From the Tax Law Offices of David W. Klasing - What Factors Are Likely to Lead to a High Stakes IRS Audit?

IRVINE, Calif., June 1, 2020 /PRNewswire/ -- You may be concerned about whether the IRS will or has discovered something serious during their audit that could lead to a high-stakes audit and therefore a potential criminal tax referral to the IRS criminal investigation division (C.I.). It is important to note that if your audit is referred to C.I., C.I. has over a 90% criminal tax conviction rate.

Occasionally, the IRS conducts audits on a completely random basis. However, most times, the IRS audits you because of something that they noticed when statistically reviewing your tax returns. The consequences of the IRS finding willful, criminal wrongdoing in an audit can be quite severe. However, the key word here is "willful." The IRS will almost never pursue a criminal investigation post-audit unless they believe that the taxpayer acted willfully to defraud the system. Audits known to potentially involve willful behavior include audits involving:

• Undisclosed cash sales.
• Padded, over deducted, and unsubstantiated expenses or tax credits that taxpayer does not qualify for.
• Undisclosed foreign financial accounts and unreported offshore income / inheritances.
• Captive insurance company deductions.
• Listed transactions
• Egg shell audits
• Reverse eggshell audits
• Unreported cryptocurrency transactions
• Unreported revenue
• Non filed returns

Signs the IRS agent has referred the case to the criminal investigation unit or intends to do so.

• Agent summonsing and photocopying all your bank account information
• Agent asking you questions about your "lifestyle" and certain lavish expenditures
• Agent requesting information related to your assets at the beginning and end of last year (this may suggest that they believe your books do not reflect your actual income)
• Agent asks you to submit to an interview under oath
• Agent will not give information about the status of the audit or when the audit will potentially conclude

An experienced criminal tax defense attorney will spot these and other warning signs that your case is being considered for criminal tax investigation and will work to mitigate any criminal tax exposure before the matter is taken to the next level.  The goal here is to keep your audit civil and therefore just about minimizing the money you will owe.

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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

SOURCE Tax Law Offices of David W. Klasing, PC

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