IRS LISTENS FOR FALSE STATEMENTS FROM TAXPAYERS

The IRS has recently announced that it will send more of its auditors through training on being able to determine false statements made during tax audits. The purpose of the program is to train lower level agents to be able to recognize false statements made by taxpayers during an audit examination so that these agents will be better able to refer these cases to the criminal investigation division of the IRS for prosecution.

The criminal division has generally focused on larger taxpayers in the past due to the cost of investigations. However, now it appears that the IRS is refocusing its efforts on smaller taxpayers because they seem them as easier targets.

Once a taxpayer is charged with making false statements, they are forced to either cut deals with the IRS or pay costly litigation fees to defend themselves. Most deals include pleading guilty to certain allegations, paying fines and serving some prison time. Recently the Department of Justice has stated that they think everyone that has committed a Federal tax crime should spend time in prison regardless of their lack of criminal history. Furthermore, most people plead guilty when charged because the cost to defend such cases can amount to hundreds of thousands of dollars.

As part of their training, agents are taught to ask questions in a variety of ways in order to then listen for answers which contradict each other. For example, the National Trial Lawyers Association offers courses to teach Attorney's these tactics for cross examination purposes. The Association then bring in actors to role play different trial scenarios. The Lawyer is then taught how to ask questions in such a way as to confuse the actor into making contradictory statements which would impeach his testimony at trial.

I find this new effort by the IRS alarming. Most taxpayers try their best to file accurate returns but most of the time lack good documentation for their deductions basically because they are poor record keepers. Now that they have to worry about not only paying more tax due to poor record keeping but also avoiding jail time for misstating something during an audit, I feel more people will drop out of the system and try to avoid paying taxes altogether.