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Sacramento, a vibrant city known for its governmental hub and diverse economic activities, is not exempt from the intricate challenges of federal and California state tax regulations. Many individuals and small enterprises in the city often feel uncertain about the complicated tax rules and tend not to be risk-averse. Consequently, if you face a criminal tax investigation or are concerned about a high-risk audit potentially escalating into an eggshell or reverse eggshell audit, it’s prudent to grasp the potential severity of your situation. When confronting an IRS criminal investigation or a high-risk eggshell or reverse eggshell audit, there are specific measures you should undertake and others you should sidestep to establish a robust defense and mitigate any potentially devastating repercussions.

The IRS can conduct either a civil tax audit or a criminal tax investigation. Typically, an IRS Special Agent will conduct a criminal tax investigation. Special Agents from the IRS Criminal Investigation division will identify themselves and read the taxpayer their non-custodial Miranda Rights. However, evidence for a criminal tax investigation can be collected during a civil audit and later referred for criminal tax investigation. Occasionally, a criminal tax investigation will occur concurrently with a clandestine civil audit, thus being obscured by the civil audit. It is possible that a seemingly benign civil audit can lead to potential criminal tax liability. That is why involving our dual-licensed Criminal Tax Defense Attorneys & CPAs early in any type of audit is the most effective way to identify underlying criminal tax issues in your audit and take action to mitigate any resulting criminal tax exposure.

Understanding the IRS Criminal Investigation Process in Sacramento

For various reasons, you may face an IRS criminal tax investigation or a civil audit that could potentially escalate into a criminal tax investigation. It is surprisingly easy to become entangled in these IRS tax issues. Perhaps you’ve been accused of tax evasion or tax fraud. Many of our clients were unaware that anything was amiss until the IRS came looking for them. Entrapped in this investigative vortex face a staggering 90% likelihood of being indicted on criminal tax charges. Upon indictment, the trajectory toward criminal tax conviction is alarmingly consistent. The ramifications of such in-depth tax inquiries and subsequent criminal tax prosecutions transcend mere judicial outcomes.

Triggers for an IRS Criminal Investigation

Several actions can initiate an audit, which may escalate to a criminal tax investigation, including:

• Unreported income
• False statements
• Use of impermissible accounting or banking services
• Excessive deductions

A simple mistake, oversight, or your accountant’s malpractice may trigger an IRS criminal tax investigation. Specifically, unreported income, a false statement, using an impermissible accounting or banking service, or declaring too many deductions could initiate an audit, which could then rise to the level of an IRS criminal investigation process.

Difference Between Audits and Criminal Tax Investigations

• Audits: With an audit, the IRS attempts to determine whether you have calculated your tax liability correctly;
• Criminal Investigations: With a criminal tax investigation, the IRS seeks to mount a case against you so that the U.S. Attorney’s Office can prosecute you for a tax crime.

The taxing system is based on fear. To maintain a proper level of fear, the government must prosecute tax cheats continuously.

The Role of the IRS Criminal Investigation Division (CID)

The IRS is the world’s most powerful collection agency, with tremendous resources, and its Criminal Tax Investigation Division (CID) is ruthless. Their goal is singular: to conduct thorough investigations of taxpayers suspected of tax fraud to build cases for criminal tax prosecution for the “deterrent effect”. The IRS’s Criminal Investigation Division (CID), distinguished for its discreet operations and specialized understanding, consistently monitors complex federal tax fraud strategies. The CID meticulously scrutinizes pre-meditated tax transgressions, including tax identity theft, digital tax cybercrimes, and unscrupulous actions by tax return preparers. Upon exhaustive investigation, cases fortified with substantial evidence may be escalated to the Department of Justice (DOJ) for prospective criminal tax litigation. This can culminate in hefty criminal tax sanctions. Concurrently, under the Internal Revenue Code (IRC) provisions, the IRS retains the prerogative to levy civil tax penalties corresponding to the specific tax contraventions identified.

Choose Us at the Tax Law Offices of David W. Klasing as Your Criminal Tax Defense Lawyers in Sacramento

Engaging our Sacramento Dual Licensed Criminal Defense Attorneys & CPAs services at the onset of a high-risk audit / criminal tax investigation will maximize the possibility of a favorable outcome without escalating to criminal tax charges. We have never had a federal or California audit client criminally prosecuted for tax crimes. We excel at representing clients under high-risk IRS or California state tax audits, especially where they blatantly cheated on the tax return under audit and thus fear criminal tax prosecution. When facing high-risk tax audits from agencies like the IRS, CDTFA, EDD, or FTB, certain red flags, such as destroyed records, underreported income, badges of fraud, or unfiled returns, can intensify the examination, and may lead to high-risk eggshell and reverse eggshell tax audits. As such, residents and businesses must be aware of potential criminal tax violations and the signs indicating that they might be under a more rigorous investigation by the IRS’s Criminal Investigation Division (CID).

At the Tax Law Offices of David W. Klasing, we can help you avoid being blindsided by a criminal tax investigation, mitigate existing risks, and protect your rights as necessary. In addition to tax deficiency payments plus interest, audits can result in additional financial penalties, criminal tax charges, increased future scrutiny, and, worst-case scenario, prison time. These can be enormous consequences for a taxpayer. Do not face these risks alone – count on our dual-licensed Sacramento Tax Lawyers and CPAs for sound and strategic financial and legal guidance. Contact us online or call (916) 290-6625 or (800) 681-1295 to schedule your reduced-rate initial consultation today.

