminal Investigation Division.
- Unusual interest in specific transactions or excessive document requests. If an IRS agent displays an extraordinary interest in sensitive transactions or requests an unusually large number of documents, it could be a sign that they suspect potential wrongdoing. This heightened focus may indicate the initiation of a criminal investigation.
- Questions about intent rather than form. When an agent starts asking questions about the intent behind your transactions rather than just the form, it suggests a deeper level of scrutiny. The IRS may be exploring potential criminal aspects of your tax affairs.
- Contact from a CID special agent. If a CID special agent contacts you by phone or unexpectedly shows up at your business, attempting to extract incriminating information without the presence of legal counsel, it is a clear sign that you are under criminal investigation. Remember, you have the right to remain silent and should exercise that right. Politely decline to provide any further information until you have legal representation.
Recognizing the warning signs of an IRS investigation is crucial for taxpayers to protect their rights and interests.
When it comes to tax matters and IRS investigations, staying informed can make all the difference. I've spent years delving into tax law intricacies and have witnessed various cases involving IRS audits, civil investigations, and potential criminal inquiries.
Firstly, sudden changes in IRS agent behavior can indeed signal a shift in your case status. If an agent who was actively pursuing your tax debt suddenly goes silent, especially after extended pursuit, it might indicate a referral to the Criminal Investigation Division (CID). This shift typically happens when the IRS suspects serious issues like tax evasion or falsification of financial information.
Disappearing IRS auditors during an ongoing audit process are another red flag. When both Collection and Examination Divisions halt their activities, it's often due to suspicions of potential criminal issues. Seeking legal counsel becomes imperative, even if your case is still in the civil investigation stage.
Bank records being summoned or subpoenaed is a significant indication of an investigation intensifying. If your bank notifies you of such actions by the CID or the U.S. Attorney's Office, it's crucial to engage legal representation promptly to navigate potential legal challenges.
Similarly, if the CID contacts your accountant or subpoenas them, it strongly suggests that a case might be building against you. This is a critical point to involve an IRS tax attorney, given that statements made to accountants can be used against you in a criminal investigation.
Selection of a previous tax return for audit, especially if it contains discrepancies, demands caution. Conversations with accountants at this stage might backfire if the investigation escalates to a criminal level, as IRS agents are adept at identifying potential fraud.
IRS agents' unusual interest in specific transactions or excessive document requests could signify suspicions of potential wrongdoing, leading to a more focused investigation.
Moreover, when agents delve into the intent behind transactions rather than just the form, it suggests a deeper level of scrutiny. This shift often marks a shift towards potential criminal aspects of tax affairs.
Lastly, if a CID special agent contacts you directly, attempting to extract information without legal counsel present, it's a clear sign of a criminal investigation. Remembering your right to remain silent and seeking immediate legal representation is crucial in such scenarios to safeguard your rights.
Understanding these warning signs is pivotal for taxpayers to protect their rights and interests when facing IRS investigations.
