IRS Special Agents - Who They Are and What to Do if They Contact You

IRS special agents have wide latitude to investigate tax-related and other financial crimes. Although these agents do not have the ability to prosecute taxpayers, they play a critical role in determining whether a specific case should be referred for criminal prosecution.

Given the above, if a special agent contacts you, it is an extremely serious matter. This article will answer some common questions about special agents, including who they are, what you should do if they contact you, and what can happen during an IRS criminal investigation.

irs special agent criminal investigation

What is an IRS Special Agent?

Special agents work within the Criminal Investigation (“CI”) Division. In this capacity, special agents make initial determinations of whether a taxpayer has committed a crime under the CI Division’s purview and whether your case should be referred for criminal prosecution.

To this end, special agents have various investigative tools at their disposal, including document requests and interviews with third parties, conducting surveillance, executing search warrants, subpoenaing bank records, and reviewing financial data.

What is the CI Division?

The CI Division is the Service’s criminal enforcement arm. The Division investigates potential criminal violations under the Internal Revenue Code, including:

  • Falsification of corporate and/or individual tax returns
  • Abusive tax schemes
  • Tax return preparer fraud
  • Employment tax enforcement
  • International tax investigations
  • Bankruptcy fraud

The CI Division also investigates other financial crimes under the Bank Secrecy Act and certain anti-laundering laws. This includes investigations into complex money laundering schemes and fraud against financial institutions.

 

How Are Criminal Investigations Initiated?

Criminal investigations are commonly initiated when a revenue agent suspects possible tax fraud during an audit or collections effort. The CI Division can also initiate an investigation based on information provided by the public or an ongoing investigation conducted by another federal agency.

When special agents receive this information, they will first conduct a “preliminary investigation” of the information. The agent’s front-line supervisor and head of the office will ultimately need to approve or decline to move forward with the case. The approval from these levels of CI management signifies that there is sufficient basis for a criminal investigation.

The special agent will open a “subject criminal investigation if the case is approved.” The special agent will use the investigative tools mentioned above to establish whether tax fraud or another financial crime has occurred during this stage. Based on this information, the agent and their supervisor will determine whether the evidence supports the recommendation for prosecution. If the answer is “yes,” the agent will compile a written report, which must also be reviewed and signed off by various levels of CI management.

In the event CI management signs off on the written report, the Division will forward the recommendation for prosecution to the U.S. Department of Justice (DOJ), if the crime is tax-related and the applicable U.S. Attorney's Office for all other crimes.

Ultimately, the takeaway is that special agents are conducting investigations in the background, often unbeknownst to the taxpayer in question (although they may get a sense based on visits to the taxpayer or document requests to third parties). Thus, by the time the DOJ or U.S. Attorney’s Office charges you (if they do in fact decide to), the special agent has obtained a good portion of evidence against you.

How Will a Special Agent Make Contact with You?

Special agents can contact you in a variety of ways. They can make an unexpected and unscheduled visit (even to your house) to interview you or make requests for certain documents from you.

Special agents can conduct searches of your home, office, or other premises with a warrant and make arrests in more extreme cases.

What if a Special Agent contacts me?

If special agents contact you, you should (i) tell them that you do not wish to talk to them without an attorney present and then (ii) immediately retain an attorney to represent you in all future communications. This is because the agent can use any information that you provide to support a criminal prosecution recommendation to the DOJ or the applicable Attorneys’ Office.

Indeed, the Service’s internal operating manual instructs special agents to refrain from interviewing you if:

  1. You indicate that you do not want to be interviewed;
  2. You tell the agents that you do not want to answer any more questions at any stage of the interview; or
  3. You request an attorney prior to or during the interview.

Of course, these safeguards do not apply if you voluntarily provide information. Informing the agent that you do not wish to be interviewed without an attorney present can minimize the chance that something you say to the agents will be used as a basis for criminal prosecution.

Will They Read My Rights?

Based on the IRS internal operating manual, special agents are supposed to warn you in “clear and unequivocal” terms of your right to remain silent, that any statements made can be used as evidence against you, and your rights to request the presence of an attorney.

Even if special agents do not read you your rights, you should refrain from speaking with them and request the presence of an attorney who will handle all future communications and requests from them.

What if I Know I’m Innocent, What Should I Do? 

Even if you know that you are innocent, you should still retain an attorney to represent you in all dealings with special agents. Any information you provide during a criminal investigation can later be used by the agent (even if wrongly) as a basis for a criminal prosecution recommendation to the DOJ or the U.S. Attorney’s Office (as applicable).

An experienced criminal tax attorney can help you navigate the IRS criminal investigation process and reduce the chances that you will say something or provide information to the agent that wrongly incriminates you.

What Can Happen If I Did Commit a Tax Crime?

If you did commit a tax crime, the special agent could refer your case to the DOJ or U.S. Attorney’s Office for criminal prosecution if that agent, together with others at the CI division, determines that the evidence supports such a prosecution.

The special agent’s “preliminary investigation” and “subject criminal investigation” are subject to review and approval by various levels of CI Division management. Therefore, if an agent and others in the CI Division do not believe that the collected evidence warrants a criminal prosecution, they can terminate the criminal investigation against you.

What If I Am Just a Witness to a Tax Crime?

Even if you are a witness to a tax crime, you are required to comply with every legal and reasonable request by the special agent or the CI Division, including requests for testimony, documents, or other information. A witness can refuse requests on the basis that providing such information would tend to incriminate them.

Special agents have summons authority to compel witness testimony or the production of specified documents if the witness fails to comply with the agent’s request. This authority even extends to requests where a witness refuses to provide the information on the basis that it will tend to incriminate them.

In light of the above, witnesses should also retain and consult with an experienced criminal tax attorney to prevent themselves from being implicated in the tax crime later on during the criminal investigation.

 

Getting Help Help if You've Been Contacted by an IRS Special Agent

If you are involved with som resort of IRS criminal investigation, it is in your best interest to retain a tax professional that can assist. At TaxCure, we have a large network of tax professionals from around the country with a variety of backgrounds. The network includes licensed attorneys who specialize in criminal tax matters. You can start your search here for tax professionals with a law license that have experience with IRS special agents.

Find and Assess Licensed Tax Professionals To Solve Your Tax Issues

Select Tax Agency/Agencies
e.g. 10011 or New York, New York

Find and Assess Licensed Tax Professionals To Solve Your Tax Issues

Select Tax Agency/Agencies
e.g. 10011 or New York, New York