Damico & Stockstill, Attorneys at Law

Why is a federal tax agency involved in money laundering cases?

Personal and business income is taxable by federal, state and local governments. Louisiana taxpayers try to reduce tax burdens by taking advantage of all possible deductions and credits. The Internal Revenue Service is also well aware people try to cheat the tax system, particularly when funds are unlawfully obtained.

Money laundering is a white collar crime that involves hiding illegal income by recycling it through legitimate operations. This serves two purposes. Dirty money is cleaned and criminals avoid paying taxes.

The transactions that take place to disguise criminal activities and ill-gotten gains are often elaborate. Funds may be moved multiple times, inside and outside the country, to accomplish the goal. IRS agents and other investigators devote a considerable amount of time tracking the flow of funds to uncover and prove allegations of money laundering.

Tax evasion charges are often filed alongside money laundering charges. The IRS gets involved because all income, no matter how it's earned, is taxable. It's against the law not to report income from a criminal enterprise as much as it is from any other source.

Prosecutors are reliant on tax investigators' findings to convict defendants. Don't assume government investigators are any less prone to mistakes than other people. Criminal defense attorneys are aware the price for the government's error can be paid by unfairly accused defendants, unless mistakes are detected and used to a client's advantage.

Police and government investigations also must be conducted without violating a defendant's rights. A right's violation presents another opportunity for a defense attorney to challenge the validity of charges against a defendant.

The criminal legal process is intimidating for many defendants. From a defendant's position, it's easy to assume people who work within that system day after day -- police, prosecutors and investigators -- always do everything right. Verifying proof and challenging procedural and evidential flaws can improve a defendant's legal standing.

Source: Internal Revenue Service, "Overview - Money Laundering," accessed April. 03, 2015

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