How a criminal investigation differs from an audit
Revenue agents and tax compliance officers conduct civil audits; special agents of IRS Criminal Investigation are federal law enforcement officers investigating possible crimes. Cases begin in different ways, including referrals from a civil audit, information from banks or third parties, and related investigations by other agencies. A civil audit that stalls or goes quiet without explanation can be one sign of a referral. Federal tax charges are decided by Justice Department prosecutors, often in a U.S. Attorney's Office, and the Department has recently reorganized the units that review tax cases. Grand jury subpoenas to you, your bank, or your accountant are another signal that a matter is being handled criminally.
The first days
You are not required to answer an agent's questions on the spot, and you can say you will speak with them through a lawyer. Be polite and do not argue, but understand that statements made in that first conversation are written up and can become central evidence. Knowingly making a false statement to a federal agent is itself a crime, which is one more reason to decline rather than improvise. Do not destroy, alter, or move records, and do not coordinate accounts with an accountant, a bookkeeper, or a family member. Keep any business card or document the agents left.
What we work out first
We find out, as far as possible, whether you are viewed as a witness, a subject, or a target, and whether a civil matter is running at the same time. We look at whether accountants or other advisors should be brought in under an arrangement that preserves privilege, and whether there are documents that must be produced under a subpoena. Whether a corrected filing or a disclosure is sensible depends heavily on timing and on what the government already knows, so it is not a step to take alone. In a first meeting we review what was said, what was received, and who else may be contacted.
