Audit Leading to Criminal Charges
The Internal Revenue Service (IRS) can utilize 18 USC §1001 to prosecute general criminal charges against the defendant in an audit or investigation. This statute broadly covers materially false statements made to the federal government and is commonly used when false statements (oral or written) or documents are given to an IRS agent during the course of such an audit or investigation. A person convicted under this statute can face fines, a maximum imprisonment of 5 to 8 years (depending on circumstances), or both.
- During the IRS audit of an estate tax return, the executor of the estate gave information to the IRS auditor. Because of executor’s statements and in light of the tax return that was filed, the audit was referred to the Criminal Investigation Division (CID). The CID recommended prosecution. Moskowitz LLP was able to meet with the Department of Justice (DOJ) in Washington, D.C. and present evidence that we believed would make it difficult to prove certain elements of the crime to a jury. After our meeting, the DOJ declined to prosecute the case.
- In the case of United States v. Hirst (not represented by Moskowitz LLP), statements were made to Internal Revenue Service Agents during the course of a civil estate tax audit. The statements made regarding the individual’s assets and their value proved to be false and led to an indictment for violation of 18 USC §1001. (United States v. Hirst, 2012 U.S. Dist. LEXIS 117364, 2012 WL 3583044 (N.D. Cal. Aug. 17, 2012))