I recently moderated a presentation to a group of civil tax attorneys from an IRS Criminal Investigation (CI) Agent working in Montana. I requested that the CI Agent discuss what civil tax lawyers should know about tax crimes in Montana. Here are some interesting points raised in his remarks:
- 40-50% of IRS CI Agents are CPAs. However, they don’t consider themselves to be tax experts necessarily as they are not involved in tax issues every day. The IRS has resources that IRS CI agents can turn to for “hard tax” issues.
- IRS CI is also involved in drug crimes, political corruption, COVID fraud (PPP loan issues), and college admission scandals. IRS CI is involved with many crimes where money is at stake. Taxes must be paid on illegal income.
- IRS CI agents must focus on an overt act in order to pursue tax evasion crimes. For example, using only cash or a double set of books as part of the evasion of taxes.
- If a taxpayer owes the IRS money and has an account levied upon by the IRS, the taxpayer moving cash to new bank accounts and dealing only in cash in order to avoid a tax levy could be committing an overt act and grounds for a tax crime.
- Deducting personal expenses on a tax return as a business expense could be considered tax evasion if the deduction was intentional. However, there is a materiality component that has to be taken into account before this conduct will arise to an investigated tax crime rather than a civil matter.
- It can be hard to get a jury conviction on a technical violation of tax law.
- For gift and estate tax issues, criminal tax charges are rarer because the gift and estate tax law is so complicated. It can be hard to prove willfulness in the context of gift and estate tax, which is a necessary element for tax evasion.
Taxpayers who have concerns about whether their tax matters may violate civil or criminal tax laws may contact Jared Le Fevre to discuss the tax situation.
About the Author. Jared M. Le Fevre is a Partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal, state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.