IRS Criminal Investigation Division Contacted Me

Contact from IRS Criminal Investigation is categorically different from contact about a tax bill. IRS-CI is the criminal enforcement arm of the Internal Revenue Service, its personnel are federal special agents who carry badges and firearms, and it does not open matters to discuss whether a return was calculated correctly. If a special agent has made contact, a criminal investigation exists.

The most consequential mistake at this stage is treating the approach as a continuation of a tax dispute and answering questions in that spirit. Law Offices Of SRIS, P.C. has been practicing since 1997, and Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases. To discuss contact from IRS Criminal Investigation, request a consultation at (888) 437-7747.

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What IRS Criminal Investigation Is

IRS-CI investigates criminal violations of the tax laws and related financial crimes, including money laundering and currency reporting offenses. Its agents work with federal prosecutors and present cases for charging in the same way other federal agencies do.

It is separate from the examination function that conducts audits. A revenue agent conducts a civil examination and determines what is owed. A revenue officer collects. A special agent investigates crime. The titles matter, and asking which one you are speaking to is a reasonable question.

Special agents commonly work in pairs, present credentials, and, when interviewing a subject, typically deliver a statement of rights that resembles a warning. That statement is a signal rather than a formality: it indicates that the person being addressed is regarded as a subject rather than a source.

How This Differs From an Audit

An audit is a civil process aimed at determining the correct liability, and most audits end with an assessment. A criminal investigation is aimed at establishing whether conduct was wilful, which is the element that separates a mistake from a crime.

That difference changes what matters. In a civil examination, showing that a position was reasonable resolves the issue. In a criminal investigation, what the taxpayer knew and intended becomes the central question, and evidence of state of mind, including communications, drafts, and how instructions were given to a preparer, becomes the focus.

It also changes who is at risk. Accountants, bookkeepers, and preparers can become witnesses against a client, and in some matters subjects themselves. A preparer who believes their own exposure is in play will act accordingly.

The Eggshell Audit

An eggshell audit is a civil examination conducted while an unresolved criminal exposure sits underneath it, typically because a return contains a material problem the examiner has not yet identified.

These are among the most difficult situations in tax practice. The taxpayer has obligations in the civil examination, and answering questions or producing documents can supply the very material that establishes wilfulness. Providing false information or misleading the examiner compounds the exposure substantially.

A related situation is the reverse eggshell audit, where the examination is being conducted with a criminal investigation already underway and the taxpayer is unaware. Signs include an examiner who becomes unresponsive, a matter that stalls without explanation, requests that seem disproportionate to the issues, or unusual interest in intent rather than computation.

The correct response is not to press ahead and hope. It is to have counsel evaluate the exposure before further responses are made, and to structure the civil process accordingly.

The Kovel Arrangement

Tax matters frequently require an accountant, and communications between a taxpayer and their accountant are generally not privileged in a federal criminal matter. A client who explains the problem to their regular accountant has created a witness rather than an adviser.

A Kovel arrangement addresses that. The accountant is engaged by the lawyer, rather than by the client, to assist counsel in providing legal advice, and the accountant’s work is brought within the attorney-client privilege and the work product protection on the same basis as any other consultant retained by counsel.

The mechanics matter and the protection is not automatic. The engagement must run through counsel, it must genuinely be for the purpose of assisting with legal advice rather than ordinary accounting work, and using the taxpayer’s existing accountant is frequently a poor choice because that person already has independent knowledge and may be a witness.

Return preparation performed under a Kovel engagement is generally not protected, since preparing a return is not legal advice. Separating the two functions is part of setting the arrangement up correctly.

Voluntary Disclosure

The Internal Revenue Service maintains a voluntary disclosure practice through which a taxpayer who comes forward before an investigation begins may, in defined circumstances, be considered for resolution without criminal prosecution. It is a practice rather than an entitlement, and it confers no immunity.

Timing is the entire question. A disclosure is generally not available once the Service has begun an examination or investigation of the taxpayer, or has received information about the specific noncompliance from a third party. A person who has already been contacted by a special agent is usually past that point.

