Talking to the IRS Can Land You in Hot Water. Just Ask Richard Mathews.
Mr. Mathews was a successful businessman, in spite of never graduating high school. Unfortunately for him, he made some big mistakes on his tax returns - he happened to omit substantial income. The IRS audited him and based on his statements to the IRS agent his audit went criminal and he ended up spending 27 months in jail.
What Did Mr. Mathews Do Wrong?
For starters, Mr. Mathews tried to talk his way out of trouble. When that didn't work he started lying. Some of the statements that got him into trouble were:
- He said he only had a personal checking account when in fact he also had another account (which the IRS discovered on its own).
- He changed his story several times about his businesses, his role in those businesses and how the money flowed (i.e. what he got paid).
- He told IRS agents when his home was searched that the only cash in the home was $20 in his pocket. A search revealed $13,000 in two safes. He denied ownership of $10,000 in one safe and said he forgot about the other $3,000. Some time after that he changed his story and claimed all $13,000 as his.
You can read the whole story here; what I have above should be sufficient to get my point across. Talking to the IRS can lead to trouble.
Why Talking to the IRS is Almost Always the Wrong Answer!
Mr. Mathews went wrong when he tried to go it alone with the IRS. Even if you are perfectly innocent, you still run the risk of your words being misinterpreted by the IRS agent as something more nefarious.
Before you say that Mr. Mathews was obviously guilty and if you are innocent than you have nothing to fear. I want to point you to an entertaining youtube video about the dangers of talking to the police (and by extension the IRS), aptly title Don't Talk to the Police. Over the last couple of decades, many "guilty" people who confessed to the crime have been freed after DNA evidence proved they did not do it.
Talking to the IRS has the same perils as talking to the police. Neither are your friends. If anything you say later turns out to not be true, exaggerated or inconsistent than it may be seen as indicating you are lying or trying to hide something.
Once that happens inevitably the person will try to keep talking more and more to "dig" their way out of trouble which only leads to more problems. My advice, just don't do it.
You have an absolute right to not speak to the IRS and to deal with the IRS through your representative. The IRS does not penalize you for "lawyering up." In fact, a good tax professional can help pull things together to quickly and efficiently respond to the IRS. Overworked and underpaid IRS agents appreciate this.
What to do if you do decide to talk to the IRS
Now if you decide to talk to the nice young man or woman at the IRS, asking about your tax deductions, at least heed the following:
- Answer only the questions asked and nothing more.
- Do not answer if you are not sure the reason for the question; it is not wrong to ask for clarification before answering.
- Do not under ANY circumstance lie, embellish/exaggerate, or guess.
If you or someone you know in the Portland, Maine area has been approached by the IRS for an interview, please feel free to contact me directly at 207-299-0515 or by filling out my contact form.
James D. Wade, Esq.
Law Office of James D. Wade
53 Exchange St., Ste 400
Portland, ME 04101
207-747-5318
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