Key Takeaways IRS Criminal Investigation (CI) is a federal law enforcement agency with a conviction rate exceeding 90% CI special agents are armed federal officers with authority to execute search warrants and make arrests Most CI investigations begin with referrals from civil audits where revenue agents identify badges of fraud Never speak to CI special agents without a criminal tax defense attorney present Early legal intervention can prevent charges from ever being filed What Is IRS Criminal Investigation? IRS Criminal Investigation (CI) is the criminal enforcement arm of the Internal Revenue Service. Unlike IRS revenue agents who handle civil tax examinations, CI employs approximately 2,000 special agents who are sworn federal law enforcement officers. These special agents carry firearms, badges, and have full federal arrest authority. CI is responsible for investigating potential criminal violations of the Internal Revenue Code and related financial crimes, including tax evasion, tax fraud, money laundering, public corruption involving tax violations, and identity theft tax fraud schemes. CI works closely with the Department of Justice Tax Division, which makes the final decision on whether to prosecute. How Criminal Tax Investigations Begin CI investigations typically originate from several sources: Fraud Referrals from Civil Audits The most common source of CI investigations is a referral from an IRS civil examination. When a revenue agent conducting a routine audit identifies multiple badges of fraud — such as substantial understatement of income, destroyed records, two sets of books, or false statements — they can refer the case to CI through a "fraud referral." This transition from civil audit to criminal investigation is one of the most dangerous moments for a taxpayer. The civil examiner is supposed to suspend their examination once a fraud referral is made, but the taxpayer may not know the referral has occurred. This is why having...