Because eligibility turns on facts that are frequently unclear and because an ineligible disclosure hands the government a confession, this route should never be attempted without counsel evaluating eligibility first.

What to Do Now

Do not answer questions. Take the agent’s name, agency, and contact details, say that counsel will be in touch, and end the conversation. An inaccurate statement to a federal agent is a separate offense under 18 U.S.C. § 1001, chargeable even where the tax matter itself produces no charge.

Do not contact your accountant to discuss the substance until counsel has advised. Those communications are generally not privileged and can make your adviser a witness to the conversation as well as to the underlying work.

Preserve everything. Returns, workpapers, source documents, bank and brokerage records, correspondence with preparers, and the electronic files behind them. Do not amend, reconstruct, or tidy anything, and do not create documents to explain past events. Suspend automatic deletion you control.

Do not file an amended return to fix the problem without advice. An amendment can be read as an admission and does not by itself resolve criminal exposure.

Frequently Asked Questions

Is IRS Criminal Investigation the same as an audit?

No. Audits are civil examinations conducted by revenue agents to determine the correct liability, and most end with an assessment. IRS Criminal Investigation is the criminal enforcement arm, staffed by federal special agents who investigate criminal violations of the tax laws and related financial offenses. Contact from a special agent indicates a criminal investigation rather than a dispute about computation.

Should I talk to the special agents?

No, not without counsel. Take their names, agency, and contact details, say that a lawyer will be in touch, and end the conversation. The interview is not an opportunity to clear things up; the central question in a criminal tax matter is what you knew and intended, and an unprepared conversation about state of mind is exactly what the interview is designed to obtain.

What is an eggshell audit?

A civil examination conducted while an unresolved criminal exposure sits underneath it, typically because a return contains a material problem the examiner has not identified. The taxpayer has obligations in the civil process, and answering or producing can supply evidence of wilfulness, while misleading the examiner compounds the exposure. It calls for counsel before further responses are given.

Can I talk to my accountant about this?

Not about the substance, until counsel has advised. Communications with an accountant are generally not privileged in a federal criminal matter, so explaining the problem to your regular accountant creates a witness. Where accounting assistance is needed, it can be engaged through counsel under a Kovel arrangement so that the work falls within the attorney-client privilege.

What is a Kovel arrangement?

An engagement in which an accountant is retained by the lawyer rather than by the client, to assist counsel in providing legal advice, so that the accountant’s work comes within the attorney-client privilege and work product protection. The engagement must run through counsel and be genuinely for legal advice. Return preparation performed under such an engagement is generally not protected.

Should I file an amended return?

Not without advice. An amended return can be read as an admission of the earlier position and does not by itself resolve criminal exposure. Where correcting a filing is appropriate, the timing and framing matter considerably, and both should be decided after counsel has evaluated the exposure rather than as a first response to contact.

Working With Law Offices Of SRIS, P.C.

Criminal tax matters turn on wilfulness rather than computation, which is why the early work concentrates on state of mind evidence: how instructions were given to a preparer, what the contemporaneous records show, and which communications are protected. Structuring the accounting assistance through counsel is part of that from the outset.

Mr. Sris, Owner and Founder of Law Offices Of SRIS, P.C., is a former prosecutor and is admitted in Virginia, Maryland, the District of Columbia, New Jersey, and New York. The firm has been practicing since 1997. Mr. Sris and the firm’s Of Counsel attorneys handle criminal defense matters across those jurisdictions, which matters in federal practice because a single investigation frequently reaches conduct, witnesses, and records in more than one state. Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases.

The firm serves Northern Virginia from 1655 Fort Myer Dr, Suite 700, Room 719, Arlington, VA 22209 and central Virginia from 7400 Beaufont Springs Drive, Suite 300, Room 395, Richmond, VA 23225. By appointment. Call (888) 437-7747 to schedule. Request a consultation. Reach our location at (888) 437-7747.

This page provides general information about IRS Criminal Investigation matters and does not create an attorney-client relationship. Case results depend on a variety of factors unique to each case. Results may vary.

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