How will I know if contact from the IRS means I am being investigated criminally for my business or personal income tax filings or actions?
One tell-tale sign is if initial contact is made by two agents requesting to interview you. If two agents show up to the interview, the investigation probably is being conducted by the IRS Criminal Investigation Division. In that circumstance, it is always best politely to decline the interview, take the agents' contact information, and have an experienced criminal defense attorney contact them.
What should I do if I am undergoing a civil tax audit but have legitimate concerns it will reveal a fraudulent income tax return?
If you have concerns your tax returns contain false information, either of commission or omission, you should not agree to an interview by the IRS auditor. Any audit should occur at a neutral location such as your accountant's office rather than your home or business location, without your presence. Also, it is imperative insure that the accountant you retain for any audit -- even if it is your regular accountant -- is aware of the potential effect any statements he or she may make on your behalf. An accountant who has not handled criminal cases as a defense expert -- and even some who have -- may be unaware of the deleterious effect his or her statements can have to the client, or how to implement appropriate safeguards such as those outlined in the next section.
Can my accountant's statements made in an audit later be used against me in a civil or criminal context?
In certain circumstances they can be used against you. The IRS required power of attorney given to the accountant to handle the audit for you should make express that the accountant is NOT authorized to make adoptive admissions or representations on your behalf that can be considered as your statements and therefore subsequently used against you in a civil or criminal context. You should consult with an experienced criminal defense lawyer as soon as possible to make sure that all appropriate safeguards are put in place before the audit. Otherwise, representative admissions may be used against you in court just as if you had made the statement yourself.