The Internal Revenue Service (IRS) Wields Tremendous Power – Don’t Face it Alone. The IRS is a federal agency with broad civil and criminal tax investigative and enforcement powers. When you speak to the IRS on your own, revenue officers and auditors—trained interrogators—can use your statements to expand an audit or to establish criminal intent should they suspect intentional wrongdoing. Even well-intentioned attempts to “clear the air” frequently backfire. If you believe you might have underreported income, destroyed records, intentionally cheated on your tax returns, or committed other errors, never attempt to “fix” the problem by talking to the IRS directly. Engaging competent legal counsel immediately is essential to avoid compounding tax liabilities and to protect yourself from potential life-changing criminal tax prosecution.
When confronted with sensitive questions by the IRS, it is essential to remain truthful. Even if the agent has yet to suspect any potential tax fraud on your part, providing false information can significantly worsen your position. Thus, caution should govern all dealings with the IRS. If your business or personal finances contain questionable areas, handling an audit alone can be overwhelming, potentially resulting in untruthful statements or excessive disclosures. Above all, your key objective must be to avoid having the revenue agent refer your case to the IRS Criminal Investigation Division (CID). If you suspect there may be dubious elements in your returns, it is imperative to seek guidance from an experienced dual-licensed tax attorney & CPA before engaging with the IRS.
At the Tax Law Offices of David W. Klasing, our dual-licensed criminal tax defense attorneys and CPAs will help you lawfully respond to inquiries of the IRS during a high-risk eggshell or reverse-eggshell audit, reducing the risk of additional criminal tax charges, such as “making a false statement.” We will advise on whether to comply with or challenge a summons for records and when invoking your Fifth Amendment right against self-incrimination is appropriate. We also remain vigilant for any indication that the IRS revenue agent is working with a Fraud Technical Advisor (FTA), signaling a potential shift toward civil tax fraud penalties or a referral to the clandestine IRS-Criminal Investigation Division. Our team thoroughly reviews each client’s tax filings and financial records, carefully orchestrating all interactions with the IRS to minimize the possibility of escalating the matter. To learn more about our services, call us at (888) 564-1409 or schedule a reduced rate initial consultation online HERE.
Cooperating Fully With the IRS Does Not Mean They Will “Go Easy”
Many well-intentioned taxpayers mistakenly believe that being extra friendly and open with the IRS leads to leniency. In truth, IRS agents are not your advocates. They already have a strategy—whether it’s collecting delinquent taxes, expanding the scope of an audit, or uncovering tax fraud. The more information you freely provide, the more room the IRS has to increase liabilities, extend the audit into multiple years, or refer the case to the DOJ for criminal tax prosecution if they detect potential willfulness or deliberate tax evasion. As a result, your “cooperation” can become the very thing that hurts you the most.
Risks of Speaking to the IRS Alone
- Self-Incrimination: Anything you disclose can be used against you. Even innocent remarks can be misconstrued as admissions of wrongdoing—especially if they conflict with existing documentation or previously filed tax returns.
- Rapidly Escalating Audits: A conversation intended to clarify a single line item may prompt the IRS to broaden its review to prior years, additional expenses, or other potential sources of underreported income.
- Potential Criminal Exposure: The IRS may involve its covert Criminal Investigation Division (CID) or coordinate with other California state agencies if they suspect tax fraud. Information you give voluntarily, without legal counsel, can form the basis of criminal charges for tax evasion, filing false returns, or other offenses.
- No Attorney-Client Privilege: Correspondence with non-attorney professionals (like your accountant, tax preparer, or financial advisor) generally lacks attorney-client privilege. This means emails, texts, documents, or notes exchanged with them can be subpoenaed by the IRS—and used against you.
Beware of Indirect Contact: Family, Friends, and Associates
The IRS Criminal Investigation Division (CID) often begins by interviewing family members, coworkers, and service providers close to the taxpayer. These interviews can last a year or more and are designed to build a comprehensive case for criminal tax prosecution. During this period, CID may:
- Monitor your mail without opening it,
- Request records from your phone or credit card companies,
- Employ court-authorized phone taps in extreme cases,
- Subpoena accountants or other trusted advisors, forcing them to disclose your private communications.
When the IRS contacts someone you know about another individual’s tax matters, caution is vital. If you have any link to the person under a criminal tax investigation—whether as a manager, business associate, or employee—avoid speaking with the IRS without representation. Even if you believe you are not a suspect, the scope of a criminal tax investigation can quickly shift.
Note: Advising someone to give the IRS false information constitutes an offense in itself. Also, never reach out to the IRS-CID to “see what’s going on.” Instead, contact our dual-licensed tax attorneys & CPAs at the Tax Law Offices of David W. Klasing and let us contact the IRS on your behalf.
If You Know You Cheated on Your Taxes, Silence Is Golden
If you know you have intentionally made misstatements or engaged in inaccurate reporting, any contact from the IRS, FTB, CDTFA, or EDD is a clear indication that you are under the microscope. Attempts to lie, downplay errors, or talk your way out of trouble seldom work. These auditors and investigators do this for a living; they quickly spot implausible or inconsistent statements and may escalate to a criminal tax investigation—especially if “badges of fraud” are present. The most prudent course of action is to separate yourself from direct contact with the examining agent immediately.
