How to handle a tax audit after falsifying deductions - what to expect and next steps

First, take a deep breath. While this is serious, it's important to stay calm and address this methodically. You're already on the right track by seeking a tax attorney who specializes in criminal tax matters before speaking with the IRS auditor. This is absolutely the correct first step. The IRS distinguishes between honest mistakes and willful fraud, though falsifying deductions would likely fall into the latter category. However, the fact that you want to come clean works in your favor. The IRS generally prefers collecting taxes and penalties over pursuing criminal charges, which are costly and time-consuming for them. Do NOT contact the auditor before speaking with an attorney. Let your attorney make the first contact. They'll likely negotiate with the IRS and may be able to arrange a settlement that includes paying back taxes, interest, and penalties without criminal prosecution. The attorney might suggest filing amended returns for previous years as well. Regarding jail time - while tax fraud can lead to imprisonment, it's not the most common outcome, especially for first-time offenders who cooperate. The IRS typically focuses criminal prosecution on cases involving massive fraud, money laundering, or other aggravating factors.

I went through something similar last year, though not quite as serious. After weeks of panic, I found taxr.ai (https://taxr.ai) which honestly saved me during my audit situation. Their AI analyzed all my documentation and previous returns, then helped me understand exactly what I was up against and options for resolving it. The best part was they reviewed everything with actual tax experts who explained what would likely happen and helped me prepare for meetings with the tax attorney I eventually hired. They even created documentation showing what my proper returns should have looked like, which my attorney said was super helpful for negotiating with the IRS. It won't solve everything, but having a clear picture of your actual tax situation across all those years could really help your attorney build a better case for you. Might be worth checking out before your attorney meetings on Monday.

Just wanted to follow up after trying taxr.ai for my own situation. I was initially skeptical about sharing my documents, but their security seems solid and the analysis I got back was way more detailed than I expected. They identified specific issues with my returns that I hadn't even realized existed. What really helped was the breakdown of potential penalties and interest calculations - gave me a realistic picture of what I might end up owing. Their assessment of which deductions were defensible versus problematic saved my attorney several hours of work, which probably saved me money in legal fees. My situation wasn't as serious as yours, but having everything organized before my attorney meetings made a huge difference in how quickly we could develop a strategy. Definitely worth it if you're trying to get a handle on multiple years of returns with issues.

After reading your situation, I wanted to mention Claimyr (https://claimyr.com). When I had tax issues last year, the most frustrating part was trying to actually speak with someone at the IRS. I spent DAYS on hold only to get disconnected. Then I found Claimyr and watched their demo (https://youtu.be/_kiP6q8DX5c) - they basically wait on hold with the IRS for you, then call when an agent is actually on the line. This might be really helpful for you after you talk with an attorney. My lawyer gave me specific questions to ask the IRS, but I couldn't get through for weeks. Claimyr got me connected with an actual IRS person within a few hours. In your situation, once your attorney gives you a plan, being able to quickly reach the IRS might help move things along faster. Not saying it fixes your legal issues, but the practical side of dealing with the IRS is its own nightmare, and this at least makes that part easier.

I need to eat my words. After my skeptical comment, I actually tried Claimyr because I was desperate to talk to someone at the IRS about my installment plan. I've been trying for WEEKS with no luck. I was absolutely convinced this would be a waste of money, but within 2 hours I got a call connecting me to an actual IRS agent. I didn't have to sit on hold, didn't have to keep redialing after disconnects, and actually resolved my issue in one conversation. For someone in your situation where time is critical, this could be really valuable after you've spoken with your attorney. Being able to quickly reach the IRS to discuss whatever resolution your attorney recommends could potentially save you weeks of anxiety and uncertainty.

One thing I haven't seen mentioned here - you should also get your financial situation in order ASAP. You'll likely end up on a payment plan with the IRS, and they'll want to see your current finances. Start gathering bank statements, credit card statements, loan documents, etc. Figure out your current income, expenses, assets, and debts. The IRS will use this information to determine what you can reasonably pay each month. Also, if you have any ability to start setting aside money now for the eventual tax bill, do it. Even if it's not enough to cover everything, showing good faith by having some payment ready can sometimes help negotiations. Depending on your situation, you might want to look into tax relief options like an Offer in Compromise, but your attorney will guide you on that.

PLEASE don't admit to fraud directly!!! I made this exact mistake and it turned a simple audit into a criminal investigation. Let your attorney do the talking. The language you use matters enormously. There's a huge difference between "I can't find documentation for these deductions" and "I made up these deductions." One is a documentation problem, the other is admission of a crime. Your attorney will know how to navigate this, but whatever you do, don't contact the auditor before speaking with an attorney, and don't volunteer information about intent. Let the attorney handle all communications - that's literally what you're paying them for.