In Part 2 of this deep-dive series, Eric Green is joined again by former U.S. Department of Justice Tax Division attorney John Mulcahy for an unfiltered look at what really happens behind the scenes in a criminal tax case.
This episode pulls back the curtain on the critical decision-making process inside the government—from how cases are reviewed and approved for prosecution to the high bar prosecutors must meet under the “reasonable probability of conviction” standard. John walks through what happens when IRS agents submit a case, how DOJ attorneys analyze evidence, and why some cases get sent back for further development before charges are ever filed.
Eric and John also tackle one of the most important (and misunderstood) opportunities for defense attorneys: the pre-charging conference with the DOJ. They explain why these meetings matter, how they can change the trajectory of a case, and what prosecutors are really looking for before deciding whether to move forward with criminal charges.
The conversation then shifts to strategy—covering proffers, reverse proffers, and how both sides use these tools to either build or defend a case. You’ll hear real-world examples of how these interactions play out, including when they lead to declined prosecutions… and when they don’t.
Finally, the episode explores the realities of sentencing, restitution, and negotiation dynamics—breaking down how numbers drive outcomes, why simplicity matters in front of a jury, and how acceptance of responsibility can significantly impact a client’s future.
Whether you’re a tax professional, attorney, or advisor, this episode delivers practical insight into navigating criminal exposure, advising clients effectively, and understanding how the government thinks at every stage of a case.
If you haven’t listened to Part 1 yet, start there—this is a continuation you won’t want to miss.
Want to contact John? Email him at: jmulcahy@nixonpeabody.com.
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Watch the episode here
Listen to the podcast here
Inside A Criminal Tax Case Part 2 With John Mulcahy
What really happens behind the scenes before someone is charged with a criminal tax offense?
In Part 2 of the Tax Rep Network podcast series on criminal tax investigations, tax attorney Eric Green sat down with former DOJ Tax Division prosecutor John Mulcahy to pull back the curtain on how federal criminal tax cases are investigated, reviewed, and ultimately prosecuted.
Mulcahy, who recently transitioned from federal prosecution to private practice at Nixon Peabody, explained that one of the biggest surprises after leaving government service was how naturally he adapted from being a prosecutor to becoming a defense attorney. After spending more than a decade at DOJ Tax and the U.S. Attorney’s Office, he now uses his insider knowledge to help taxpayers and practitioners understand what is really happening behind the scenes during an investigation.
A major focus of the discussion was the DOJ Tax Division review process. Many tax professionals assume that once IRS Criminal Investigation recommends prosecution, charges are inevitable. Mulcahy explained that is not necessarily true. Before a tax case can move forward, DOJ Tax attorneys in Washington must independently review the evidence and determine whether there is a “reasonable probability of conviction,” the standard required under the Justice Manual.
That review process can be extensive. DOJ attorneys examine investigative reports, supporting exhibits, witness interviews, and legal theories before authorizing prosecution. In some cases, DOJ Tax sends the matter back to IRS special agents for additional work if they believe evidence is missing or certain witnesses still need to be interviewed.
One of the most valuable insights from the episode involved taxpayer conferences — meetings where defense counsel has the opportunity to persuade DOJ not to prosecute. Green emphasized that many practitioners underestimate how effective these conferences can be. Mulcahy agreed, explaining that prosecutors take them seriously because charging someone with a federal felony is a life-altering decision.
The conversation also explored the role of restitution in criminal tax cases. While many taxpayers believe criminal resolution ends their IRS problems, Mulcahy explained that restitution often becomes a separate civil assessment that the IRS can continue collecting long after the criminal case ends. Since changes enacted in 2010, restitution assessments can be enforced civilly by the IRS, and unlike traditional tax liabilities, those amounts generally cannot be compromised through an Offer in Compromise.
Another fascinating topic was how prosecutors think strategically about jury trials. Mulcahy noted that successful white-collar prosecutions depend heavily on simplicity. Prosecutors intentionally focus on straightforward theories and easily understandable tax issues because overly complicated cases can confuse juries and create unnecessary risks at trial.
The episode wrapped with a discussion of “proffers” and “reverse proffers,” where defense attorneys and prosecutors exchange information in hopes of resolving cases before indictment. Both Green and Mulcahy emphasized that early cooperation and open communication can often lead to better outcomes for taxpayers while saving government resources.
For tax professionals, the episode offers a rare insider look at how criminal tax cases are actually built, reviewed, negotiated, and resolved — and why understanding the government’s perspective can make all the difference when representing a client under investigation.
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About John Mulcahy
John T. Mulcahy is a member of the firm’s Litigation Department and Government Investigations & White Collar Defense practice group. John is a trial lawyer and has more than 15 years of experience as a federal and state prosecutor in high-stakes matters involving tax, healthcare, public corruption, money laundering, extortion, obstruction of justice, and bribery. He has tried more than 40 civil and criminal cases in federal and state courts. In addition, before becoming a prosecutor, John was in private practice at major international and regional law firms.
