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Former IRS employee pleads guilty to wrongful use of tax information

In an ultra-competitive job market, seeking to gain an edge is understandable. In Texas and across the country, job applicants are very familiar with the pressure to set yourself apart from the pack.

But sometimes there can be a conflict of interest between an employee's old job and the one he or she is pursuing. The employee may be tempted, for example, to disclose something to the prospective employer that the employee is privy to only because of his or her current job.

When that type of authorized disclosure happens, the result can be white-collar crime charges. In a recent case involving the unauthorized disclosure of income tax data, a former IRS employee has pleaded guilty to such an offense.

The case involved an IRS employee who was seeking a job with Commerzbank AG, a bank based in Frankfurt, Germany. The man used his position at the IRS to provide information about a tax fraud audit to Commerzbank. He worked on that audit, prosecutors said, and eventually negotiated a very substantial settlement with the bank.

Not long after negotiating that settlement, the man was hired by Commerzbank. He position was tax director.

Prosecutors in the U.S. attorney's office in Manhattan thought that this arrangement didn't pass what is colloquially known as the "smell test." It looked like the man was misusing his old job in order to get the new one by cutting Commerzbank a break on the tax fraud investigation of allegedly unreported income.

The man pleaded guilty yesterday to two separate criminal counts. The first was to having a criminal conflict of interest during the tax fraud investigation. The other count was illegal disclosure of information about federal income tax.

Sentencing is scheduled for June 11. Under federal sentencing guidelines, the man could receive up to five years in prison on each count.

Source: "Ex-Commerzbank Offical Admits to Passing IRS Secrets," Bloomberg, Bob Van Voris, 3-12-13

To learn more about our practice, please visit our section on criminal tax matters.

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