By Charles Hack
If Charles Hyacinthe comes knocking at your door, it’s about the money. Hyacinthe, a special agent for the criminal investigation division of the Internal Revenue Service, has the job of making sure Uncle Sam gets his share, from those who have decided they are not going to pay theirs. With 2005 taxes due, Hyacinthe told members of the Nieuw Amersfort Community Association how to keep on the right side of the law, at their Jan. 24 meeting at St. Paul’s Church, at East 40th Street and Avenue J. The criminal division is one of two branches of the IRS. The other is the civil division that provides advice, processes tax filings, and audits taxpayers. Taxpayers should choose their preparers with the same care as choosing a doctor, insisting on good credentials, plenty of experience and sound references. And be warned of scam artists and gougers in the tax business who may promise huge refunds. “Trust me on this,” Hyacinthe said. “If something does not sound right, it probably is not right.” The special agent also warns to check the tax deductions claimed by the preparer before signing anything. “If it is not true, don’t put it on your tax return,” warned Hyacinthe. “Your signature is on it.” Another reason for not using fly-by-night tax preparers is they are being entrusted with all the information that can be used for identity theft, including name, address and social security number. “The preparer has all he needs to become you,” he said. “We have seen it.” Anyone who believes they are a victim of identity theft can contact the federal hotline at (877) 438-4338. They should also file reports with their local precinct, the credit card company and the credit card bureau. “Our job is to determine if a crime is being committed,” said Hyacinthe, a graduate of Qeensborough Community College, who has been with the office for 15 years. If so, the case gets referred to the U.S. attorney’s office for prosecution. Generally, the IRS considers knowingly failing to file taxes and filing illegally obtained money to be a criminal act. At the same time, the government requires all income, even if it was illegal, to be reported. This includes money gained from prostitution, unlicensed gambling or even laundering drug money. Hyacinthe says that there are many informants who are prepared to notify the IRS of illegal activity. These include neighbors, ex-lovers, friends and collared accomplices. Investigators will often start their investigations of white collar and organized crime with lower level players in a crime ring or wayward corporation, then move up the food chain. “There is nothing like the threat of going to jail to get someone to start talking,” said Hyacinthe. Recently, an accounting firm, KPMG was fined $456 after a settlement for creating $11 billion in phony tax shelters, defrauding the IRS of some $2.5 billion between 1996 and 2003. Federal prosecutors agreed to settle, rather than indict the company, because it was in the better public interest, he said. “If that company had been indicted, thousands of people would have been out of work.” The companies for whom the shelters were created are now being investigated. “All the people who have benefited from that have issues with us now,” said Hyacinthe. The IRS also investigates charges of conspiracy to launder money, especially of money gained through narcotics. Depositing drug money into a regular account is considered money laundering. One red flag for the IRS is where the cash deposits into an individual’s bank account exceeds earned income. The IRS helps to fight terrorism, investigating the flow of suspicious money, from charitable organizations to pay for, for example, flying lessons in Florida. “Where there is money there are IRS agents sniffing around,” said Hyacinthe. Many of these investigations go beyond the U.S. borders, to places countries traditionally don’t ask questions about the source of the funds, such as Switzerland or the Cayman Islands. “If there is a terrorism indication, countries are a lot more willing to cooperate with us,” he said. Hyacinthe says that the difference between criminal and civil violations is generally a question of intent. Forgetting to put something in a tax return would usually be treated as a civil case. The tax paper must repay the money owed to the IRS, with any penalties and interest. To be considered a crime, there must be “willful intent” to violate the law. It is up to investigators like Hyacinthe to decide if the person or company has withheld taxes knowing that they were breaking the law. To determine this, they look to see if the suspect has created false documents such as phony invoices, or lied to the auditors or investigators – which is in itself is a crime. “Our job is to prove that it was not an honest mistake,” said Hyacinthe. He also said that there are various myths about the IRS laws that people try to use when defending trying to explain why they failed to pay their taxes. These “frivolous arguments” include ideas that paying tax is voluntary, wages are not income, that the dollar sign is meaningless, and that taxes are illegal under the Constitution. The investigator also warned anyone who might be unhappy with the war in Iraq, not to withhold taxes as a protest to how money is being distributed. This would not sit well with the IRS. “There is no legal way to do that,” Hyacinthe said. The correct way to protest is through the ballot box, he said. To report someone suspected of committing tax fraud contact (800) 829-0433. A good tip could lead to a reward — of up to 10 percent of the amount recovered. There is a cap of $100,000. Anyone who thinks that reporting problems amount to snitching should think again. “You are paying your taxes, so should your neighbor,” said Hyacinthe. Anyone who is under 37 years old and wants to make a career out of helping the treasury to keep its coffers filled, can apply for a job at the IRS. They should have at least 15 units of accounting credits. Federal officials undergo heavy screening and background checks and train at the law enforcement center. The salary scale begins at $47,000 but rises rapidly. Then there then is the excellent pension. It’s the 401K of tax-free savings. For more information, visit www.irs.gov.
