A dangerous situation for a taxpayer to find himself in is a parallel proceeding. Parallel proceedings involve criminal investigations of certain taxpayers, entities or tax years while, simultaneously, related entities or other tax years are undergoing a civil audit. Any information collected by the Revenue Agent in the civil audit may be used in the criminal investigation without the taxpayer’s knowledge. Thus, a taxpayer may soon find himself the subject of both a criminal investigation and a civil audit.
Other examples of parallel proceedings involve one agency, such as the IRS, investigating the taxpayer and, unbeknownst to the taxpayer, sharing the information with another agency, such as the Securities and Exchange Commission.