Opinion ID: 757334
Heading Depth: 2
Heading Rank: 1

Heading: The Contours of an IRS Investigation

Text: 3 The IRS splits the responsibility for enforcing the nation's tax laws between its two investigative divisions. The Criminal Investigative Division (CID) is charged with investigating criminal violations of the tax code and related federal statutes. CID investigators are called special agents. Like many other criminal law enforcement agents, they carry firearms and badges. In addition, special agents must recite an administrative warning prior to soliciting information from taxpayers. See Beckwith v. United States, 425 U.S. 341, 343, 96 S.Ct. 1612, 48 L.Ed.2d 1 (1976) (quoting warning provided by special agents). 4 On the other hand, the Examination Division of the IRS is responsible for conducting civil tax audits. Examination Division investigators are known as revenue agents. In contrast to special agents, revenue agents do not carry firearms; nor are they required to provide taxpayers with an administrative warning. Although an Examination Division audit typically concludes with some sort of civil settlement between the IRS and the taxpayer, such an audit may uncover evidence that causes the revenue agent to refer the case to the CID for criminal investigation. Under IRS regulations, a revenue agent who uncovers a firm indication of fraud on the part of the taxpayer must immediately suspend her audit and refer the case to the CID. See Internal Revenue Manual § 4565.21(1). At that point, the CID enters the case and the IRS' efforts become focused on the possibility of criminal prosection. See generally Michael I. Saltzman, IRS Practice and Procedure pp 12.01 & 12.03[a]. This case, in large part, concerns the distinction between a civil tax audit and a criminal tax investigation.