What is a criminal investigation? The IRS has a special unit within the organization that investigates cases believed to involved tax fraud and tax evasion. The special agents in the Criminal Investigation Division (CID) often work with IRS attorneys, IRS Revenue Officers, IRS Revenue Agents, and the US Department of Justice during their investigations.
The IRS has the authority to examine tax returns for accuracy and collect federal taxes that are due. During the course of a routine examination or collection review by IRS personnel, your case may referred to the criminal investigation division if it is determined that certain badges of fraud or indicators of tax evasion exist. Some indicators may include failure to file tax returns, failure to properly report all income, intentional concealment of income, establishing fraudulent nominee or alter ego entities, and misrepresentation of material facts, among many others.
Criminal investigations involving international and domestic tax matters are on the rise. Since 2010, the IRS has significantly increased its efforts to find new ways to address off-shore bank fraud and combat tax evasion worldwide. While routine IRS cases involving back taxes and tax audits carry no threat of jail time, individual and business taxpayers charged and convicted of tax fraud and tax evasion may be sentenced to incarceration, fines, restitution, and more.