TAX FRAUD - AN OVERVIEW FOR TAX PRACTITIONERS

• NCJ Number: 65246
• Journal: TAXES Volume: 57 Issue: 5 Dated: (MAY 1979) Pages: 331-342
• Author(s): W S SMITH; G A ROBINSON
• Date Published: 1979
• Length: 12 pages
• Corporate Author: Commerce Clearinghouse, Inc
• Publication Format: Article
• Language: English
• Country: United States of America

Annotation

ASPECTS OF TAX FRAUD CASES UNIQUE IN CRIMINAL LAW, INTERNAL REVENUE SERVICE (IRS) METHODS IN FRAUD INVESTIGATIONS, AND THE RIGHTS OF PRACTITIONERS AND CLIENTS IN SUCH CASES ARE DISCUSSED.

Abstract

TAX FRAUD CASES CAN BE DISTINGUISHED FROM OTHER CRIMINAL DEFENSE WORK BECAUSE THE TAXPAYER AND TAX RETURN PREPARER PROVIDE MOST OF THE HIGHLY DAMAGING INFORMATION, BECAUSE THE TAXPAYER IS LEGALLY REQUIRED TO COMPLY WITH CIVIL INVESTIGATIONS OF HIS TAX RETURN, AND BECAUSE THE TAX RETURN PREPARER MUST ANSWER QUESTIONS BY BOTH CIVIL AND CRIMINAL IRS AGENTS. THE AUTHORS SUGGEST THAT TAX PRACTITIONERS SHOULD HAVE A WORKING UNDERSTANDING OF CRIMINAL STATUTES IN ORDER TO PROPERLY ADVISE THEIR CLIENTS AND LIST SPECIFIC CIVIL AND PRACTICAL PENALTIES FOLLOWING CRIMINAL TAX PROSECUTION INCLUDING THE 50 PERCENT FRAUD PENALTY. THE AUTHORS ALSO DEFINE ELEMENTS THAT CONSTITUTE TAX FRAUD AND SUGGEST STEPS PRACTITIONERS AND CLIENTS CAN TAKE TO REDUCE RISKS, INCLUDING TAX PREPARATION INQUIRY, DOCUMENTATION, AND DISCLOSURE. IRS METHODS FOR DETECTING FRAUD CASES ARE DELINEATED, SUCH AS MONITORING A PARTICULAR BUSINESS ACTIVITY AREA, FOLLOWUP OF INFORMANT TIPS, AUDITS BASED ON STATISTICAL SAMPLING METHODS. AND ALERTNESS TO PARTICULAR TAX RETURN ITEMS. INDICATIONS OF FRAUD INVESTIGATIONS ARE LISTED, INCLUDING CIVIL AGENT REQUESTS FOR LARGE NUMBERS OF ORIGINAL DOCUMENTS, MEETINGS ATTENDED BY SPECIAL IRS AGENTS, AND IRS CONTACT OF RECORDKEEPERS SUCH AS BANKS. DISCUSSION COVERS USE OF THE PRIVILEGE CONCEPT FOR THE TAX PREPARER AS WELL AS THE FOUR CONDITIONS FOR ATTORNEY-CLIENT PRIVILEGE TO BE RECOGNIZED BY FEDERAL COURTS. THE ARTICLE CONCLUDES THAT KNOWLEDGEABLE TAX RETURN PREPARERS CAN ASSIST CLIENTS IN AVOIDING TAX FRAUD ACCUSATIONS, CAN HELP PROVIDE A SKILLED DEFENSE, IF NEEDED, AND CAN AVOID ELICITING INCRIMINATING INFORMATION WHERE NO ATTORNEY-CLIENT PRIVILEGE EXISTS. AN APPENDIX PROVIDES PRIMARY CRIMINAL TAX SECTIONS AND FOOTNOTES ARE GIVEN. (AOP)