With an impeccable “A+” rating from the Better Business Bureau and a pristine 10.0 score from AVVO, David W. Klasing’s commitment to premier civil and criminal tax defense representation remains steadfast and unyielding. The Tax Law Offices of David W. Klasing stand out not just as another legal service point but as a lighthouse in the murky waters of civil and criminal tax exposure intricacies. To offer a clearer perspective on our exceptionalism, consider this: In the vast expanse of over a million attorneys and upwards of half a million CPAs in the U.S., only approximately 24,000 professionals can boast of being dually-licensed Attorney CPAs. Further narrowing down this elite group, a scant 3,000 have the rare distinction of having earned a Master’s in Taxation. David W. Klasing, an integral part of this select league, harnesses his unparalleled education and decades of hands-on experience to champion our clients’ civil and criminal tax defense challenges with unwavering vigor. We’ve also strategically adopted an approach wherein we simultaneously manage a dynamic mix of civil and potential criminal tax cases, ensuring the IRS remains perpetually off-balance.

Signs That You May Be Subject to an IRS Criminal Investigation in Sacramento

Unusual Behavior from IRS Agents

1. Abrupt Silence from Your IRS Agent: If an IRS agent abruptly stops pursuing you after requesting you to pay your IRS tax debt and no longer returns your calls, it may indicate that they are preparing to refer your case to the Criminal Investigation Division (CID). This can happen if they suspect previous or current tax evasion or crimes committed during the collection process, such as making false statements or hiding income or assets.
2. IRS Auditor Disappears: If an IRS agent auditing you disappears for days or weeks, it might mean your case has been referred to the CID. The Collection and Examination Divisions typically pause their activities to avoid jeopardizing a potential criminal tax prosecution. The IRS’s CID is resourceful and strategic. To protect yourself, contact our experienced dual-licensed Sacramento Criminal Tax Defense Attorneys & CPAs as early as possible, especially if you know you have cheated on the tax return under audit, even if your case is still at the civil investigation stage.

Contacts and Subpoenas

1. Bank Records Summoned: If your bank informs you that your records have been summoned by the CID or subpoenaed by the U.S. Attorney’s Office, this is a clear sign that you need an attorney immediately.
2. Accountant Contacted by CID: If CID special agents contact your accountant or subpoena them to appear before a grand jury with your tax records, the case against you is growing. You need an attorney urgently. Any statements made to your accountant can be used against you in a criminal tax investigation, either through the discovery process or if the accountant is called a witness during a criminal tax trial. The accountant-client privilege does not protect you in a criminal case, unlike conversations with your attorney, which are protected by the attorney-client privilege. Once you discover you are under investigation, say nothing further to your accountant to avoid giving the IRS more evidence against you.

Audit and Investigation Signs

1. Tax Return Selected for Audit: If the IRS informs you that one of your previous tax returns has been selected for audit and contains an under- or over-statement of income or deductions, stop speaking with your accountant. Conversations with your accountant can be used against you if your investigation turns civil to criminal. IRS agents are skilled at identifying tax fraud and quickly refer potential criminal cases to the CID.
2. Interest in Sensitive Transactions: If an IRS agent shows an unusual interest in certain sensitive transactions or requests significant documents, it might indicate they suspect fraudulent activity.
3. Questions About Intent: If an agent asks questions about the intent of your transactions rather than their form, it may be a sign they are investigating possible criminal activity.

Direct Contact from CID Agents

1. CID Special Agent Contact: If a CID special agent contacts you by phone or shows up unannounced at your business, trying to elicit incriminating information, it is a sure sign you are under criminal investigation. Do not speak with CID special agents, even if you believe you are innocent. You have the right to remain silent and should exercise it. This ambush technique is designed to gather information before you seek legal representation. Tell the special agent you wish to say nothing further without your IRS tax lawyer present.

If any of these signs apply to your situation, it would be wise to seek competent legal representation from our experienced dual-licensed Sacramento Criminal Tax Defense Attorneys & CPAs at the Tax Law Offices of David W. Klasing immediately. Early in the investigation, a strong defense could determine between a conviction and time behind bars or merely facing additional tax, penalties, and interest. Because of the specialized nature of criminal tax law, very few attorneys are genuinely competent to handle this sort of tax controversy.

Contact Our Sacramento Office Today

If you are considering whether you should plead guilty to a tax crime, connect with our experienced Dual Licensed Criminal Tax Defense Attorneys and CPAs. We have the best opportunity and highest probability of preventing a criminal tax conviction in the first place when you bring us into your high-risk tax matter as early in the process as possible. To date, we have only had one client ultimately serve jail time, and many of our clients have had real-world exposure to being charged with a tax crime for their actions before engaging us. Many of our clients who have faced this exposure have stayed with us long-term to avoid having similar problems.

At The Tax Law Offices of David W. Klasing, we are ready, willing, and able to help you defend against an IRS, FTB, CDTFA (BOE), or EDD audit or criminal tax investigation. Our experienced staff will review your case, communicate with the auditing / investigating taxing authority on your behalf, and fight to get the best result possible. If the results achieved are less than optimal, our Tax Appeals and Criminal Tax Defense Lawyers will fight to better the situation in the appeals and litigation process or, where necessary, strive to get a declination before criminal indictment, or worst-case scenario, try to achieve damage control through an advantageous plea bargain. To schedule a reduced-rate initial consultation regarding your audit or criminal tax investigation/prosecution, call (916) 290-6625 or 800-681-1295 or schedule online today.

In addition to our fully staffed 19,700 square foot penthouse office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad, Sacramento, Las Vegas, Nevada; Salt Lake City, Utah; Phoenix, Arizona, Albuquerque, New Mexico. We also have virtual offices in New York, New York; Austin, Texas; and Washington, D.C.

Our Sacramento office is conveniently located at:

180 Promenade Circle, Suite 300,

Sacramento, CA 95834

(916) 290-6625

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