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How to Negotiate with the IRS: Criminal Investigations

This is Part I of our three-part series on “How to Negotiate with the IRS.” In this video, I discuss the very uncomfortable prospect of a criminal investigation or grand jury indictment. The takeaway – every situation can be made better.

ANTHONY PARENT: Today’s show is going to be negotiating with the IRS.

CLAUDINE GINDEL: Is that possible?

ANTHONY PARENT: Is that possible?

CLAUDINE GINDEL: What a pleasant sound.

ANTHONY PARENT: I do though. I mean what do you mean? What else do you think I do?

CLAUDINE GINDEL: Yes. I was never sure actually. I don’t say it but now I know.

ANTHONY PARENT: That’s what it’s all about: “Negotiating with the IRS.”

CLAUDINE GINDEL: It does seem like a mountain to climb. It’s like Mount Everest.

ANTHONY PARENT: Well, I guess it is if you try to climb Mount Everest at once. But if you want climb Part One and I guess there was an avalanche that go. Okay, that’s bad analogy.

CLAUDINE GINDEL: So wait are you like

ANTHONY PARENT: Let’s forget about Mount Everest.

CLAUDINE GINDEL: You’re like a sherpa.

ANTHONY PARENT: Sure.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: That’s right. Piece by piece and knowing which parts to stay out of too

CLAUDINE GINDEL: Okay.

ANTHONY PARENT: There’s a danger area so get out of there. That’s not going to be any good.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: Get out. Sometimes it might be better off in Kathmandu or maybe back in sunny Acapulco

CLAUDINE GINDEL: In the lodge having a beer

ANTHONY PARENT: I think that could be better too. The first one that I want to talk about –the first one I thought: “Criminal Negotiations with the IRS” because that actually happens.

CLAUDINE GINDEL: So when you actually broke the law, you admitted you broke the law?

ANTHONY PARENT: No-no-no. I follow all

CLAUDINE GINDEL: A client

ANTHONY PARENT: A perspective client is alleged

CLAUDINE GINDEL: Okay.

ANTHONY PARENT: To have been accused of perhaps running afoul of a certain statute. We have a few different situations that come up. So somebody calls me and sometimes somebody’s talking them off the ledge and I mean that. We’ve had junior. She’s thought someone off the ledge. I mean we’re having a really wonderful job.

Somebody who thought his life was over, he called, he was in trouble with the IRS and he was a criminal. So I kind of go in and say: “Okay, let’s see if we can pull you out of the fire. I’ve done it before.”

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: This is one that didn’t go as well as I thought would go. He had some good facts. Not all good facts but he had some good facts. The thing is that: “For two years, he’s been trying to get to straighten down with the IRS.”

He hired this guy in California; some attorney guy in California to straighten that out. He goes: “Look. I’ve been doing all the wrong things with the IRS.” He got involved in the tax protesters groups and did a lot of structuring to sort of avoid and then writing letters to the IRS saying: “I don’t agree with whatever thing that you’re doing.” It’s better to have nothing, you know nothing of.

They gave the IRS all the stuff that they hate to see. So I called the prosecutor: “Hey. I’ve seen how far you guys are in this. Think of maybe we can pull this guy out? Maybe through a little while I’ll carry a disclosure? Clean it up; he’ll pay it get him this deal. What do you think about that?” No-no-no. This guy has been a pain in our butt for 12 years.

CLAUDINE GINDEL: Wow.

ANTHONY PARENT: We have the grand jury is out. We’re not going to stop him. So it’s like: “What are my negotiations there?” They’re going to do it and I guess so at this point, I tell them. Okay, it’s going to go through the grand jury. So we have some negotiations we could do at this point.

We can do some plead negotiations. If you want to do a plead negotiation, you wouldn’t want somebody really like me for that because the IRS knows I don’t go to a criminal trial.

CLAUDINE GINDEL: Right.

ANTHONY PARENT: They know that-that’s not what I do. We do a lot of the backend stuff. Some saying: “I could do something for you. I’m trying to intimidate them to taking this to trial but it’s a joke.” Don’t do it because it chooses our credibility. You don’t negotiate something that they can see right through. They’re not going to take you seriously.

CLAUDINE GINDEL: Right.

ANTHONY PARENT: It already seems like they’re trying to make an example of this day. You want to mess with this for 12 years? No, we’re not going to negotiate.

