5 Signs of an Impending Tax Evasion Prosecution


tax evasion

The IRS examination

An IRS examination is a standard procedure, and unless you actually have something to hide the process should not worry you one bit. However, there is the possibility that your tax audit may transform from a civil tax examination to a criminal tax case such as tax evasion. If this happens then you can worry and probably should begin creating a defense for the same. But how can you tell before it is too late?

Well, there are ways to anticipate a potential tax evasion prosecution so that you can prepare yourself for the impending storm and probably calm it before the turbulence knocks you off your boat. This article gives you five signs to look out for on an impending tax prosecution.

1.    IRS Criminal Referral

The IRS has customarily had a fraud referral program known as the IRS Criminal Investigation. This program takes up cases from the IRS’s civil examinations with potential leads on tax evasion for a criminal investigation and a possible prosecution by the Department of Justice.

You, as the taxpayer, may be required to submit to an interview by the civil investigator. It will, therefore, depend on how this interview goes to determine whether or not your case will be referred to the IRS CI. For instance, if a question is asked during this interview that incriminates you, you can exercise constitutional protections via The Fifth Amendment (which protects us from self-incrimination among other things), to avoid a response. However, this may confirm the civil investigator’s suspicion which would then encourage referral to the CI.

The IRS civil examiner is not obligated to inform if or when they have referred your case to the IRS Criminal Investigation. And so it is for you to read between the lines and decipher whether or not you are in trouble.

2.    Unexplained Silence

During a civil examination by the IRS, especially after you have been summoned for questioning by the civil investigator, a succeeding long period of unexplained silence is the first indicator of potential prosecution. The silence would usually mean that your civil investigation case has been referred to the IRS Criminal Investigation unit. The referral usually starts with a consultation after which, if there is a valid reason for further suspicion an actual criminal investigation is launched.

3.    Request for Documentation

If indeed there is a valid reason to launch an investigation based on your tax records, then there will be the need for proof. This proof comes in the form of documents of previous records. These records may include copies of bank statements, canceled checks, deposit slips, bank wire income and any other documentation that could serve as evidence of unreported income. When such documents are ordered, your IRS agent should be able to tell this as a sign of a potential tax evasion prosecution.

4.    Leading Questions

An investigation is basically a process that seeks out information and that is exactly what an IRS Criminal Investigator would be looking for. To do so, they need to ask questions and seek out their answers. Questions on a taxpayer’s expenditure and lifestyle would form the kind of question that hints towards a possible prosecution.

5.    Perpetration of the Act

Well, if indeed you did attempt to evade or defeat a tax payment as stipulated within the IRC section 7201 on the tax evasion statute; then this should be your initial sign. So if it so happens that you did attempt to evade your taxes, then the action in itself becomes a sign of potential government prosecution. Add that to the other mentioned signs and you should start preparing a defense against an impending tax evasion case.

However, you can avoid all this by expanding your knowledge of tax evasion as stipulated within the IRC section 7201 and getting a tax defense attorney to help you stay on the right side of the law.

Contact an Attorney

If you have been caught with your pants down by an IRS agent, or are just worried about an impending tax evasion discovery or prosecution, then you need to contact a lawyer….immediately!  The tax attorneys at Ayar Law deal specifically with state and IRS tax issues and are extremely well-versed in handling all matters related to tax and tax crimes or fraud of any kind.  Call us today for free, no-obligation tax advice.  800.571.7175

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.