In the United States, the Internal Revenue Service (IRS) investigates tax crimes in three categories: legal source tax crimes, illegal source financial crimes and narcotics-related financial crimes/counterterrorism financing. The IRS criminal investigators serve the American public by examining potential violations of the Internal Revenue Code (IRC).

Approximately 2,700 IRS workers are special agents devoted to uncovering tax-related criminal schemes. Every year, the IRS launches thousands of tax crime investigations. About half of these investigations result in criminal convictions. 81% of individuals convicted end up in prison—usually for years at a time. Additionally, many tax crimes are punishable by heavy fines.

Foreign Accounts & Tax Evasion

The IRS is extremely wary of offshore bank accounts. Why? Many tax crimes involve concealing money from the IRS through foreign banking. Some countries and jurisdictions (called tax havens) offer American investors the opportunity to store their funds in another country so that they cannot be taxed by the IRS. Many of these countries enact secrecy laws so that investors can manage bank accounts almost anonymously, making it easy to avoid tax payment in the U.S.

Employment Tax Crime Investigations

The IRS is especially aware of employment tax crime evasion schemes. According to new sources, the United States may lose up to $5 billion in unpaid taxes every year. Thus, the IRS aggressively pursues criminal convictions related to tax fraud and tax evasion. Sometimes, businesses try to avoid tax payments by withdrawing income tax from their employees’ paychecks but never remitting the money to the IRS. This scheme is often called pyramiding. In the past, employers have paid their workers in cash to avoid tax payment. These schemes are detrimental to government financing and to the individuals involved. When paid with cash, employees often lose future Medicare and social security benefits. Call us today!

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