March 24, 2023
What To Know if You’ve Received an In-Person Visit from the IRS or IRS CI
The Internal Revenue Service (IRS) conducts most audits and reviews remotely. The IRS is responsible for enforcing more than 150 million taxpayers’ obligations, and, as a result, it simply does not have the resources to visit all delinquent taxpayers in person.
As a result, receiving an in-person visit from the IRS—especially unannounced—is almost always a big deal.
In a recent News Release warning of the risk of revenue agent impersonation scams, the IRS notes that agency personnel will make unannounced visits to taxpayers’ homes and businesses in two primary scenarios. First, revenue officers may conduct unscheduled visits “to share information, inform taxpayers of their tax filing and payment obligations and work with taxpayers to resolve their tax issues and bring them into compliance.” Second, Special Agents with IRS Criminal Investigation (IRS CI) may conduct unannounced visits when pursuing criminal tax fraud and tax evasion investigations.
Important Considerations After an In-Person Visit from the IRS
If you have been visited by revenue officers or Special Agents with IRS CI, what do you need to know? Here are some key considerations:
1. Did You Receive a Visit from a Revenue Officer or IRS CI Special Agent?
The first key consideration following an in-person visit from the IRS is making sure you know the nature of the IRS’s inquiry. Did you receive a visit from a revenue officer? Or did you receive a visit from a Special Agent with IRS CI?
If you received a visit from a revenue officer, this means that the IRS’s inquiry is currently civil in nature. An audit may be forthcoming—and further inquiry could potentially lead to criminal scrutiny as well—but at this point, you may still have an opportunity to resolve the matter without facing additional scrutiny. As we discuss below, you should speak with a lawyer about your situation promptly, and you will need to make informed decisions about how to resolve any pending tax issues. Depending on the circumstances, this could involve demonstrating compliance, submitting an amended filing or offer in compromise, or taking other remedial measures.
If you received a visit from a Special Agent, this means that IRS CI is actively conducting an investigation—and this means that criminal penalties are at stake. Criminal tax charges can lead to substantial fines, federal prison time and other penalties—so you will need to begin making informed and strategic decisions right away.
2. Are You (or is Your Business) the Focus of the Audit or Investigation?
Before going too far, it is also important to make sure you know whether you (or your business) are the focus of the IRS’s inquiry. As the IRS notes, revenue officers and Special Agents conduct announced visits to third parties’ homes and businesses in some cases. If you are currently being treated as a witness rather than a suspect or target, this will have a significant impact on your next steps.
3. What Information Did You Share (if Any) During the In-Person Visit?
Following an in-person visit from the IRS or IRS CI, it is important to make a record of any and all information you shared with the revenue officers or Special Agents. To the best of your ability, you should document any hardcopy and electronic files the revenue officers or Special Agents reviewed (or collected) during the visit, and you should take notes detailing any discussions that took place as well. All of this will be important information to share with your tax defense lawyer.
4. Did You Receive Any Letters or Other Documentation Before the Visit?
Even if the visit itself was unannounced, you (or someone in your office) may have received letters or other documentation from the IRS previously. If you have any additional forms of documentation related to the IRS’s (or IRS CI’s) inquiry, you should share these with your tax defense lawyer as well.
5. What Risks Are You (or is Your Business) Currently Facing?
After discerning the nature and focus of the IRS’s (or IRS CI’s) inquiry, you can then work with your tax defense counsel to assess the risks that you are currently facing. To conduct this assessment, your counsel will focus on answering questions such as:
- What are the substantive issues underlying the inquiry or investigation (i.e., is it focused on underpayment of income or employment tax liability or failure to report offshore accounts)?
- Is the inquiry civil or criminal in nature?
- What is the current status of the inquiry or investigation?
6. What Defense Options Do You Have Available?
In addition to answering these types of questions, your tax defense counsel will also focus on determining what defense options you have available. This will involve answering additional questions such as:
- What information does the IRS (or IRS CI) currently have in its possession, and what additional information might it be able to obtain?
- Do you have substantiating documentation to support your (or your business’s) tax filings?
- If you owe taxes, interest and penalties, can you afford to pay what you owe? Regardless, do you have leverage for negotiating a settlement?
7. What Are Your Next Steps?
Finally, after thoroughly evaluating the circumstances at hand, you will need to carefully determine your next steps. Civil and criminal tax matters require different approaches, and different types of tax controversies require different approaches as well. Working with your tax defense counsel, you will need to decide how best to address the circumstances at hand—and you will need to do so before the IRS’s in-person visit leads to additional and unnecessary consequences.
Contact Us for More Information
If you have received an in-person visit from IRS revenue officers or IRS CI Special Agents, it is important that you speak with a lawyer promptly. Our tax defense lawyers represent individuals and businesses in high-value tax controversies involving the IRS and IRS CI. To request a confidential initial consultation at Brown Tax, P.C., call 817-870-0025 or send us a message online today.