Eggshell Audits: Protecting Your Client in a Criminal Examination

How to protect your client in a criminal examination

An eggshell audit refers to the civil examination that investigates the issues of tax defaulters. It is a criminal investigation carried out against those who have a record of withholding taxes. This examination involves two parties – the client and the tax controversy attorney. The latter party calls the shots. This means they are influential in the decision that ultimately befalls their clients.

Tax Crimes

The following are the tax crimes carried out against defaulters:

  • Evasion: an attempt to evade tax
  • Employment tax: an attempt to dodge the payment or collection of the tax
  • Failure to provide information or the detail of the tax due
  • An attempt to provide false statements
  • Obstruction: an attempt to intrude with the department of Internal Revenue Laws
  • An attempt to defraud the government

If your client involved themselves in any of the offenses mentioned above. You might have to play tactically to help them through an eggshell audit. If the audit proves the offenses, both you and your client have to suffer the consequences.

Strategies for the Examination

Like any other exam, it is important to do your preparation for an eggshell audit. Be thorough and observe due diligence. The tax controversy attorney should have all the information regarding tax returns before taking the next step.

Once you have collected all the information, sit down with your client and have a complete and comprehensive conversation. Ask them every little detail. Your meeting should be thorough, without leaving anything to the imagination. A crystal clear conversation is the only way to help your client through this process.

Moreover, you should conduct a thorough analysis of every bank deposit ever made. As well as, a forensic search and the net worth of the person you are dealing with. Get familiar with the lifestyle of your clients and analyze the situation methodically.

It is a tax controversy attorney’s duty (and skill) to read between the lines. With the required experience, they are able to pick on every little detail that might lead to a criminal offense. Sometimes, the case is a bit complicated, and you have to dig deeper to get to the root cause of the criminal offense.

They assign a revenue agent to each case. It is your duty to inquire about them and how skilled they are.

Furthermore, they also need an affirmation of assets. You have to consider it and plan accordingly. Make sure to abide by the rules and be cautious of privileges. The confidentiality between two parties – attorney and client – needs to be discrete. Likewise, they should consider the Spousal Privilege, Fifth Amendment Privilege, and Joint Defense Privilege.

How to Ascertain Control during the Examination?

Since you are the expert here, try to set the table where you and only you speak. Minimize the participation of your client as much as you can. In addition to that, choose a location that is convenient to you, preferably your office.

Be very careful with your words. The IRS officer notices and records everything. One wrong move might jeopardize the entire case. Maintain the record and ask for its copy after the examination. Analyze the record and provide only those documents and statements requested from you. Refrain from giving unnecessary information.

Do not give any false statements that might land you in trouble. Be true to your case and avoid defamatory comments or slandering. If the given information proved to be wrong or false in case, you might face an obstruction charge.

The composure of the tax controversy attorney reflects their skill. Make sure you are calm and collected during the entire period of the examination. Do not lose your calm, and keep a check on your emotions. Be patient and present your record with caution.

The revenue agent determines the future of your case. There are heavy chances of criminal referral if you haven’t made a lasting impression on the IRS officer. Therefore, it is essential to maintain a friendly relationship with the revenue agent.

What Leads to Criminal Referral?

The revenue agent is well-versed with all the loopholes that they might come across during the investigation. Therefore, you need to be very careful with the provided material. If there is a small hint of fraud or hidden capital, it might lead to a criminal referral.

Moreover, provide legitimate documents for investigation. Refrain from showcasing anything that you might not be able to explain, such as valued items or large investments. Substantial overstatements might also lead to a criminal referral.

What Are the Signs of a Criminal Referral?

The following are the signs clearly indicating that your case is turning into a criminal record:

  1. If the Revenue Agent is nowhere to be found after the investigation, it means that you are in hot water.
  2. The Revenue Agent inquires about your client’s net worth or other bank statements.
  3. If the Revenue Agent suspects the real intention behind your client’s contribution towards the sensitive issues of society.
  4. The Revenue Agent seeks warrants against your client.
  5. If the Revenue Agent does not have direct contact with you or your client. They might start approaching a third party to look over your case.

Final Word

Lastly, an eggshell audit is a civil examination carried out against those involved in any tax offense. Thus, Tax Controversy Attorneys are lawyers skilled at helping their clients through the investigation. Including, helping them find a way out without any personal or financial damages.

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