Question 3

Tax Fraud – Frequently Asked Questions (page 3)

What options are available for the taxpayer?

The Justice Department and the IRS have implemented the “early plea” program for taxpayers who are being investigated solely for Title 26 offenses. The “early plea” program allows the practitioner to approach the Government at any stage of its investigation and to indicate a willingness of the taxpayer to enter into a plea bargain, providing a limited factual basis for the plea. As there is always the possibility that the case may ultimately not be referred for prosecution, the practitioner should weigh the advantages of taking an early plea against the likelihood that evidence sufficient to sustain a recommendation to prosecute will be developed.

Counsel may be able to limit the sentence by pursuing the early plea and avoiding an extended investigation which may lead to additional and more severe charges, substantial additional tax loss, or the likelihood of other guideline adjustments, e.g. “sophisticated means,” being applied. Furthermore, in a case involving a substantial tax loss, an early plea may permit the defendant to obtain a 3 level reduction for acceptance of responsibility.