The Criminal Investigation Division (CID) is the IRS police department. With the help of the court system, CID puts people in jail. They don’t wear uniforms like police, but they carry gold badges and guns like police. If somebody says they are from CID of the IRS, you or somebody you know is under criminal investigation and may go to jail.
Fortunately, very few individuals are criminally investigated, but prosecutions are on the rise. Part of the reason is because the IRS is very thorough with its criminal investigations, more thorough than most police departments. In fact, criminal investigations can take years and may involve interviewing friends, neighbors, family, business associates, employees, bankers, insurance agents, etc. The IRS may monitor somebody’s mail with the help of the U.S. Postal Service. Even your accountant can be forced to give information about you to the IRS. As result of its thorough investigations, the IRS is successful in its criminal prosecution of tax crimes about 80% of the time! About two-thirds of those charged with tax crimes plead guilty.
The three primary crimes that the IRS investigates are:
- Tax evasion (the intentional conduct to defeat the income tax law—like tax cheating schemes).
- Filing a false return (tax returns containing misstatements).
- Failure to file a tax return.
If CID contacts you, it is likely that they have almost completed their investigation and are hoping you will make damaging admissions or a confession to make prosecution easier.
If CID knocks on your door, SAY NOTHING other than goodbye.
Do not speak to them. Call an attorney immediately after they have left. Remember, your conversations with an attorney are protected by the attorney-client privilege. This privilege does not extend to accountants or enrolled agents unless your attorney has engaged them.