Criminal Tax Investigations Targeting Small Businesses, Construction Companies and Their Executives Are On the Rise

The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) have recently ramped up their efforts to target small businesses, construction companies, and their executives in criminal tax investigations. This includes investigations targeting corporate and individual income tax fraud, as well as payroll tax fraud and other federal tax violations. Learn more from Boston criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

IRS Shifts Focus from Large Corporate Taxpayers to Small Businesses and Their Executives

In recent years, the IRS and DOJ have devoted substantial resources to targeting large corporate taxpayers and wealthy individuals suspected of evading their federal tax responsibilities. Now, however, the federal government seems to be changing course. While we are still seeing large corporate tax fraud cases, we aren’t seeing as many as we have previously, and we are seeking far more cases targeting small businesses, construction companies, and their executives.

Why is this the case? While there are several possible explanations, one likely one is that these cases are easier for the federal government to prove. With smaller companies, there is less documentation to review, and the issues involved are often much simpler than the complex corporate tax issues involved in investigations targeting large private and publicly traded companies. Additionally, while there may be less money at stake overall, the stakes are often disproportionately higher in small-business cases—with the imposition of substantial penalties that can threaten targeted businesses’ viability as going concerns.

What Small Business and Construction Company Executives Can (and Should) Do to Prepare

With this growing concern in mind, what can (and should) small business and construction company executives do to prepare?

As with all aspects of federal tax compliance and risk management, a proactive approach is key. Executives who are not confident in their companies’ compliance record should promptly engage counsel to assess their risk exposure. If mistakes have been made, addressing these risks proactively—through voluntary disclosure, if necessary—can help eliminate much of the exposure they might otherwise pose.

With that said, it is important to be prepared for scrutiny from the IRS or DOJ as well. All businesses, including small businesses and construction companies, should have procedures in place to respond to an audit or a criminal tax investigation, if necessary. Mistakes early in the process of responding to an audit or investigation can prove very costly, and these are mistakes that can (and should) be avoided.

Schedule a Confidential Consultation with Boston Criminal Tax Lawyer Kevin E. Thorn

Our law firm helps small businesses and construction companies in Massachusetts manage their tax-related risk exposure, and we also provide representation in federal tax audits and investigations. If you would like more information about how we can help your business, you can call 617-692-2989 or contact us online to schedule a confidential consultation with Boston Criminal Tax Lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.