The Internal Revenue Service (IRS) is committed to resolving tax issues, often through aggressive means. One of their most serious powers is the authority to conduct criminal investigations to determine whether individuals are complying with tax laws.
If the IRS suspects you of willfully evading taxes, you may find yourself facing an audit or, in more extreme situations, a full criminal investigation.
Engaging a tax attorney early in this process is essential, as they can help you navigate the legal complexities without jeopardizing your financial situation. Unfortunately, many individuals wait too long to seek legal counsel, leaving some potential relief options unavailable by the time they do. Understanding the signs that the IRS may be investigating you can help you respond proactively.
Identifying the Signs of an IRS Investigation
Although IRS investigations can be discreet, there are clear indicators that you might be under scrutiny. The following are key signs that your audit may have escalated into a more serious criminal investigation.
1. IRS Agents and Auditors Cease Contacting You
At first, it may seem like a positive development when IRS agents stop reaching out to you after an audit. However, this can actually be a concerning sign. If you’ve been in frequent contact with the IRS, you’re likely familiar with their persistence in pursuing unpaid taxes. They typically stay involved and responsive.
If, suddenly, IRS agents stop responding to your calls, fail to return messages, or cease communication altogether, it may indicate that your case has been transferred to the IRS Criminal Investigation Division. This division is activated when the IRS suspects you’ve committed serious tax crimes such as evasion, asset concealment, or submitting false information.
Additionally, if auditors are no longer handling your case, it suggests that your case may no longer fall under their jurisdiction. Examination and Collection Division staff are required to halt their actions during a criminal investigation to avoid interfering. If the IRS stops communicating, it’s time to seek the advice of a tax attorney.
2. Your Bank Records Are Subpoenaed
A serious indication of an IRS investigation is when the Criminal Investigation Division subpoenas your bank records. This action typically occurs when the IRS or the U.S. Attorney’s Office requires additional evidence to support a criminal investigation. If your bank informs you that your records have been subpoenaed, it’s crucial to act quickly and consult a legal professional.
Similarly, if your accountant is subpoenaed and required to hand over your tax records to a grand jury, it suggests that the investigation has moved into criminal territory. It’s important to remember that accountants do not benefit from attorney-client privilege, meaning anything shared with them can be used against you. This makes it essential to consult with a tax lawyer who can provide confidential advice.
3. The IRS Audits Previous Tax Returns
If the IRS decides to audit older tax returns, particularly those filed in previous years, it may signal that they have concerns. The IRS may review older returns if they believe there are discrepancies, such as questionable deductions or income reports that don’t align with their expectations.
While not always an indication of a criminal investigation, reviewing past returns raises red flags, especially if they find patterns of inconsistency. If this happens, be cautious when communicating with your accountant, as anything you discuss could potentially be used in a criminal investigation. Unlike attorneys, accountants aren’t bound by attorney-client privilege, so it’s wise to consult a tax lawyer who can protect your confidentiality.
4. Intense Focus on Specific Transactions
If IRS agents begin to focus on a particular transaction or set of transactions, or if they ask for an excessive amount of supporting documentation, it may suggest they suspect fraudulent activity. This heightened scrutiny is one of the clearest signs that the IRS is intensifying its investigation and could be gathering evidence for a criminal case.
IRS agents often investigate the intent behind specific transactions, which could lead them to suspect criminal behavior. If you find that certain transactions are under heavy scrutiny, it’s important to act quickly and consult with a tax attorney, as you may be facing the early stages of a criminal investigation.
5. Contact from an IRS Special Agent
Similar to law enforcement detectives, IRS special agents are authorized to contact individuals directly to investigate potential criminal tax violations. They may reach out via phone, visit your home, or arrange in-person meetings in an effort to gather incriminating information. While the agent may appear friendly and cooperative, remember that they are not there to help you—they are building a case against you.
If an IRS special agent contacts you, it’s crucial to understand your legal rights. The best course of action is to remain silent and invoke your Fifth Amendment right to avoid self-incrimination. You are not obligated to provide any information without the presence of your attorney. Politely inform the agent that you will only discuss the matter in the presence of your lawyer. It’s important to exercise caution, as any information you provide could harm your case.
When Should You Hire a Tax Attorney?
Knowing the signs that the IRS may be investigating you is important, but knowing when to seek legal help is equally crucial. The sooner you engage a tax attorney, the better. It is often wise to involve an attorney early in the process—such as when you first receive notice of an IRS audit—to protect yourself from inadvertently providing damaging information.
The early stages of an audit are critical because they can shape the direction of the investigation. Even a seemingly harmless conversation with the IRS could unintentionally provide evidence that leads to a criminal investigation. This is why having an attorney by your side from the beginning is so beneficial.
A tax attorney can guide you through the audit process, ensuring that you don’t inadvertently say anything that could hurt your case. Unlike accountants, attorneys are protected by attorney-client privilege, meaning that anything you discuss with them is confidential.
If the IRS investigation escalates and leads to accusations of tax fraud or evasion, you will need an experienced attorney to represent you in court. The potential consequences of criminal charges, such as heavy fines or imprisonment, make it essential to have a skilled lawyer to defend your rights and achieve the best possible outcome.
Why Legal Assistance from the Law Offices of Mary E. King Is Essential
While recognizing the signs of an IRS investigation is vital, it’s important to understand that a misstep during an audit or investigation could significantly harm your case. This is where the expertise of a tax attorney becomes invaluable.
At the Law Offices of Mary E. King, we specialize in defending clients who are under IRS criminal investigation. With years of experience handling complex tax matters, we can provide the highest level of legal representation to protect your rights and financial interests.
If you suspect the IRS is investigating you, or if you’ve received a subpoena or contact from a special agent, don’t wait to act. Contact us for a free consultation at 941-906-7585 or through our online form. Let us help you safeguard your rights and work toward the best possible resolution for your case.
