In the U.S., the tax system relies heavily on the idea that the government can tax all of your income. If a person attempts to hide income or commits fraud, it can result in a criminal investigation.
While the IRS Criminal Investigation aims to maintain the integrity of the tax system, it can also be intimidating to face investigation or prosecution due to alleged tax-related criminal acts.
Types of fraud
There are multiple types of fraud that the IRS may investigate. Corporate fraud and financial institution fraud are common allegations. Corporate fraud includes violations of the IRC. Generally, in corporate fraud, an individual or entity falsifies tax returns. Financial institution fraud may include money laundering, fraud against loan associations, banks and other financial institutions.
Other types of fraud may include healthcare fraud, general fraud and bankruptcy fraud.
Illegal gaming
In the U.S., all sources of income are taxable, including illegal sources of revenue. If a person operates or owns an unlawful gambling business but fails to report the income to the IRS, the government may initiate an investigation into the individual. Hiding income from an illegal gambling operation can still result in charges related to defrauding the IRS.
When it comes to prosecution, the IRS is more likely to seek prosecution when a person acts dodgy during an audit. IRS agents will look for people who make false statements or continue to hide bank records during the investigation. In most cases, the IRS saves prosecution for extraordinary circumstances involving high-net-worth individuals.