1 / 23

Navigating the Criminal Tax Fraud Investigation

Navigating the Criminal Tax Fraud Investigation. Meagan F. Temple Johnson, Bruzzese & Temple. How Do Investigations Start?. Audit “Cooperating witness” (i.e. a snitch) Divorced spouse Disillusioned business partner Illegal immigrant worker. What Types of Investigation?. Failure to file

hallie
Download Presentation

Navigating the Criminal Tax Fraud Investigation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Navigating the CriminalTax Fraud Investigation Meagan F. Temple Johnson, Bruzzese & Temple

  2. How Do Investigations Start? • Audit • “Cooperating witness” (i.e. a snitch) • Divorced spouse • Disillusioned business partner • Illegal immigrant worker

  3. What Types of Investigation? • Failure to file • Failure to report • Includes international/offshore “investments” • Failure to withhold • Fraudulent deductions

  4. Who’s Being Investigated? • Subject – has information that suggests his/her involvement • Witness – has information that does not suggest his/her involvement • Target – the person being investigated *status can change without notice!

  5. Federal Investigations • When you first learn the IRS is conducting a criminal investigation, make sure you secure all records relevant to the client being investigated. • Watch out for obstruction of justice

  6. Federal Investigations • Summons • Grand jury subpoena • Visit from investigating agent

  7. Summons • Issued to taxpayer • “Administrative” • Was it given by CID agent? • If yes, client should contact an attorney immediately.

  8. Grand Jury Subpoena • Not usually given to client first • Likely given to accountant for records • What should you do?

  9. Grand Jury Subpoena • Contact an attorney • Need to talk to an attorney who handles *criminal* tax investigations • Ok to ask attorney friends/colleagues for referral, but use caution before retaining attorney who does not practice in this area • Don’t want to incriminate yourself • Don’t want to incriminate client

  10. Grand Jury Subpoena(Why do I need a lawyer?) • Protection against self-incrimination • You don’t know what you don’t know • Does CID agent think you were complicit? • Attorney can contact investigating agent • Find out if they consider you a target/subject • Help to narrowly tailor response to subpoena • May avoid having to appear • At some point, CID will want your cooperation – you will need representation

  11. Why Can’t I Just Call My Client’s Lawyer? • Because… • Your client might be claiming you are at fault • Your client’s lawyer is not your advocate • You have no way of knowing if your client’s lawyer has experience in this area • Your client’s lawyer may advise you to do something the IRS would consider obstruction

  12. Visit from a CID Agent • You are entitled to speak with a lawyer • They won’t tell you that • Even if you did everything right, you are too close to a very serious situation • They love to visit people at their place of business or homes because it’s comfortable • “We’re not sure he did anything wrong.”

  13. Visit from a CID Agent, cont’d. • CID agents ARE NOT ACCOUNTANTS • They’re cops • They probably won’t know the accounting nuances even if you explain it to them • So what benefit is it to you or your client to speak to them? • All you have to say is, “I wish I could help you today, but I need to speak with an attorney. Can I have your card? I’ll have my lawyer contact you.”

  14. Visit from a CID Agent,cont’d. • Won’t I “look guilty” if I don’t talk to the agent? • You’ll look a lot more guilty if you admit to conduct that was criminal • Remember – you don’t know, what you don’t know • Right against self-incrimination means you don’t have to say anything that tends to incriminate you

  15. Client’s Investigators • Your client may hire a special investigator to interview witnesses • Former law enforcement personnel • Direct them to your lawyer, if you are represented

  16. Forensic Accounting in Criminal Cases • Consultants at investigative stage • Work covered by attorney-client privilege • Caution – conversations with taxpayer-defendant • Role • Help lawyers understand accounting problems • Determine tax deficiency

  17. Forensic Accounting inCriminal Cases • Federal prosecutions driven by the sentencing guidelines • Sentence will largely be a function of tax deficiency • U.S.S.G. 2T4.1 • 28% default tax rate on unreported income

  18. Forensic Accounting inCriminal Cases • Purpose • To cooperate • To challenge • Don’t assume IRS has fully investigated • They’re overworked & underpaid • Klein conspiracy

  19. Privilege • Forensic accountants as consultants to lawyers covered under attorney-client privilege • But not as witnesses • No accountant-client privilege under Federal law • Pennsylvania does recognize accountant-client privilege

  20. Reliance on Counsel Defense • Applies to advice from lawyers and accountants • Negates element of willfulness and knowledge • Client must have acted honestly and in good faith • Client must have fully and honestly laid all the facts before the accountant

  21. Reliance on Counsel Defense, cont’d • Client must have honestly and in good faith followed the advice of the accountant • Client must have actually believed the advice to be correct • Client intended acts to be lawful when he/she went to account for advice

  22. QUESTIONS?

  23. Meagan F. TempleJohnson, Bruzzese & Temple707 Grant Street, Suite 1720Pittsburgh, PA 15219mtemple@jbtattorneys.com(412) 338-4790

More Related