Awards & Recognition
A tax audit has the potential to unearth criminal tax activity, such as willful attempts to avoid paying U.S. income taxes. If an auditor believes that a tax crime has occurred, the audit can give way to a criminal tax investigation – and in turn, prosecution by the Department of Justice or state of California. If you are concerned that an upcoming state (EDD, CDTFA, FTB) or IRS tax audit could lead to a criminal tax investigation, you need to get ahead of the situation now. The best way to ensure that your rights are protected when dealing with the IRS, DOJ, Franchise Tax Board (FTB), or other state agencies is to hire a competent tax attorney who has a proven record of successfully defending taxpayers in state and federal audits, along with high-stakes criminal cases. If you need an experienced tax attorney in Oxnard, ask the Tax Law Office of David W. Klasing how we can be of assistance.See our Audit Representation Q and A Library
How Many Years Does the IRS Have to Audit Me?
In most cases, a deadline known as the “statute of limitations” sets a three-year deadline on IRS tax audits, meaning the IRS generally has a period of up to three years in which to examine a prior return. However, there are several exceptions in which the limit extends to six years or even longer. For instance, there is no statute of limitations in cases involving civil fraud, providing the IRS another way to pursue taxpayers even if criminal charges are not filed. California agencies such as the FTB typically have four years to examine tax records, allowing additional time for a state tax audit, such as a California sales tax audit.
Why Am I Being Audited?
There are many issues which may have brought your previous returns to the IRS’ or California’s attention. For example, it is common for the IRS or California to initiate a tax audit if the taxpayer has unfiled returns, does not report all income sources, files numerous late (delinquent) returns, leaves portions of one or more tax returns blank, claims suspicious tax credits, or claims too many deductions. However, even if the taxpayer is initially chosen for an innocent reason, such as owning a cash-based business, fraudulent activity will be quickly discovered, no matter how long ago it occurred. If you have received a notification from the IRS informing you that you have been selected for an audit or “examination,” you should contact a tax defense lawyer for help immediately – no matter the stated reason for the audit.
See our Non-Filer Q and A Library
Can a Tax Audit Lead to a Criminal Tax Investigation?
A tax audit may give rise to a criminal tax investigation if the auditor (“Revenue Agent”) finds evidence that tax fraud occurred. If the Revenue Agent finds “indicators of fraud” – red flags pointing to tax evasion – he or she may terminate the audit and refer the case to the IRS Criminal Investigation Division (IRS-CI). Auditors do not have the authorization to criminally investigate taxpayers. Instead, criminal tax investigations are conducted by IRS-CI Special Agents, who, unlike most employees of the IRS, are armed members of law enforcement.
In some cases, a criminal tax investigation might occur concurrently with a tax audit. When a criminal investigation and civil audit occur simultaneously, it is known as a “reverse eggshell audit.” In a standard eggshell audit, the return under examination features a substantial misstatement of income, suggesting potential fraud.
What Are the Risks of an IRS or California Tax Audit?
A tax audit is dangerous for several reasons. In a purely civil case, the basic risks are tax assessments, civil fraud penalties, and interest charges – but in a criminal case, the consequences are even harsher. In addition to civil tax fraud penalties, which are often imposed in criminal tax cases, a defendant convicted of tax crimes will also face criminal fines (which, for some offenses, reach or exceed $100,000); a sentence which generally ranges from several months to five years in federal prison; and a period of one or more years of supervised release, which subjects the offender to court-ordered rules after incarceration. He or she will also receive a criminal record, which can create serious obstacles to employment, housing, certain loans, and international travel, among other issues.
Criminal Tax Audit Defense Lawyer + CPA in Oxnard, CA
You need immediate legal assistance if you have been chosen for an IRS tax audit or any type of state tax audit, such as an FTB tax audit, CDTFA audit, or EDD audit. To arrange a reduced-rate consultation with an IRS attorney in Oxnard, contact the tax defense lawyers and CPAs at the Tax Law Office of David W. Klasing online right away. You can also reach us by calling our Oxnard tax office at (805) 617-4566. Please note that all meetings at our Oxnard office must be scheduled in advance.See our Sales Tax Q and A librarySee our Employment Tax Law Q and A Library
Criminal Tax Audit FAQs
The following FAQs may help to provide additional information related to your tax issue. However, you are advised to seek professional tax representation if you are facing an audit or criminal charge.
- How do IRS agents detect fraud and develop a criminal case?
- How does an IRS tax audit work?
- How many years can an IRS audit go back?
- What are the warning signs an IRS audit has gone criminal?
- What is the difference between criminal tax evasion and civil tax fraud?
- What is the difference between IRS audits and state tax audits?
See our Criminal Tax Law Q and A Library See our Civil and Criminal Divorce Tax Law Q and A Library
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