If you’re losing sleep over the possibility of criminal tax prosecution due to a history of fraudulent returns, call our office to explore the option of a domestic or offshore voluntary disclosure. We can help you secure a guaranteed exemption from criminal tax charges in exchange for accepting program terms that limit your potential civil liability and virtually eliminate the risk of criminal tax prosecution. At the tax law offices of David W. Klasing, our dual-licensed Tax Attorneys and CPAs, skilled in criminal tax defense, can serve as a buffer, preventing you from making inadvertent admissions that can establish “willfulness”—a key element the IRS needs to prove criminal intent.
Will I Know If I’m Under IRS CID Investigation?
You will most likely not realize you are under criminal tax investigation until formal charges are filed as most investigations are clandestine in nature. The IRS typically interviews others—bankers, ex-spouses, former employees—long before approaching you directly. By the time CID contacts you, they have often compiled a mountain of evidence and are seeking a confession or additional damaging statements.
- Suspense Accounts: Sending a nominal tax payment for a year under suspicion can sometimes reveal if your account is under criminal tax investigation. If the payment is directed to a “suspense” account, it might indicate a potential freeze or pending criminal tax inquiry.
- Last to Know: You might learn from a friend or business associate that the IRS questioned them about you. If so, do not confront the CID for details. David W. Klasing is a dual-credentialed attorney and CPA, having earned a Master’s degree in taxation. As a former public accounting auditor, he managed a team of 15 while handling sophisticated audits for private placements, IPOs, employee benefit plans, nonprofits, and for-profit entities. David fully understands the audit methodologies and processes employed by the IRS and often anticipates and prepares for the auditor’s next move before it happens. Leveraging his extensive education, training, and experience, he consistently stays several steps ahead in the audit process, effectively mitigating the civil and criminal tax consequences you may face.
If you are facing an audit from the IRS, FTB, BOE, or EDD, going it alone is simply not a wise strategy. You risk compounding your liability, especially since these agencies frequently share information, potentially triggering additional audits by other authorities. Contact the Tax Law Offices of David W. Klasing today by calling 888-564-1409 or reach out online HERE.
Facing an IRS Tax Audit: Why the Right Representation Matters
Never Discuss Potential Cheating with Anyone: If you suspect you have cheated or made errors on your returns, avoid discussing this with neighbors, friends, or even clergy. The IRS offers whistleblower bounties to individuals who come forward with evidence of tax fraud, and you do not want to enable someone to act against you unwittingly.
Don’t Rely on Your Original Accountant: Some taxpayers consider going back to the CPA or tax preparer who filed their returns. This is often a grave mistake. Your communications with non-attorney tax preparers are not privileged, and the IRS can compel them to testify about your admissions. Accountant-client privilege is weak and inconsistently recognized, meaning anything you say could become evidence in court.
Attorney-Client Privilege Is a Game-Changer: Attorney-client privilege is robust and recognized in all state and federal courts. Nearly anything you discuss with an attorney is confidential and cannot be used against you—so long as the privilege is maintained. Additionally, your attorney can extend a Kovel arrangement to consulting accountants, shielding their work under your attorney’s privilege. This ensures you can openly address every concern and error, empowering your lawyer to craft an effective defense strategy.
Only a criminal tax defense attorney with extensive experience in both criminal and civil tax law should represent you in communications with the IRS. Statements made to non-attorneys—such as CPAs or Enrolled Agents—can be used against you by the IRS Criminal Investigation. Any discussions or documents exchanged with anyone other than an attorney are subject to court disclosure, and the IRS may compel non-attorney advisors to testify on your behalf.
Let The Tax Law Offices of David W. Klasing Communicate with the IRS Directly on Your Behalf
At the Tax Law Offices of David W. Klasing, our dual-licensed Criminal Tax Defense Attorneys and CPAs benefit from robust attorney-client and work product privileges. This protection prevents even your hired professional—whose privilege under Code Sec. 7525 or California state law does not extend to criminal tax investigations—from being compelled to testify against you, especially in situations where they prepared returns that might later require amendment during a high-risk eggshell audit, investigation, or prosecution.
During high-risk tax audits, we advise against voluntary meetings with revenue agents. Our dual-licensed Attorneys and CPAs, upholding the highest ethical standards, ensure that facts are represented accurately—without obstructing or interfering with California state and federal tax laws. We preserve the confidentiality of privileged communications and make strategic decisions about disclosing information. If you face an administrative summons, we guide you on whether to comply or assert your Fifth Amendment rights based on the unique facts and circumstances of your case.
We also handle logistics, such as scheduling business tours strategically to minimize your exposure. Our vigilant approach involves identifying early warning signs that a sensitive tax audit may escalate to a criminal tax investigation and preparing accordingly. At every step, the team at the Tax Law Offices of David W. Klasing is dedicated to protecting your interests, preserving your rights, and providing the most vigorous possible defense against any California state or federal tax challenges. Our attorneys can also extend Kovel privileges to consulting accountants, ensuring all facets of your defense remain confidential. For immediate support or guidance, call us at (800) 681-1295 or contact us online to schedule a reduced-rate initial consultation. We are here to protect your liberty, defend your net worth, and help you stay several steps ahead of any agency that may be scrutinizing your tax matters.
