Many of my firm's clients have been participants in abusive offshore tax schemes of one variety or another. Typically, the Internal Revenue Service has sent a letter stating that the client has been identified in such a scheme, and inviting the client's cooperation in an investigation into their activities. Typically, the involvement goes back several years; years as to which the IRS could only assess additional income tax if it asserted the fraud penalty in order to keep the assessment period open under the tax assessment statute. This is a very intimidating letter. Less often, a client may be notified that he is a target of a criminal investigation relating to an involvement as a participant in an abusive tax shelter. Either way, it is often the case that the client has been a victim of an unscrupulous promoter selling what the Internal Revenue Service sees as nothing more than snake oil. To put a finer tone to it, the IRS view is of an absence of a business purpose in the transaction or series of transactions in which the client has been involved, wiping out, for all intents and purposes, all of the tax benefits that flowed from the reporting position, and heavily penalizing the attempt to abuse the tax system.
The biggest mistake that a client can make is to underestimate the seriousness of such a matter as an offshore scheme investigation, notwithstanding its perceived civil nature. It goes without saying that underestimating a criminal tax investigation of any nature is a very serious mistake on every level. The Department of Justice, Tax Division, Criminal Section, is the federal prosecutorial arm of the Internal Revenue Service. Over 80 percent of criminal tax cases that make their way to trial are won by the government.
The unknown is measured from the point of view of one's perspective on it, and while no tax lawyer however skilled in criminal tax defense can predict a future outcome, perspective is everything. In any offshore tax investigative matter, or criminal tax investigation generally, under no circumstance it is a good idea to speak to a special agent of the Internal Revenue Service without first consulting a lawyer with a complete understanding of substantive and procedural criminal tax law. I have that understanding.
Look to the following sites of The United States Department of Justice to read further about the mission of the Tax Division, its functions and both current and archived news releases relating to prosecution of offshore tax scams.
- http://www.quatloos.com/
- http://www.usdoj.gov/opa/ - Search "Press Room and Tax"
- www.usdoj.gov/tax - Search "Tax News" and "Press Releases"
- http://www.usdoj.gov/tax/readingroom/2008ctm/TaxManual2008.htm - Department of Justice Tax Division Criminal Tax Manual
For more information, and if you are or believe that you are involve in an investigation into an offshore or high-risk tax structure, please call me in confidence immediately at 1-888-TAX-RISK (829-7475). Thank you.
