While the federal government shutdown is entering its fourth week, the criminal investigations (CI) division is still fully staffed and working cases. To protect business interests, it’s crucial to know what to do at the first sign of an tax-related audit or investigation.
Ignoring the mail notices from the IRS will never make the problem go away. The first step may be to gather up the letters and schedule a consultation with an experienced tax attorney to review them together.
Standards can shift a civil investigation to criminal
In tax matters, the willful element will often make a significant difference. For instance, failure to file a FBAR disclosure related to foreign financial assets is generally a civil issue that comes with serious fines. If there is evidence that actions were willfully designed to conceal offshore accounts, criminal charges could be attached.
Learn the standard as well as types of conduct that draws red flags. A tax lawyer can provide invaluable assistance here by adding insight into how IRS-CI interprets the standard. No Google search can replicate the advice and counsel that comes from speaking with someone who has handled similar cases and can apply the law to your unique set of circumstances.
The shredder will not solve the matter
Do not destroy any documents. Even the routine needs to be put on hold until after you resolve the issues. Obstruction of justice is a crime that can sometimes be proved through document destruction. Even routine shredding could carry an appearance of guilt.
How to develop a strategic response
It is crucial to find out what prompted the investigation and the scope. A tax attorney is able to get in touch with the revenue officer or lead agent and find out if you or your company are a target or a potential witness.
An immediate response allows you to address potentially damaging evidence and argue that it is being taken out of context or is insufficient to support a criminal case. Deferred prosecution agreements could in some cases resolve an issue with fines and agreed changes to operating procedures while avoiding continued prosecution.
Look for legal counsel from an attorney who has represented other entrepreneurs and business owners through similar matters. Ask questions about prior experience and read reviews to learn what it is like to work with a specific attorney before making the important decision of who to retain.