Enforcement of criminal tax law is aggressive, so it’s important to know your rights if special agents from the IRS show up at your door
First, realize the obvious: agents from the Criminal Investigation Division (CID) of the IRS are not investigating a mere civil matter. It’s a criminal case, and the agents are trying to put someone in prison.
Agents typically investigate matters that occurred years ago, so it’s easy to be honestly mistaken about what you’re being questioned about. Agents will, however, believe that you are lying if they have information that contradicts what you tell them.
You do not have to answer any questions, and it is wise that you don’t until you have retained an attorney to determine the focus of the criminal investigation.
And remember, any statements you make to your tax preparer aren’t confidential. Likewise, anything you say to friends, relatives or business associates. If you say anything the government could view as inculpatory, anyone you talk to can be subpoenaed to testify against you. The only conversations that are privileged and confidential are the ones you have with your legal team.
If you are contacted by CID special agents, it is best to politely decline to answer any questions and contact an experienced IRS tax attorney immediately
Protecting Yourself from the IRS includes immediately getting all of your personal records back from your tax preparer
If the government subpoenas those records from the tax preparer, there is normally no privilege that can be asserted.
However, if all of the personal records are in your possession, privileges could likely be asserted.
How Tax Fraud Investigations Work
The IRS employs over 3,000 special agents dedicated to uncovering and investigating tax fraud. These agents have at their disposal a number of computer, accounting, surveillance and investigative resources. They have the power to issue summons for financial information and can freeze bank accounts and seize assets if doing so is deemed necessary for the purposes of an investigation.
First, if you have not received any prior letters from the IRS concerning one of your tax returns, the odds are very high that these are IRS special agents. It is important to fully realize that these agents are not investigating a mere civil matter. Special agents only investigate criminal cases.
It’s easy to forget details and make honest mistakes in recounting what happened. But you do not have to answer any questions, and it is wise that you don’t until you have retained an attorney to determine the focus of the criminal investigation. As Martha Stewart found out, any statements made to federal agents that the government believes are false can be an independent basis for criminal charges.
Politely tell them that you want an attorney present and completely stop the interview, then immediately retain an experienced white collar attorney to determine the best defensive strategy for you.