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The IRS Criminal and Civil Parallel Investigations Process is about to be Improved — More Criminal Tax Charges Coming?

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    The Treasury Inspector General for Tax Administration (TIGTA) just released a report detailing the results of an audit on the IRS parallel investigations process on September 23rd of this year.

    The parallel investigations process was established in 2005 by Policy Statement 4-26, available here: https://www.irs.gov/irm/part1/irm_01-002-013.html. This policy encouraged collaboration between IRS’s criminal investigation and the applicable IRS civil compliance functions when there is an ongoing abusive tax problem that causes significant harm to the Government. The policy statement called for simultaneous but separate “parallel investigations” by the criminal and civil divisions. The goal of these parallel investigations was to explore the full range of criminal and civil remedies available in order to stop the promotion of abusive tax avoidance schemes and achieve maximum compliance.

    However, the TIGTA report found that IRS’s criminal investigations frequently did not coordinate with the civil investigations when it became aware of tax abuse. TIGTA made four recommendations to the IRS in order to fix this. The IRS agreed with all four recommendations and plans to take corrective actions by revising memorandum to clearly identify tax abuse, ensuring all quarterly coordination meetings are conducted, improving awareness, and monitoring investigation inventory systems used to track parallel investigations.

    What does this mean to you? This means that the IRS is now going to conduct criminal and civil parallel investigations much more often. In the past, tax abuse usually just meant civil liabilities and penalties. Now, there is a much greater risk that a civil investigation could also lead to a criminal investigation. Don’t let this happen to you!

    If you find yourself in an audit situation where the hair on the back of your neck stands up because you know this may be a little more than a straightforward audit, it is better to be under the representation of an experienced tax attorney than in the gun sights of a parallel investigation.

    If you don’t want CID special agents coming to visit you with guns and badges, contact us – we can keep you out of jail!

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