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What to Do When You Receive an IRS Criminal Tax Investigation Letter

What to Do When You Receive an IRS Criminal Tax Investigation Letter

Getting a letter from the IRS saying you are under criminal investigation for tax violations can be intimidating. But it’s important not to panic. There are steps you should take to protect yourself and your rights if you find yourself the target of an IRS criminal tax probe.

What is an IRS Criminal Tax Investigation?

The IRS Criminal Investigation division (IRS CI) handles criminal tax cases like tax evasion, fraud, or money laundering. If IRS CI suspects you violated tax law, they may open a criminal case and start an investigation.

This means IRS agents will begin formally gathering evidence. They may interview witnesses, subpoena records, or convene a grand jury. The goal is to build a case against you to refer for criminal prosecution.

How Do IRS Criminal Tax Investigations Start?

IRS criminal tax probes can start in a few different ways[1]:

  • An audit or civil investigation uncovers potential criminal issues
  • Informants or whistleblowers provide tips alleging tax crimes
  • Law enforcement agencies like the FBI refer cases involving tax charges
  • IRS data mining and analytics flag suspicious tax returns
  • IRS receives reports of financial transactions indicating tax crimes

In most cases, the investigation starts when the IRS civil division, FBI, or other agency refers the case to IRS Criminal Investigation due to the severity of allegations.

What to Do if You Receive a Criminal Tax Investigation Letter

If you get a letter from IRS CI informing you of a criminal tax investigation, here are important steps to take:

  1. Don’t panic. While stressful, getting a letter does not mean you will be criminally charged.
  2. Contact an experienced criminal tax defense attorney immediately.
  3. Politely decline to meet with IRS agents or provide testimony until your lawyer is present.
  4. Gather financial records that may be relevant to the investigation.
  5. Follow your attorney’s advice about responding to the letter and investigation.
  6. Have your lawyer contact IRS CI to discuss the probe and your defenses.

The most critical first step is retaining legal counsel to protect your rights. Do not go through an IRS criminal investigation alone.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
Very professional, very transparent, over all a great experience
Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Does an Investigation Letter Mean You Will Be Charged?

No, receiving a criminal tax investigation letter from the IRS does not guarantee you will actually be charged with a crime. Some key points:

  • In many cases, no charges are ever filed after an investigation opens.
  • Your attorney can argue against charges or negotiate for a civil resolution.
  • Charges are more likely if serious tax crimes are uncovered.
  • But the outcome depends on the strength of evidence and your specific case.

So while potential charges should be taken very seriously, the letter itself does not mean you will definitely be indicted or convicted.

Why Does the IRS Send Criminal Tax Investigation Letters?

There are several reasons why IRS CI sends letters to taxpayers informing them of a criminal probe[2]:

  • Notify you of the investigation and your rights
  • Inform you of potential charges if violations are proven
  • Prevent destruction of evidence or obstruction
  • Give you a chance to explain your side
  • Pressure you to cooperate as a witness against others
  • Set the stage for summons, subpoenas, or grand jury

Essentially, the letters put taxpayers on notice and allow IRS CI to engage directly as they build a case.

What Are Your Rights in a Criminal Tax Investigation?

If you receive an IRS criminal tax investigation letter, you have important rights, including:

  • The right to decline interviews or providing testimony
  • The right to hire legal counsel to represent you
  • The right to receive notices and updates on the investigation
  • The right to challenge summons and subpoenas
  • The right to review evidence and proceedings against you
  • The presumption of innocence unless charges are proven

Exercising these rights, especially your right to legal counsel, is critical when facing an IRS criminal tax investigation.

What Tactics Does IRS CI Use in Investigations?

IRS Criminal Investigation utilizes a variety of tactics as they build cases against taxpayers suspected of violations. Common examples include:

  • Interviewing targets, witnesses, associates, and third parties
  • Issuing summons for financial records, emails, etc.
  • Executing search warrants on property or electronic devices
  • Surveillance through methods like wiretaps
  • Using informants or undercover agents
  • Tracing funds through accounts or assets
  • Convening a grand jury for testimony and subpoenas

IRS CI has broad authority to investigate using both civil and criminal tools. Your attorney can help respond to these tactics appropriately.

What Could Happen After the Investigation?

After an IRS criminal tax investigation, a few potential outcomes include:

    • No charges – If evidence is weak or you have strong defenses, no charges may be filed.
    • Civil settlement – The IRS may offer a civil settlement instead of criminal prosecution. This could involve paying taxes owed, interest, and civil penalties.
    • Criminal prosecution – If strong evidence of tax crimes exists, IRS CI may refer the case to the Department of Justice for criminal prosecution. This could lead to criminal tax charges.
    • Jail time – If convicted on criminal tax charges, penalties can include substantial prison sentences depending on the violation.
    • Fines & penalties – In addition to repaying back taxes and interest, civil fines and criminal penalties can be imposed.

Your attorney can negotiate with IRS CI agents and prosecutors to seek the most favorable outcome given your specific circumstances.

Can You Get Penalty Relief in an IRS Investigation?

Possibly. If IRS CI asserts accuracy or fraud penalties against you, your lawyer may be able to argue for penalty relief if you meet reasonable cause criteria[3]. For example:

      • You made a good faith effort to comply with tax rules.
      • You had reasonable basis for positions taken on your return.
      • Circumstances beyond your control caused the error.

The key is showing you acted responsibly and had no intent to commit fraud or evade taxes. Your lawyer can present evidence to IRS CI supporting reasonable cause for penalty relief.

Can You Settle for Less than You Owe the IRS?

In some cases, yes. If the IRS determines you owe a significant amount in back taxes, interest, and penalties, your attorney may be able to negotiate a reduced settlement via an Offer in Compromise[4]. This allows you to settle your tax debt for less than the full amount under certain circumstances, such as:

      • You have insufficient income and assets to pay what you owe.
      • Collection of the full debt would create economic hardship.
      • There is doubt you actually owe the assessed amount.

Your lawyer can negotiate the most favorable settlement possible based on your financial situation and other factors.

Takeaways for IRS Criminal Tax Investigation Letters

If you receive a letter from IRS CI informing you of a criminal tax investigation, key takeaways include:

      • Consult a criminal tax defense attorney immediately.
      • Politely decline interviews until your lawyer is present.
      • Exercise your rights and let your lawyer engage with IRS CI.
      • Charges may not ultimately be filed depending on the evidence and your case.
      • Your lawyer may be able to negotiate a civil settlement or penalty relief.

Navigating an IRS criminal tax investigation is complex. But the right legal representation can protect your rights and interests throughout the process.

References

[1] https://www.irs.gov/pub/irs-pdf/p17.pdf

[2] https://www.irs.gov/pub/irs-pdf/p4345.pdf

[3] https://www.irs.gov/payments/penalty-relief-for-reasonable-cause

[4] https://www.irs.gov/payments/offer-in-compromise

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