If an IRS revenue agent has just called you, or a revenue officer has turned up at your business, or a letter arrived proposing changes to a return you would rather not discuss, or especially when approached at random by IRS Criminal Investigation special agents the safest thing you can do in the next hour is nothing. Tell them a representative will respond, take their contact information, and stop there. You are under no obligation to answer questions on the spot, and most taxpayers who try to explain the problem away potentially make their problems exponentially worse.
The IRS holds broad civil and criminal tax investigative and enforcement powers. When you speak to the IRS on your own, revenue agents and revenue officers, who conduct interviews for a living, 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 altering 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 IRS Criminal Investigation. If you suspect there may be dubious elements in your returns, it is imperative to seek guidance from an experienced dual licensed tax attorney and CPA before engaging with the IRS.
At the Tax Law Offices of David W. Klasing, our dual licensed Civil and 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. 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.
Will Cooperating Fully with the IRS Make Them Go Easy on You?
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 involves 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 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.
Who Actually Starts a Criminal Tax Referral?
Most taxpayers picture a special agent knocking on the door. In practice the referral usually begins with the civil employee already sitting across the table. When an examiner or collector spots badges of fraud and the group manager agrees, the IRS requires them to consult a Fraud Enforcement Advisor, the position the Service renamed from Fraud Technical Advisor. Those advisors sit in the Office of Fraud Enforcement, they must be consulted in every case with potential criminal fraud or a potential civil fraud penalty, and they help develop the case before it ever reaches IRS Criminal Investigation. The IRS has said that revenue officers, meaning the collection side rather than the audit side, have been the single largest supplier of criminal fraud referrals.
That is why an ordinary collection call deserves the same caution as an audit interview, and it is why we watch for any sign that a fraud advisor has entered your file.
What Are the 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 Tax Exposure
The IRS may involve its covert Criminal Investigation Division or coordinate with 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
Communications with non-attorney professionals such as your accountant, tax preparer, or financial advisor generally lack attorney client privilege. The limited federal privilege under Code section 7525 does not apply in criminal tax matters at all, and California recognizes no accountant client privilege. Emails, texts, documents, and notes exchanged with them can be subpoenaed and used against you.
What if the IRS Contacts My Family, Friends, or Business Associates?
IRS Criminal Investigation often begins by interviewing family members, coworkers, and service providers close to the taxpayer, long before it approaches the taxpayer. Investigators may request records from third parties, obtain financial records from banks and card issuers, and 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 shift quickly.
Note: advising someone to give the IRS false information constitutes an offense in itself. Also, never reach out to IRS Criminal Investigation to see what is going on. Instead, contact our dual licensed Tax Attorneys and CPAs and let us contact the IRS on your behalf.
What Should I Do if I Know I Cheated on My Taxes?
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 is to separate yourself from direct contact with the examining agent immediately.
If you are losing sleep over the possibility of criminal tax prosecution because of a history of fraudulent returns, call our office to explore a domestic or offshore voluntary disclosure. Understand the standard honestly, because no lawyer can promise otherwise. The Internal Revenue Manual states that a voluntary disclosure does not guarantee immunity from prosecution and creates no substantive or procedural rights. What it does do is put a timely, truthful, and complete disclosure in front of IRS Criminal Investigation before the government reaches you, and CI weighs that heavily when it decides whether to recommend prosecution. In practice, a genuine voluntary disclosure frequently results in no criminal referral at all, and it lets us negotiate the civil exposure that follows. Timing decides everything, because the door closes the moment the IRS already has your information from an audit, a third party, or an enforcement action.
Will I Know if I Am Under IRS Criminal Investigation?
You will most likely not realize you are under criminal tax investigation until formal charges are filed, because most investigations are clandestine. The IRS typically interviews others, including bankers, former spouses, and former employees, long before approaching you directly. By the time CI contacts you, it has often compiled a mountain of evidence and is seeking a confession or additional damaging statements.
You may learn from a friend or business associate that the IRS questioned them about you. If so, do not contact CI for details. Bring the information to counsel instead, because that call is itself an interview.
Who Prosecutes Federal Tax Crimes Now That the DOJ Tax Division is Gone?
The route from referral to indictment changed recently, and most published guidance has not caught up. The Department of Justice eliminated its Tax Division, moving criminal tax work into a Tax Section within the Criminal Division. Then, in a memorandum dated April 7, 2026 and effective immediately, Acting Attorney General Todd Blanche placed that section under the interim operational control of the newly created National Fraud Enforcement Division. Reporting on the reorganization has also noted substantial departures of experienced tax prosecutors. For a taxpayer, the practical consequence is that cases may be handled by prosecutors with a broader fraud portfolio and less institutional tax experience, which changes how a case should be positioned long before it ever reaches a prosecutor’s desk.
Can My Accountant Represent Me in an IRS Audit?
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 pays whistleblower awards to people who come forward with evidence of tax fraud, and you do not want to hand someone that opportunity while you are preparing for an audit.
Do not rely on your original accountant. Some taxpayers consider going back to the CPA or preparer who filed the returns. This is often a grave mistake. Your communications with non-attorney preparers are not privileged, the IRS can compel them to testify about your admissions, and a preparer under scrutiny has every reason to explain that you supplied bad numbers.
Attorney client privilege is a game changer. The privilege is robust and recognized in all state and federal courts. Nearly anything you discuss with an attorney stays confidential, so long as the privilege is maintained. Your attorney can also extend a Kovel arrangement to consulting accountants, bringing their work under the privilege. That is what lets you disclose every concern and error openly, so your lawyer can build a defense on the real facts rather than a partial account.
Let The Tax Law Offices of David W. Klasing Communicate with the IRS on Your Behalf
At the Tax Law Offices of David W. Klasing, our dual licensed Civil and Criminal Tax Attorneys and CPAs benefit from robust attorney client and work product privileges. That protection prevents your hired professional, whose privilege under Code section 7525 or California law does not extend to criminal tax investigations, from being compelled to testify against you, particularly where they prepared returns that may require amendment during a high-risk eggshell audit, investigation, or prosecution.
During high-risk tax audits, we advise against voluntary meetings with revenue agents. We 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 facts of your case. We also handle logistics, such as scheduling business tours strategically to minimize your exposure, and we watch for early warning signs that a sensitive audit is escalating toward a criminal tax investigation.
We are happy to provide a reduced rate initial consultation, which you can arrange by calling the Tax Law Offices of David W. Klasing at (800) 681-1295 or by clicking HERE to schedule online.
