What Non-Tax Crimes Does IRS Criminal Investigation Investigate??

IRS Criminal Investigation (IRS-CI) is not just looking at tax crimes, they pursue other federal offenses, from drug dealing and money laundering to bank fraud. It’s a diverse list that should make anyone under scrutiny by CI take notice. Whether they are looking for you specifically or whether your name came up while looking for someone else, you need to understand what the IRS is looking for.

IRS-CI is the IRS’s criminal enforcement arm, and makes referrals to the US Justice Department. To prosecute, though, it has to hand over the evidence it collects to the Department of Justice.

Non-tax Crimes Investigated by CI

Most of the non-tax crimes investigated by CI relate in some way to money. But CI is part of the team in a lot of different kinds of cases.

“Skimming” is dishonestly diverting business receipts so they never reach the accounting records, and then not paying tax on the money. It may be a separate offense. To uncover skimming, agents use digital forensics and information from third parties. If you’re in construction, for example, CI agents might talk to suppliers, contractors and electricians.

Embezzlement is not the same thing as skimming. It is stealing the assets of your employer for your own purposes. Generally, embezzlement involves someone in a position of trust with access to the victim’s money or property, say, bank accounts or an investment portfolio. A conviction for embezzlement can lead to significant prison time and steep fines.

Accounting fraud involves “cooking the books” to deceive someone, which is different from skimming business receipts or misstating business income to avoid paying taxes. IRS CI often teams up with the SEC and the FBI, and agents scrutinize bookkeepers, certified public accountants (CPAs), and corporate management. Don’t assume that they are focused only on public companies.

Bank fraud is using deceptive practices to improperly obtain money, assets or other property from a bank. It includes lying on a loan application and check kiting. A bank fraud conviction brings substantial fines of up to $1 million and up to 30 years in prison.

IRS CI is one of several federal agencies that investigate fraud against the government. That often involves contracting fraud or false claims. It covers contracts with every federal agency, and programs that pay out federal money, such as healthcare and disaster relief. Perhaps there was fraud in obtaining the money, or in how the money was spent.

Money Laundering

Money laundering turns ‘dirty’ money obtained through criminal activity into ‘clean’ money. It is a means of concealing the identity, source and destination of the money. It can involve almost anything. Tax evasion charges often accompany money laundering charges. Failure to report income can be an important part of the money laundering game.

Mail fraud and wire fraud are federal offenses involving deceit to separate someone from their money. These charges, which are often brought together, can also be tacked on to criminal tax cases. Mail fraud occurs when a person uses the U.S. mail to defraud someone. Wire fraud is a broader term, since it applies to virtually all interstate communications. Both carry substantial penalties.

Lying to a federal agent is actually a separate offense. According to 18 U.S.C. § 1001, whoever “makes any materially false, fictitious, or fraudulent statement or representation” to a federal agent is guilty of a crime. This means that anyone talking to any federal agent - IRS-CI, FBI, HHS, Social Security, the Air Force, NASA - needs to do it carefully. A lie to an IRS CI Special Agent can be prosecuted even if the investigation itself was unwarranted. So if an agent pays you a visit at home or at work, watch out.

Racketeering is a set of various criminal actions engaged in by a person or organization in a pattern. Racketeering charges are often combined with money laundering, mail fraud and wire fraud charges. They can add up quickly.

Drug and weapons offenses often attract IRS attention. IRS-CI doesn’t handle such cases on its own, and usually teams up with other federal agencies. Drugs have no labels, but money does, so CI often investigates drug traffickers and others who deal in illegal drugs or weapons. The penalties for these crimes can be harsh, and much depends on the facts, as well as the government’s ability to prove the case.

Under Civil or Criminal Investigation by the IRS

Are you under civil or criminal investigation by the IRS?

If so, speed matters. By the time you find out, IRS Special Agents could have already been digging, and they may have gathered a lot of evidence. The longer you wait to take action, the fewer options you have. An experienced federal criminal tax defense attorney can evaluate your case, develop a strategy, and interface with law enforcement for you.