Techniques and Procedures Used in Criminal Investigations

The Criminal Investigation Division of the IRS difference from the compliance groups in that its sole purpose is criminal enforcement, not determining or collecting correct tax liability from a taxpayer. Special agents with the CID are sophisticated law enforcement personnel and their job is to place individuals who have violated tax laws within the jurisdiction of the CID by opening an investigation into badges of tax fraud that indicate a tax crime has been committed.

The CID has the authority to investigate most tax offenses under the Internal Revenue Code, Title 18 money laundering, and other non-tax offenses related to CID purposes.

General Investigative Procedures Used by the Criminal Investigation Division

As a general matter, a CID tax fraud investigation consists of analyzing documents, interviewing witnesses, and using CID investigative techniques to obtain other evidence that may be used throughout the course of the investigation. Even before an investigation is formally opened, the CID special agent has some leverage to conduct investigative activities. These pre-investigation activities may include canvassing news media, accessing IRS and commercial computer databases, liaising with other law enforcement agencies, interacting with informants, and making visual inspections of persons and places. Once an investigation is formally authorized, the investigative techniques and procedures to be used are governed by a specific designation assigned to the case. At this point, the project is referred to as a General Investigation (GI), which may encompass a study, canvas, or survey or a particular group of taxpayers. Before a specific violator is identified, the CID has more limited investigative powers. They are typically limited to making contact with other law enforcement agencies, informants, or foreign agents; accessing IRS databases; conducting surveillance; and some contact with persons outside of governmental entities.

How Does the Criminal Investigation Division Conduct an Investigation Against a Taxpayer?

Once the CID shifts the focus of its investigation to a specific taxpayer, a Primary Investigation (PI) is authorized. PIs are typically initiated due to an informant’s or whistleblower’s communications, domestic and international criminal referrals, a U.S. Grand Jury investigation, or a refund package generated by the Scheme Development Center (SDC). If the CID determines that a case has prosecution potential, the PI will be elevated to a Subject Criminal Investigation (SCI). An SCI is a full-scale criminal investigation in which all investigative techniques available can be used. In order to use a search warrant with the CI special agent as the affiant, the case must have been elevated to an SCI.

Can the CI Interview Me in Connection with a Criminal Investigation?

If you are under investigation by the CID, the special agent handling your case will likely wish to interview you. In fact, the special agent will typically try to interview you before the existence and nature of the investigation is even known to you. The interview sometimes takes place after the IRS has obtained and reviewed the taxpayer’s tax returns, and the special agent may also make contact with the taxpayer and the taxpayer’s representative. The conversations with the taxpayer and taxpayer’s representative will be thoroughly detailed in the CI’s case file against the taxpayer. Barring any special circumstances, the interview with the taxpayer will take place early on in the investigation.

If you are interviewed by a special agent in connection with a CI investigation, you must be very careful in all communications with the criminal investigator. When a special agent performs such an interview, he or she will often formally introduce himself or herself and present credentials. When making contact with the taxpayer in question, the special agent will often state: “As a special agent, one of my functions is to investigate the possibility of criminal violations of the Internal Revenue laws and related offenses.” The special agent will also inform the taxpayer of his or her Constitutional rights at the start of the custodial interview. The taxpayer actually has the option of canceling the interview, and may elect to do so after being advised of his or her rights. If the taxpayer chooses to cancel the interview, the special agent must terminate it immediately. If a special agent interviews a taxpayer who is already in custody, full Miranda warnings must be given.

Taxpayers who are interviewed often unknowingly prejudice themselves by giving out too much information when they ought to be more discreet. There are many examples of taxpayers who provide evidence not obtainable elsewhere, including substantial evidence of criminal intent, to the special agent during these early-stage interviews. Taxpayers often make the mistake of believing the interview with the special agent to be an informal, off the record interview with no consequences. On the contrary, the special agent interview may result in further investigation and possible imprisonment if the taxpayer makes false statements to the special agent. At the very least, making false statements to a special agent during an early-stage interview can significantly contribute to a finding of civil fraud. Although the Criminal Investigation Division generally frowns on special agents conducting information interviews with taxpayers, the aforementioned dangers do exists and taxpayers should be aware of them if they are ever contacted by any IRS personnel.

How a Tax Attorney Can Help with Criminal Investigations

If you are under investigation by the IRS for a potential criminal prosecution, then you must consult with an experienced tax attorney. The Tax Lawyer - William D Hartsock Tax Attorney Inc. has been successfully helping clients with criminal tax issues since the early 1980s. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case. To schedule your free consultation simply fill out the contact form found on this page, or call (858) 481-4844.