Before you read further — which describes you?
Quick Answer
The IRS charges taxpayers with tax crimes for four main reasons: (1) significant tax loss combined with clear willfulness indicators; (2) pattern of non-compliance demonstrating intent; (3) identified affirmative acts of concealment or evasion; and (4) prosecution recommendation by IRS-CI to Tax Division / U.S. Attorney’s Office. The short version is that criminal charges follow a specific path — civil audit → CI referral → grand jury → indictment. In our experience, the window for voluntary disclosure closes the moment CI contact is made.1
Why charged question? A 15-minute consultation is free.
Four reasons for IRS tax crime charging.
The Four Charging Reasons
| Reason | Indicator2 |
|---|---|
| Tax Loss | $100K+ often cutoff |
| Pattern | Multiple years non-compliance |
| Affirmative Acts | Concealment / false statements |
| Recommendation | CI → Tax Div / USAO |
Quick Reference
Jump to: loss, pattern, acts, or recommendation.
1. Significant Tax Loss
$100K+ typical cutoff for federal criminal prosecution.
If this is you: Material tax underpayment. Federal prosecution focuses on larger dollars. State thresholds typically lower.
Tax Loss Strategy
- Assess government’s tax loss calculation.
- Challenge inflation or misattribution.
- Identify mitigating factors.
- Document compliance efforts.
- Negotiate with prosecutors.
2. Pattern of Non-Compliance
Multi-year pattern demonstrates willfulness.
If this is you: Years of non-filing or underreporting. Pattern supports willfulness. Single-year errors rarely prosecuted.
3. Affirmative Acts of Concealment
Hidden accounts, false documents, structured transactions.
If this is you: Offshore accounts, false invoices, fake businesses, nominee entities, structured cash. Affirmative acts support evasion charge.
4. Prosecution Recommendation
CI recommends to Tax Division; Tax Division to USAO.
If this is you: Under CI investigation. CI prepares Special Agent’s Report. Tax Division reviews. USAO files charges. Multi-step review process.
CI contact? Book consultation immediately.
Why Charged Lookup
| Stage / Document | Meaning |
|---|---|
| CI contact | Special Agent interview |
| Grand jury subpoena | Active investigation |
| Target letter | Prosecution imminent |
| Indictment | Charges filed |
| Information | Charges by prosecutor (usually plea) |
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Why Charged Statute
- Criminal: 6 years typical (§6531).
- Some offenses shorter.
- Statute runs from offense (e.g., filing date).
Why Charged Patterns
| Situation | Outcome |
|---|---|
| Large tax loss + willfulness | Prosecution likely |
| Affirmative acts present | Evasion charge |
| Good-faith error | Civil path typical |
| Voluntary disclosure pre-CI | Civil resolution |
Why Charged Escalation
Civil Audit
Initial examination.
CI Referral
Fraud indicators found.
Prosecution
Grand jury and indictment.
First 48 Hours
- Do not speak with CI.
- Engage criminal tax counsel.
- Preserve records.
- Evaluate voluntary disclosure if available.
- Privilege protection.
The ROI Question
Pre-indictment intervention critical. Early counsel often prevents indictment.
When to Engage
- CI contact or interview.
- Grand jury subpoena.
- Target / subject letter.
- Civil audit with fraud indicators.
Frequently Asked Questions
Why is IRS charging me?
Four reasons — significant tax loss, pattern of non-compliance, affirmative acts of concealment, prosecution recommendation through CI / Tax Division / USAO.
What’s the threshold?
$100K+ tax loss typical federal threshold. State thresholds lower. Prosecution discretionary regardless of amount.
What are affirmative acts?
Concealment, false statements, nominee entities, offshore accounts, structured cash, false invoices. Support willfulness and evasion.
Who decides to prosecute?
CI investigates, recommends. Tax Division (DOJ) reviews. USAO files charges. Multi-step review process.
What is Tax Division review?
DOJ Tax Division reviews all federal tax prosecutions. Approves or declines CI recommendation. USAO then files.
Can I talk to CI?
Not without counsel. CI agents are criminal investigators. Statements used against you. Attorney representation essential.
What’s a target letter?
Formal letter from prosecutor indicating you are target of grand jury investigation. Prosecution imminent. Counsel critical.
What’s a subject letter?
Subject = possibly involved, not yet target. Less severe than target but still serious. Counsel important.
Does voluntary disclosure still work?
Pre-CI contact yes. Post-CI contact generally no. Timing critical.
How long does CI investigation take?
12-24 months typical. Complex cases longer. Multi-agency investigations longer.
Will I know I’m under investigation?
Not always. Witness interviews, subpoenas, summonses can signal. Ask accountant if subpoenaed.
What about civil while criminal pending?
Often stayed. Fifth Amendment. Civil examiner frequently removed.
Can civil exam go criminal?
Yes via CI referral (IRM 25.1). Firm indicators of fraud trigger. Revenue agent ceases, refers to CI.
If you have read this far, you have a notice and you are trying to understand it before doing anything that makes it worse. That instinct is correct.
The next right move is a 15-minute call. We will identify the audit type, confirm your deadline, and tell you honestly whether you need representation. There is no cost and no obligation.
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Next Steps
Why charged question? 15-min consultation free.