Can a tax audit result in criminal charges?

On Behalf of | Oct 28, 2019 | White Collar Offenses |

The last thing you want to receive in the mail is a tax audit notice from the IRS. Even if you’ve done nothing wrong, you’re likely to have concerns about what the IRS could dig up and if it will lead to additional trouble.

While not always the case, it’s possible for a tax audit to result in criminal charges. For this reason, it’s critical to understand the process the IRS uses to select tax returns for an audit, as well as the steps you can take to protect your legal rights.

Here are the four most common selection methods:

  • Computer scoring: The IRS has a complex scoring system to analyze potential errors, thus pointing them toward returns that deserve a closer look.
  • Large corporations: It doesn’t mean smaller companies are 100 percent safe, but the IRS has a history of auditing tax returns of large corporations.
  • Related issues: For instance, if a tax return has an issue related to other taxpayers, such as a business investor, it’s more likely to be selected for an audit.
  • Information matching: If inaccurate information comes to light, such as your reported income being lower than the information from your payer, it’s a red flag for the IRS.

What should you do next?

There are steps you can take to reduce the risk of a tax audit, but there’s no guaranteed way to avoid it entirely. If you receive the dreaded IRS audit letter by mail, you have two options for proceeding:

  • Conduct the audit by mail
  • Conduct the audit in-person, such as at your home, accountant’s office or local IRS office

Generally speaking, if the IRS allows you to conduct the audit by mail, it’s less serious. Conversely, if they want to meet with you in person, it’s likely that they suspect something more serious, possibly criminal.

Your goal is to make your way through the audit process as quickly as possible and without facing additional trouble.

If you have reason to believe criminal charges are coming or you’ve already received notice that this is the case, immediately learn more about your legal rights. You don’t want to say or do too much, as doing so could work against you during your case.