Challenging An IRS Investigation Can Be A Daunting Task

The IRS is a unique agency with powers that go far beyond ordinary governmental offices. It operates under different rules when going after taxpayers for tax evasion and other violations of law. Challenging the authority of the IRS to investigate can be a very difficult task.

What Kinds Of Investigations Are Necessary?

IRS investigations may be conducted on the mere suspicion that the law is being violated, or to make sure laws are not being broken. The IRS enjoys a broader definition of relevance in its quest for certain evidence than that in the Federal Rules of Evidence, which all other federal cases must follow.

Even though under the tax laws the IRS is prohibited from subjecting taxpayers to unnecessary examination or investigations, the news that the IRS is summoning you for a tax audit strikes fear into the average person. The IRS is recognized by courts as serving a vital public purpose, and historically the rule against unnecessary examinations or investigations has been interpreted very narrowly.

Virgin Islands Resident Investigated

In the recent case of Gangi v. U.S., a taxpayer who claimed to live in the U.S. Virgin Islands was the target of an investigation into whether he was participating in a scheme to avoid U.S. taxation. Summonses were sent to third parties located in Massachusetts as part of the investigation, and the taxpayer sought to quash the summonses on the ground that the investigation was being done for an improper purpose and in bad faith.

The decision addressed the scope of the IRS's investigatory powers and the court noted the heavy burden on the taxpayer to rebut the IRS's case. The investigation into whether the taxpayer in the Gangi case maintained a residence in the Virgin Islands during the tax years in question was based on an affidavit by an investigator regarding the IRS's suspicions about a tax evasion scheme. No evidence was put forth by the taxpayer to show bad faith by the IRS, except for the five year length of the investigation.

Armed Search By IRS Agents Violated Statute, But Not Constitution

The case of U.S. v. Adams involved an issue that was a first for federal appellate courts — whether it was lawful for IRS agents to be armed while conducting a search of a residence. The defendant in the case, described as an unabashed opponent of the tax laws, was indicted for conspiracy and tax evasion, and tried unsuccessfully to have evidence found in a search of his home suppressed.

The defendant argued that the IRS agents needed explicit authorization to carry guns during tax investigations, as the laws only allowed agents enforcing alcohol, tobacco and firearms laws to carry guns. The court rejected that theory reasoning that the Fourth Amendment's warrant requirement protected the defendant's privacy interest, and that was satisfied in this case by the unchallenged search warrant.

Consult A Tax Attorney

Violations of the tax laws carry severe punishments; even infractions that seem small, such as filing a false tax return are designated as felonies. If you or a loved one is being investigated by the IRS or if you have already been charged with a tax crime, it is essential to obtain legal representation immediately. An experienced tax attorney can help sort through all possible options.