Special Agents, Offshore Tax Crimes & IRS Investigations

IRS Special Agents and Offshore Non-Compliance

Special Agents, Offshore Tax Crimes & IRS Audits

Special Agents, Offshore Tax Crime and IRS Investigations: When the IRS Special Agents visit you, they mean business. Unlike other general IRS positions like an examiner or agent (which do not require any tax or legal background) — IRS Special Agents are specially trained to investigate you. When the IRS or U.S. Government believes someone may have committed a tax crime, the matter is referred to the IRS Special Agents for a quasi-criminal investigation.

If the IRS agents show up at your door, workplace, or anywhere else — you should never speak to them unless you are accompanied by counsel — no matter how slick you think you are.

Moreover, with the IRS aggressively enforcing foreign accounts compliance — coupled by the sheer magnitude of offshore penalties — it is important to avoid self-incrimination.

What are Special Agents?

The purpose of the IRS special agents is to launch quasi-criminal investigations involving potential tax fraud, tax evasion, money laundering, or other types of tax crimes. While the IRS Special Agents do not prosecute you, they provide all factions of the U.S Government with recommendations for prosecution.

Depending on the information the Special Agents gather from you, it will determine whether they decide to either close the case or refer it out.

Usually, if there is any evidence that could be taken that a person committed a form of criminal tax fraud or evasion, your case will be referred for criminal prosecution.

Many times, when the special agents approach, they will play the “good cop, bad cop” roles. The purpose of this is to try to make you feel comfortable enough to begin talking to them – without the benefit of having an attorney present.

CPAs and Accountants do not have the same privileges as an attorney, and there is no attorney-client privilege.

Approached by an IRS Special Agent?

Unfortunately, when the IRS Special Agents approach you for the first time — it will be unexpected.

It also signifies that things have just gone from bad to worse. 

They may try to catch you leaving the health club, returning home from a trip, or just finishing up a drink with a buddy — when you are approached b two people in suits waiting for you.

The goal of the Special Agents is to get you to talk before you are ready.

Your goal should be little more than getting the words, ” I want to call my attorney” out before saying anything else that could be considered incriminating and used against you later down the line in a possible indictment or grand jury investigation.

Criminal Tax Investigation Case Study Example

There are many different ways in which the Internal Revenue Service may get wind of your tax situation.

The following example is the primary way in which the IRS determines whether it is going to bring criminal charges by way of an IRS Special Agent investigation.

Reverse Eggshell Audit: Meet David

David receives a notice of audit from the Internal Revenue Service.

The purpose of the audit is for various different deductions they believe were improper as well as possible unreported income. In addition, the IRS is also aware David has unreported foreign accounts and assets. This is referred to as “Reverse Eggshell Audit.”

David is too smart for his own good, and decides he is going to handle the audit by himself without the help of an attorney.

At the audit, the IRS revenue agent asks David some general questions before delving deeper into his financial affairs.

It turns out that David filed a schedule C and took a whole host of business deductions with were “embellished.”  David  also had multiple foreign accounts and investments, including a foreign life insurance policy under his brother’s name and a few Swiss Numbered Accounts.

When pressed, David responded that the did not have any foreign Accounts.

The Audit Abruptly Ends

David is cocksure individual that everything is resolved. Weeks –and even months –pass-by and David has not received a notice of examination changes.

It is not until a few months later when David is leaving the gym that he’s approached by two individuals in dark suits who introduce themselves as special agents.

David is now under criminal investigation by the IRS Special Agents (Criminal Investigation department of the IRS).

This is one of the main ways in which the IRS initiates a criminal investigation, from what appeared to David to be a harmless audit.

The Special Agents Contacted me, Now What?

Never speak to a Special Agent outside of the presence of Counsel.

No matter what the special agents tell you, always remember the IRS agents do not go around investigating everybody.

They only investigate people they believe are guilty.

Can my CPA or Accountant Represent me?

Yes, but there is not Attorney-Client Privilege, and anything you tell a non-attorney may be discoverable by the U.S. Government.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure. 

Contact our firm today for assistance with getting compliant.