The Internal Revenue Service often launches criminal investigations of those suspected of fraud or blatant tax evasion. The IRS understands some taxpayers may have difficulty meeting their obligations, which is why payment plans are available to those who file returns. Criminal behavior is another matter, one that may come with a less amicable response. Texas residents who lie on tax returns, hide income, or make false deductions could be in jeopardy.
The IRS issues a report about criminal investigations
In late November 2021, the IRS issued a press release noting that the agency performed more than 2,500 investigations. The press release stated the government uncovered $10 billion associated with criminal tax fraud. The press release serves a purpose beyond celebrating the agency’s success. In pointing out the IRS’ criminal investigations lead to a 90% conviction rate, the agency likely put those engaged in tax fraud on notice.
Anyone worried about tax fraud charges and possible incarceration may rethink plans to file a false return. Discovery could result in heavy fines and a prison sentence.
Tax fraud investigations
IRS criminal investigations may uncover additional illegal activities. The press release notes that criminal tax investigations led to money laundering, drug trafficking, and other charges among the many defendants. Those charged with multiple federal crimes could face significant prison time if found guilty.
Persons charged with tax crimes – or any crime – have rights. Therefore, IRS investigators must not violate a suspect’s rights, or the case could collapse. Investigators who coerce witness statements or fail to procure necessary warrants may face charges of civil rights violations. Any evidence procured in such ways could become inadmissible in court.
Some defenses to tax irregularities might be more common. For example, people make mistakes on returns, leading to audits. An “honest mistake” might not rise to a criminal offense.