TO FILE OR NOT TO FILE AN AMENDED RETURN TO CORRECT AN ORIGINAL RETURN THAT HAS CRIMINAL TAX DIMENSIONS – THAT IS THE QUESTION

Your client has filed a fraudulent return underreporting his tax liability. He now has misgivings. He comes to you and expresses great concern. What should you do?  This is a continuation of Part 1 that was posted October, 2, 2013.

EGGSHELL AUDITS: KEEPING THE SHELL OF THE EGG FROM CRACKING WHEN THERE ARE CRIMINAL TAX ISSUES

In an “eggshell audit,” you must walk on eggshells to represent your client effectively in the civil examination without exposing the fraud, all the while honoring your duties to the tax system not to mislead the revenue agent. Although it is theoretically too late for disclosure once the civil examination has begun, the practitioner might still be able to obtain a reasonable level of assurance from the revenue agent that he will not refer the matter to CI, so that disclosure of the fraud will not result in a referral for criminal investigation.

There are many instances in which disclosure to the agent may be the best option. For example, if the taxpayer has failed to pay income from foreign bank accounts, the IRS may be willing to allow the taxpayer to disclose the problem, pay a reduced penalty, and move on without a criminal referral. In other cases, you may be convinced Read More