Concluding the interesting remarks of a Montana IRS Criminal Investigations Agent addressing various tax crime issues to a group of civil tax lawyers:
- When a civil IRS auditor uncovers evidence of tax fraud during a tax audit, IRS Civil Exam can refer the case to IRS CI. However, having an IRS civil audit turn criminal is fairly rare. In the past year in a four-state region that includes Montana, there have been perhaps four criminal referrals stemming from a civil IRS audit.
- IRS CI cannot use civil process to obtain information for a criminal tax case.
- IRS criminal charges for failure to file tax returns are rare and criminal tax charges for unfiled returns are not often approved by IRS CI supervisors.
- If the taxpayer follows the IRS civil voluntary disclosure program, the IRS CI agent was not aware of any IRS tax crimes charges brought. To do so would be destructive to tax compliance.
- However, taxpayers using voluntary disclosure must be truthful in order to avoid criminal tax charges.
- Taxpayers cannot fly under the radar in Montana on IRS criminal tax charges. If a taxpayer has significant illegal income and does not pay tax on it, that unexplained and untaxed income tends to stand out in Montana communities.
- For every $1 with which Congress funds the IRS, it returns $10 in collected tax. There seems to be a new feeling in Congress to fund the IRS in order to obtain more tax funds.
Practice Point. Montana taxpayers should be aware that IRS CI agents are active in Montana. Taxpayers should treat tax compliance seriously and consult with tax legal counsel with any concerns about possible civil or criminal tax liability.
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.