What really happens when a tax case goes criminal? In this episode of the Tax Rep Network Podcast, host Eric Green sits down with former federal prosecutor John Mulcahy—now in private practice at Nixon Peabody—to pull back the curtain on how criminal tax cases are built, reviewed, and prosecuted.
Drawing on over a decade of experience at the U.S. Attorney’s Office and the DOJ’s tax division, John walks through the lifecycle of a criminal tax case—from initial IRS investigation to DOJ review, grand jury proceedings, and ultimately, prosecution decisions. Along the way, he explains why the DOJ still plays a critical gatekeeping role and how consistency in tax enforcement is maintained nationwide.
But this conversation goes beyond process. Eric and John dig into the real-world dynamics that shape outcomes: the discretion of Assistant U.S. Attorneys, the strategic decisions behind charging (or declining) a case, and the often misunderstood role of “willfulness” in tax crimes. Through candid stories and behind-the-scenes insights, they highlight how cases can turn on a single issue—especially intent—and why listening closely to clients can make or break a defense. Now on the defense side, John also shares what it’s like transitioning from prosecutor to advocate—working with clients in crisis, navigating complex facts, and seeing firsthand that every case has more than one side.
If you’re a tax professional, attorney, or anyone curious about how criminal tax enforcement really works, this episode offers a rare insider perspective you won’t hear anywhere else.
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 With John Mulcahy
John’s Background And Transition To Private Practice
In a recent conversation, Tax Attorney Eric Green sat down with former federal prosecutor John Mulcahy to discuss what really happens behind the scenes in criminal tax investigations, how the Department of Justice approaches tax enforcement, and what it’s like to transition from prosecuting cases to defending taxpayers in private practice.
Mulcahy recently joined Nixon Peabody after spending nearly twelve years as a federal prosecutor. His career included four years in the DOJ Tax Division and nearly eight years at the U.S. Attorney’s Office in Boston handling a wide range of tax fraud cases involving individuals, corporations, payroll taxes, wire fraud, and theft of government funds.
One of the most interesting parts of the discussion centered around how criminal tax cases actually move through the federal system. Many tax professionals assume the IRS independently handles criminal investigations, but Mulcahy explained that the DOJ still plays a critical review role even when local Assistant U.S. Attorneys (AUSAs) are heavily involved early in an investigation.
According to Mulcahy, the reason for DOJ oversight is consistency. The government wants “uniform tax enforcement across the country,” meaning cases prosecuted in Connecticut should generally follow the same standards as cases prosecuted in California or Kansas.
The conversation also highlighted the tremendous discretion prosecutors often have. While DOJ reviews cases centrally, local AUSAs who are deeply invested in a matter may still influence how aggressively a case proceeds. Mulcahy noted that DOJ frequently allows local prosecutors flexibility as long as they are willing to fully own the outcome of the case.
Green shared a compelling real-world example involving a police officer who legally bought and sold firearms online. An IRS auditor flagged large bank deposits and referred the matter for criminal investigation, believing there was fraud. However, after examining the taxpayer’s cost basis, it became clear that the actual tax owed was relatively minor and there was little evidence of criminal intent. Despite pressure from a local prosecutor, the case was ultimately dropped.
That story led naturally into one of the most important concepts in criminal tax law: willfulness. Tax crimes generally require proof that the taxpayer intentionally violated a known legal duty. Without criminal intent, even significant tax mistakes may not support prosecution.
Mulcahy emphasized that transitioning into private practice has reinforced how important it is to truly listen to clients rather than immediately jumping to conclusions. He explained that every case has another side and that people’s lives and decisions are often far more complicated than they initially appear.
Green illustrated this point with another case involving an employer who failed to pay payroll taxes for undocumented workers. Initially, the government believed the case was straightforward tax fraud. However, after carefully listening to the client, Green discovered the taxpayer genuinely believed he had “paid the taxes” because he reported the income on his personal return and paid income tax on it. That misunderstanding ultimately helped defeat the criminal case because the taxpayer lacked the specific criminal intent necessary for prosecution.
The discussion offered a rare inside look at the realities of federal tax enforcement and underscored a critical lesson for tax professionals: criminal tax cases are often decided not just by numbers, but by intent, credibility, and the ability to fully understand a client’s story.
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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.
