The Criminal Investigation Division

During a tax audit, if an auditor suspects fraud, he can impose penalties himself or he can refer you to the CID, Criminal Investigation Division. The CID is the IRS police force and is divided into two factions, General Enforcement (for ordinary taxpayers) and Special Enforcements (to target unions, crime and drugs.) The frightening aspect of the CID is that you may not ever know that you are even under investigation until you are formally charged. CID investigations are unbelievably thorough. The Special Agent may contact your friends, employers, co-workers, neighbors, and bankers, even your spouse! They may monitor your mail or even get a court order for a phone tap. This intensive use of federal resources explains why very few people are criminally investigated for tax fraud. The CID is used only when the IRS has strong implications of wrongdoing, and even then, the CID will only recommend prosecution if they have managed to build a very strong case against you.

If you are being investigated by the CID, it is very likely that you will be among the last people they interview pertaining to your case, if you are interviewed at all. If the CID wants to talk to you, it is usually an indication that you are about to be prosecuted. They've already been through countless records and potential witnesses. If they want to talk to you, it is most likely to get a plea of admission or drag more damaging evidence out of you. Once the CID contacts you, they are required to tell you if you are the target of an investigation. Similar to policing methods, the Special Agent is also required to read you a version of the Miranda rights. Take that advice. Keep quiet and do not answer any questions until you have contacted a lawyer. You do not want to further implicate yourself by saying the wrong thing. You may be tempted to answer their questions, as they usually start off slow and easy, but before you know it, they will have you trapped and you'll wind up worse off than you were before you decided to comply by answering questions. Whatever you do, don't try to dissuade these agents from pursing your case. They will not sympathize with the stories of your traumatized life and will only see this attempt as more proof that you knew you were doing wrong if you are offering up excuses. So be quiet until you have spoken with your lawyer. Don't have one Get one fast.

As previously stated, the CID will usually recommend prosecution only if the case against you is very strong. However, if the case has high publicity value, that may be a incitement for the CID to propose indicting you as well. High profile people, such as doctors and actresses, in the headlines for being prosecuted for tax fraud is viewed by the IRS as being a big deterrent for others considering taking such risks. In addition, the amount of the indiscretion in question is also a consideration in whether or not to prosecute. The average amount of money owed in most criminal tax cases is over $70,000. Unfortunately, once the decision to prosecute is made by the CID and the Justice Department accepts the case, the chances of getting convicted are 80%, and half of those convicted wind up serving jail time regardless of whether or not they have a prior criminal record.