3 Key Differences Between IRS Criminal Tax Audits and Civil Examinations

While facing any IRS scrutiny presents significant risks, the risks of a criminal tax audit and a civil examination differ. Learn about three key differences between IRS criminal tax audits and civil examinations from Boston criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Key Difference #1: The Risks Involved

If you are facing an IRS criminal tax audit, this situation requires your immediate attention. You will need to respond appropriately and work with your tax counsel to build and execute a defense strategy focused on avoiding federal prosecution.

While civil examinations typically focus on a specific tax-related issue at a specific point in time (at least initially), criminal tax audits are wide-ranging inquiries aimed at uncovering evidence of any and all forms of tax evasion, tax fraud, and other tax-related crimes. The IRS can go back up to six years in most cases, and it can target violations not only of the Internal Revenue Code but also of the Bank Secrecy Act, the Foreign Account Tax Compliance Act, and other federal statutes.

Key Difference #2: The Process

The IRS’ procedures in criminal tax audits and civil examinations differ significantly. While civil examinations generally follow one of three well-defined processes (i.e., a correspondence audit, office audit, or field audit), criminal tax audits can involve efforts to obtain information from targeted taxpayers and other parties through a variety of different means.

It is also important to note that while the IRS often selects taxpayers for civil examinations at random, if you are facing a criminal tax audit, there is almost certainly a specific reason why. The IRS may have already flagged issues with your returns, or it may have received information about a possible criminal violation from another party.

Key Difference #3: The Potential Outcomes

In most cases, a civil examination poses the risk of liability for back taxes, interest, and penalties. While taxpayers’ civil liability can be substantial, the risks of facing an IRS criminal tax audit can be far greater.

If the IRS uncovers evidence of a tax crime, it can work with the DOJ to seek an indictment. In many cases, DOJ prosecutors will pursue charges not only for tax evasion or tax fraud but also for other federal offenses. Many of these offenses carry six-figure fines, and individuals prosecuted for tax-related offenses can also face federal prison time.

Speak with Boston Criminal Tax Lawyer Kevin E. Thorn in Strict Confidence

If you need more information about the risks of facing an IRS criminal tax audit and what you can do to protect yourself, we encourage you to contact us right away. To speak with Boston criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, in strict confidence as soon as possible, call 617-692-2989 or tell us how we can reach you online now.