IRS steps up its criminal tax prosecution efforts

On Behalf of | Jan 9, 2017 | Tax Crimes

Many Americans are familiar with the civil penalties that the Internal Revenue Service can impose for unpaid taxes. However, there are also behaviors that could give rise to criminal liability. To put it simply, an individual could serve time if convicted for filing a false income tax return or committing tax fraud or evasion.

In addition to potentially serious punishments, criminal tax charges should be taken seriously for another reason. Unlike civil tax audits, the IRS’ criminal tax prosecutions have a statistically impressive win rate. Indeed, the IRS devotes agency resources and aggressive prosecution efforts to tax fraud and tax evasion investigations. A recent article indicates that this trend will continue.

Specifically, the U.S. Department of Justice recently announced that it had finalized non-prosecution agreements with Swiss banks in a cooperative effort called the Swiss Bank Program. In exchange for coming forward to report and cooperate with offshore tax investigations, the Swiss banks are granted amnesty from criminal liabilities. According to U.S. Attorney General Loretta Lynch, the program has successfully uncovered tax evasion schemes in offshore accounts.

Although any contact from the IRS may seem intimidating, it is vitally important to consult with a tax attorney if an IRS special agent has visited you. The visit could portend a criminal tax investigation. In such event, any statements made to the IRS could reappear in a criminal tax trial for tax fraud or tax evasion. Such admissions would not be considered hearsay, and consequently, would be allowed into evidence at trial as admissions.

Consulting with an attorney will help protect your interests. At a minimum, legal representation means that that the IRS will have to communicate with your attorney, rather than you directly.

Source: The Hill, “DOJ announces deal with Swiss banks on anti-tax evasion program,” Naomi Jagoda, Dec. 29, 2016