Impeding an IRS investigation in order to avoid taxes

The law against interfering with the administration of internal revenue laws covers any “corrupt” effort to interfere with an Internal Revenue Service investigation.  In addition to enabling prosecution for those that harass IRS agents, it covers any other action that could impede an investigation as long as it is done “corruptly”.

This includes efforts to interfere with IRS efforts to obtain information from third parties.  When investigating tax filings that the IRS believes are fraudulent, the IRS will likely need to interview employers, business associates and anyone else who possibly provided income to the taxpayer.  The IRS does this in order to determine the correct amount of taxes owed and whether or not documents submitted were indeed fraudulent.  When the IRS no longer trusts the taxpayer to provide accurate information from the taxpayer, they will seek it out from third parties.

If the taxpayer attempts to prevent those third parties from responding to the IRS investigation, he could find himself in even more trouble for interfering with the administration of internal revenue laws.  This is especially true if the taxpayer attempts to dissuade these third parties from complying with false information.  What is less clear is whether the statements to third parties must be false or encourage them to break the law.  But any corrupt effort to prevent the IRS from investigating and obtaining information will be prosecuted.

Additionally, submitting false documents, such as a fraudulent assignment claim is viewed as a corrupt effort to obstruct the IRS.   In order to prosecute an obstruction effort, the IRS must prove that it was done “corruptly.”  This means that not all efforts that could impede or obstruct the IRS from investigating a case are prosecutable.  For instance, this law cannot be used to prevent a defendant from doing what is perhaps the most obstructive thing he can do, hiring an attorney to challenge the IRS.

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