Egg Shell Audits

Egg Shell Audits Can Involve Serious Risks and Penalties

Egg shell audits are serious matters that can lead to substantial fines and even prison time for taxpayers.  An eggshell audit is an audit in which the tax returns filed by the taxpayer contain an understatement of income, an overstatement of deductions or some other inaccuracy that results in the taxpayer paying fewer taxes than he or she technically owed.  It is important to understand that even if the understatement of income or the over-reporting of deductions was accidental, the taxpayer can still face significant fines and penalties.  Moreover, IRS agents are specially trained to identify fraud and can refer taxpayers who appear to have filed fraudulent returns to the IRS Criminal Investigation (CI) Division.  These situations are referred to as “egg shell audits” because the person is walking on eggshells during the audit to prevent the agent from discovering criminal tax fraud and making a referral to the CI Division.

A “reverse eggshell audit” occurs when an IRS agent collects information from the taxpayer and his or her representative in what is purported to be a civil audit.  The reality is that the IRS is actually conducting a parallel criminal tax investigation of the taxpayer under the guise of the civil audit.  These situations can be particularly challenging because the taxpayer is not on notice that the IRS Agent is looking to gather information that will be passed on to the CI Division and used in its ongoing criminal investigation. 

A Virginia Criminal Tax Attorney Can Help

If you suspect that you may be the target of an egg shell audit or a reverse egg shell audit, it is important to seek legal advice from an experienced criminal tax law attorney.  The lawyers at Thorn Law Group will carefully evaluate your situation and guide you through each step of the process.  Many of our tax lawyers worked for the IRS prior to entering private practice and we are well aware of the signs indicating that an IRS civil audit may be escalating into a criminal investigation.   In these situations our firm will take quick action to protect your legal rights and limit your exposure due to a potentially overreaching governmental agency.  We will advise on the extent to which you should cooperate with the audit and we will assert appropriate privileges on your behalf, including the Constitutional privilege against self-incrimination. 

The attorneys at Thorn Law Group have decades of experience helping taxpayers in the Virginia area and across the nation avoid harsh civil fines and potential criminal tax liability.  We are a skilled and aggressive team of tax law professionals who will work with you and the IRS to effectively manage the audit process and resolve any disputes involving your tax liabilities.   If you have been contacted by an IRS Agent for an audit, call our Virginia satellite offices today at 703-752-3752 or email Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com.