Criminal Tax Investigation
Dismissed — No Charges Filed

The Situation

Facing Potential Federal Criminal Prosecution for Unreported Income

Our client -- a successful business owner -- received the kind of phone call that changes everything: a special agent from IRS Criminal Investigation wanted to schedule an interview. The client's accountant had been contacted separately, and the government was requesting years of financial records. The implication was clear -- the IRS suspected willful tax evasion and was building a criminal case.

The client had unreported income from multiple sources spanning several tax years. Some of it was the result of poor recordkeeping. Some of it was the result of bad advice from a prior preparer. None of it was the result of deliberate fraud -- but the IRS didn't see it that way.

The Challenge

Preventing a Criminal Referral to the DOJ Tax Division

IRS Criminal Investigation has a conviction rate exceeding 90%. Once a case is referred to the Department of Justice Tax Division and an indictment is obtained, the odds shift dramatically against the taxpayer. Federal prison time, massive fines, and permanent reputational damage are all on the table.

Our window of opportunity was narrow: intervene during the investigation phase -- before a referral to DOJ -- and present evidence that would convince the special agent and their supervisors that this case did not warrant criminal prosecution. We needed to demonstrate that the unreported income was the product of negligence, not willful evasion.

Our Approach

Strategic Intervention at the Investigation Stage

Criminal tax defense requires a fundamentally different playbook than civil tax disputes. The stakes are exponentially higher, and every interaction with the government must be carefully orchestrated. Our first instruction to the client: do not speak to anyone from the IRS without us present.

We then engaged in a series of strategic steps designed to reshape the government's understanding of the case:

• Conducted a thorough internal investigation to understand the full scope of unreported income before the government did
• Engaged forensic accountants to reconstruct the client's complete financial picture across all relevant tax years
• Developed a detailed narrative demonstrating that the underreporting was attributable to negligence, not willful evasion
• Opened a proactive dialogue with the special agent through formal channels, presenting exculpatory evidence methodically
• Filed amended returns for all affected years with full payment of tax, interest, and civil penalties

The key strategic decision was filing amended returns and making full payment before the investigation concluded. This demonstrated good faith and undermined the government's core theory of willful evasion.

The Outcome

Investigation Closed. No Charges. Civil Resolution Achieved.

IRS Criminal Investigation closed its case without making a criminal referral to the DOJ Tax Division. No indictment. No charges. No plea. No prison. The matter was resolved entirely on the civil side, with the client paying the taxes owed plus civil penalties -- a result that, while not inexpensive, preserved the client's freedom, reputation, and livelihood.

Key Takeaways

What You Should Know About Criminal Tax Investigations

Here's what you need to know:

• Do not talk to the IRS. Anything you say to a special agent can and will be used against you. Exercise your rights and get a criminal tax defense attorney immediately.
• Early intervention is critical. The best outcomes happen when we intervene during the investigation phase, before a referral to DOJ. Once you're indicted, your options narrow.
• Negligence is not fraud. There is a legal distinction between making mistakes on your taxes and willfully evading them. That distinction can be the difference between prison and a civil penalty.
• The right attorney matters enormously. Criminal tax defense is a specialized practice area. You need someone who has handled these cases and knows how federal prosecutors think.