Development of Fraud Case by the Internal Revenue Service Key Question IRS will ask
1.
The following actions should assist the IRS employee in establishing affirmative acts of tax fraud:
1.
Interview the taxpayer to determine the reason or the intent of the taxpayers noncompliance.
2.
Ask sufficient questions to determine the extent of the delinquency, including the periods and tax due.
3.
Document verbatim, if possible, the questions asked and the taxpayers response or lack of response.
4.
Identify any personal reasons that could affect the taxpayers ability to comply.
5.
Attempt to get a definitive statement from the taxpayer regarding additional expenses not listed in the books and records. These expenses could include, but are not limited to, expenses paid in cash or “under-the-table ” payments to employees.Good luck.
6.
Attempt to establish year-end cash on hand for each year under investigation.
2.
Verify income from all available sources. Methods of income verification include, but are not limited to:
1.
Currency, Banking, and Retrieval System Information
2.
Information Data Retrieval System on the IRS’s own internal system
3.
Securing copies of Forms W?2 from employers and Forms 1099 from customers. IRS has on file the records for the past 7 years
4.
Securing copies of checks issued to the taxpayer from Form 1099 issuer(s);
5.
Examining the taxpayers books and records of income and expenses;
6.
Reviewing the last return filed. This will assist in identifying income sources as well as deductions and exemptions used in tax computations; and
7.
Securing current financial information including a check of public records for assets, and a physical observation of the taxpayers residence, place of business and/or other identified properties. This information will be used to determine whether the taxpayer had the ability to pay the taxes owed when the return(s) was required to be filed.
3.
IRS will access to a full credit report is governed by the Fair Credit Reporting Act (Act). The IRS will pull up credit reports from all the agencies and do a full check on financial applications given to third parties. since most individuals tend to spike up their financial information, it is a great source of information to the IRS Agent.