IRS Criminal Prosecutions: The Facts

The IRS has its own police department known as the Criminal Investigation Division (CID), and if they pay you a visit, you have IRS problems on your hands. Working independently of each other are two divisions of the CID. Special Enforcement is in charge of unions, drugs, and organized crime, while ordinary taxpayers and everything else is under the jurisdiction of General Enforcement.

You or someone you know is probably subject to investigation if the CID visits you. They interview family, friends, bankers, accountants, colleagues, neighbors, insurance agents, etc. and may take a long time to complete. If you're contacted by the CID regarding someone you know, do not lie. Be wary as anything you say could lead them to you, especially if they're investigating your business partner. Approximately 80% of tax crimes are prosecuted because of the CID.

If you are the one being investigated, don't answer any queries from the CID. Wait until the agents leave and then call your attorney immediately. Don't contact the IRS for details regarding the investigation. Let your lawyer contact them.

You may be prosecuted if the CID has a good case against you and your guilt can be proven without a doubt. You'll get off with civil penalties otherwise.

Tax evasion, failure to file a tax return, or filing a fraudulent tax return are the primary reasons why you would be investigated.

An assistant U.S. Attorney General from the Justice Department will take over and review the case if the CID recommends prosecution. You will be arrested or ordered to report before a federal judge if you're formally charged and the IRS seeks a federal grand jury indictment against you. You may then give a plea of guilty or not guilty, and post bail or be released on your own recognizance.

The case will go to trial when you plead not guilty. It might be with a judge or a full jury. You have to be proven that you are guilty of the crimes beyond a reasonable doubt. You will go to a federal prison if convicted of a tax crime. A plea bargain can result in a fine and/or probation or house arrest. You may also have to shoulder the cost of prosecuting you. Two years is average for a tax crime.