IRS Criminal Tax Audits: What International Taxpayers Need to Know

The Internal Revenue Service (IRS) audits U.S. taxpayers worldwide. If you are facing an IRS criminal tax audit, there is a lot you need to know. Here are some important insights from Maryland tax attorney Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors:

IRS Criminal Tax Audits Present Substantial Risks

The first thing you need to know is that IRS criminal tax audits present substantial risks. While the specific risks involved in facing a criminal tax audit depend on the specific allegations involved, potential penalties generally include:

• Liability for back taxes and interest
• Criminal fines
• Federal imprisonment

The IRS works with the U.S. Department of Justice (DOJ) to target noncompliant taxpayers worldwide. Both agencies have substantial resources at their disposal, and targeting international taxpayers for income tax fraud, nondisclosure of offshore accounts, and other federal tax crimes is among their top priorities. The IRS and DOJ can also pursue asset seizures and other enforcement measures around the world, and they routinely work with their international counterparts to do so.

If You Are Facing a Criminal Tax Audit, the IRS Already Has Evidence of Noncompliance

Another critical piece of information for international taxpayers facing IRS criminal tax audits is that once the IRS informs a taxpayer of an impending inquiry, the inquiry is already well underway. As the IRS explains, when the IRS opens a formal inquiry, “at least two layers of [IRS] management have reviewed the 'primary investigation' material and determined there is sufficient evidence to initiate a . . . criminal [audit].”

With this in mind, when facing a criminal tax audit, time is of the essence. To avoid unnecessary consequences, targeted taxpayers must be prepared to make informed decisions, communicate effectively with the IRS, challenge improper and unlawful audit tactics, and defend themselves during the audit process.

Defending Against an IRS Criminal Tax Audit Requires a Proactive and Strategic Approach

In short, defending against an IRS criminal tax audit requires a proactive and strategic approach. International taxpayers who are facing IRS scrutiny need to work with experienced tax counsel who can help steer the audit toward a favorable resolution. While there are no guarantees, there are steps that an experienced tax attorney will be able to take to help target a pre-indictment resolution that avoids unnecessary consequences.

Whether this involves avoiding additional liability entirely or negotiating a settlement with the IRS will depend on the circumstances of each individual case. Of course, in some cases, litigating with the IRS will be necessary, and international taxpayers must be able to rely on their tax counsel to defend them in federal court if this is the best option under the circumstances at hand.

Schedule a Call with Maryland Tax Attorney Kevin E. Thorn

Maryland tax attorney Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, represents clients worldwide during IRS criminal tax audits. To discuss your audit with Mr. Thorn in confidence, please call 240-235-5096 or request a call online today.