ANTHONY PARENT: That was really a thing.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: There was a lot of sieving anger in court and just like: “No. Finally, we got you. Now you magically see the light. No-no-no.” So I said: “I think you actually have grounds to fight this.”

Because he did prove to me he goes: “I hired this attorney years ago to say – hey look. I’m done fighting the IRS. I just sort of want to come clean and do everything.” He showed me the God awful amount of money he did paid this attorney. I saw what the attorney did. All he did was delay the IRS and frustrate them.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: So that’s not how to negotiate frustrating people. But the IRS didn’t know that and the IRS isn’t going to care at his part. It was like: “Well, what about 10 years before where you were sort of jerking us around?”

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: Well, it was a little too late for him. But where we did find some negotiations here is that all the sentencing guidelines are based on what you owe. So the IRS had him up to $3,000,000 something like that. We went and we fought.

The negotiation doesn’t point comes down to doing the hard work. We went pulled all bank account transcripts and pulled banks got profit and loss is down. So that by the time we’re done with it, we had them down to only $600,000.

CLAUDINE GINDEL: Wow.

ANTHONY PARENT: So that changed his sentence dramatically. We were talking going away for five years to a little over a year and a half.

CLAUDINE GINDEL: You get to work out. You get three square meals a day.

ANTHONY PARENT: Not that good. No.

CLAUDINE GINDEL: Well what do I say?

ANTHONY PARENT: The other thing to – is that he was able to get because of the confinement was a shorter time; he was able to stay closer to home.

CLAUDINE GINDEL: It’s a tax crime. You’re not going to hang out with hardened criminals.

ANTHONY PARENT: I would like to say it’s not as bad as prison but its prison.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: Yes, it’s a minimum security prison but it’s surrounded by a maximum security prison. Yes. There it is. We did negotiate. We had a bad situation but we made it better.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: Because if he just put up his hands and continue to screw around or something, he could be doing five years. He could be owing a lot more but we limited it. Say look man. It’s a year and a half. You’re going to be out soon.

I think his goal to be out for his daughter’s graduation. So they have the date settled and: “Hey. We’re going to have a party and I’ll be out of prison.” So that really changes things dramatically.

Otherwise, if you’re going to be involved in criminal negotiations, I mentioned this before on a podcast where you’re going to be doing more than where we said: “Really all we have is this number that we’re going to try to reduce this number of what he owes for these sentencing guidelines.”

If you want to negotiate seriously with the IRS on for something criminal, you’re going to need someone to go to trial. They know who does. That’s really something where that’s where you would want to find an attorney and mention some of my friends before who could go ahead and do that.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: We’ll have them on the show shortly.

CLAUDINE GINDEL: I assume you would work hand and hand with that because the people that go to trial aren’t necessarily as good as what you do. So you guys do the work in the back and then they go to trial.

ANTHONY PARENT: That’s right.

CLAUDINE GINDEL: Okay.

ANTHONY PARENT: We go to the work in the back and we sort of exposed the IRS. The IRS, who gets in charge of coming up with numbers and where they come up with – it’s sort of chaotic. It’s a very difficult place to get something done correctly.

If you’re somebody who’s confident who’s difficult to do something correctly. So we’re finding the right numbers a lot of times. That’s a lot of our negotiations to just come simply down to doing work no one else is willing to do – all that hard back work that’s tedious and long hours.

CLAUDINE GINDEL: Yes. They said that somebody has to go and pull all his bank accounts, I was like: “I get mad if my checking account doesn’t balance to the penny. I can’t imagine going through 12 years in someone else’s finances with a fine tooth comb.”

ANTHONY PARENT: What’s this for? What’s this for? I don’t remember. Okay, well we have to classify that. Okay, I don’t remember pile. Then, coming together: “You’re talking about a tremendous amount of time.” So what’s the alternative? If we’re not going to do that hard work, what’s the alternative? Come on. Luster, yelling but they’re not going to be impressed by that.

CLAUDINE GINDEL: No especially in a case like this where both sides were emotional. The IRS was like emotionally involved in this case.

ANTHONY PARENT: They really took it personally and you could tell. They had a little chip on their shoulder. The judge was very nice. She was very even about it I thought. But she’s like: “Yes, okay. I’m going to go to the guidelines. Luckily, we have our numbers where they were so we save him a ton of time.”

It’s a huge difference being in prison for a year and a half versus five years. Especially, what you have to realize with tax crimes – you’re probably going to go to prison during your prime earning years. You’re not going to go when you’re 20.

CLAUDINE GINDEL: That’s true.

ANTHONY PARENT: You’re not usually when you’re 70. Usually if you get convicted, you won’t actually go. Really when they are going to send you is that time that you need to be on the outside making, putting together some real wealth. That’s why there’s so much at stake.

Now I have a good story about some criminal negotiation because it does happen when we’re able – we were working with somebody on a voluntary disclosure. They were banking with HSBC unreported account – the whole big news everything like that.

We submit our voluntary disclosure to the IRS saying: “Hey we have someone who wants to come clean. We get a call from the Department of Justice.” Hey. Guess who I have here? We’ve been investigating this plan of yours. Okay, so what do you want to do? Well, we’ve got a lot of people. That’s basically what they said. We have a lot of other account holders.

Your guy came clean, raise his hands – we’re just going to follow him a little bit more, get us this-this-this and this and we’ll move him out of our investigation. Because somebody acted quick enough, whatever made them give a call to us that day to say: “You know what? I’m getting a bad feeling.” Someone’s getting a bad feeling. I wanted to just take care of this.

CLAUDINE GINDEL: A black car is following me around and making me nervous.

ANTHONY PARENT: We were able to getting in I mean right in time. They said: “Okay, yes. We have a lot of other people we want to prosecute.” That’s really a lot of the game. They have a lot of other people to go for so why go for this person who didn’t know they were under investigation.

CLAUDINE GINDEL: Right.

ANTHONY PARENT: Came clean. Hey they came clean. So they get it, they’re going to follow the rules. So that saved them. That person probably avoided three or four years of prison and probably a 4 or $5,000,000 fine. That was the very valuable day, calling that day as opposed to waiting say a week. That would have been one expensive week.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: There was really not many good ways around those facts. It just was basically the IRS says we can’t process all these cases that we were people have been breaking the law.

CLAUDINE GINDEL: Right. So what I’m seeing here too with both stories. The story of the moral is: “Even if you don’t agree with the government and you don’t like to pay taxes and you want to fight the good fight, maybe lying about things is not the way to do it.” It seems like you can’t trick the IRS.

ANTHONY PARENT: You can for a while until you can’t.

CLAUDINE GINDEL: Right.

ANTHONY PARENT: They eventually win or you die before they win I guess.

CLAUDINE GINDEL: Right.

ANTHONY PARENT: It takes some years to get you – 10 years of doing the wrong thing. Really in both cases, you had people doing the wrong thing for 10 years.

CLAUDINE GINDEL: Right.

ANTHONY PARENT: But is it going to be 10 years that’s something happens or 12 years or 15 years. What year is it going to be and once it happens, that’s it. Your entire life has just completely changed. All the wealth that you’ve been saving, everything that you’ve been working on is now at risk.

Of course, they’re going to charge your wife with the crime you file of course. Regardless of what your wife know or didn’t know just to put a little extra pressure on you and make that little bit more miserable.

CLAUDINE GINDEL: Right. Why can’t I think of the famous mobster who murdered a 100,000 people but they busted him on a tax crime.

ANTHONY PARENT: Al Capone

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: You know what? Al Capone’s case is so nasty because the reason why is because they totally invented a whole standard of how they got Al Capone was something through – they actually didn’t get his numbers all the numbers. I was reading and I was watching one of something that was semi-fictional.

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: We’ve got his books and we know how much money his evading in taxes. No-no-no. That’s not how they did it at all. They did something called the lifestyle lie. They said: “You’re living so high on the hub, you must be evading taxes.”

CLAUDINE GINDEL: Yes.

ANTHONY PARENT: Which is just somewhat I just have a problem with. Well, what if you’re really good at party hunting?

CLAUDINE GINDEL: It’s a whole another podcast.

ANTHONY PARENT: So that is something that is the easier thing to get somebody on tax evasion. A lot of times, people we charge with a few different crimes and then they’ll plead to the tax evasion.

CLAUDINE GINDEL: Yes. So it’s possible. It is possible that we’re learning to negotiate with the IRS.

ANTHONY PARENT: Every situation could be made better. That’s what we tell people. No matter what it is, it always can be made better.

CLAUDINE GINDEL: I like that.