Despite facing a series of budget cuts, the Internal Revenue Service remains a massive agency, employing tens of thousands of workers nationwide. To keep itself organized, the IRS is split into divisions which each have separate responsibilities. For example, the Criminal Investigation Division (IRS-CI), which recently celebrated its hundredth anniversary, is responsible for investigating tax fraud, identity theft, money laundering, and other tax or financial crimes. Every year, IRS-CI releases a data report featuring detailed crime statistics, including conviction rates, investigations launched, prosecutions recommended, offenders sentenced, and other key stats around tax and non-tax offenses. Earlier this month, IRS-CI released its report for 2019, revealing what’s changed – and what’s stayed the same – since 2018. Below, our tax defense attorneys take a closer look at some of the highlights.
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According to the 2019 IRS-CI Annual Report, IRS-CI achieved an impressive conviction rate of 91.2% – the end result of more than 1,720 warrants executed, more than 2,000 special agents employed, and nearly 2,500 investigations initiated (including 1,500 for tax crimes and 985 for non-tax crimes).
Some of these figures are roughly consistent with IRS tax crime statistics from 2018, when IRS-CI achieved a conviction rate of 91.7% (versus 91.2% in 2019) and employed 2,019 agents (versus 2,009 in 2019). Other numbers, however, changed noticeably.
For instance, IRS-CI reported initiating 1,714 tax investigations and 1,172 non-tax investigations during 2018. Respectively, these numbers dropped to 1,500 and 985 in 2019. At the same time, 2019 saw a major spike in the number of warrants executed, which increased by more than 300 from the previous year (1,399 in 2018 compared to 1,726 in 2019).
Don Fort, Chief of IRS-CI since 2017, attributed the Division’s consistently high success rates to effective enforcement strategies. He explained, “We are working smarter using data analytics to augment good old-fashioned police work and find those cases that have the biggest impact on tax administration,” adding that the IRS is “leading the world in our ability to trace virtual currency in financial investigations while still working our bread and butter tax enforcement mission areas.” (For those who are familiar with the sometimes-rocky relationship between the IRS and the cryptocurrency industry, IRS-CI’s focus on virtual currency should come as little surprise.)
Here are a few other notable highlights from the 2019 report, with comparisons to the previous year:
To go back further in time, see the 2017 Annual Report (or read our overview here). For even more statistics, explore the 2018 IRS Data Book (which our tax attorneys also wrote about), or search the comprehensive IRS statistics database.
While laws and statistics have changed over time, IRS-CI’s high conviction rates have remained consistent, signaling serious danger for taxpayers who are facing fraud allegations. Even an initially civil tax audit can lead to an IRS criminal investigation if there are indicators of fraud, such as unfiled returns, multiple delinquent filings, improperly claimed tax credits, fictitious dependents, falsely inflated deductions, or other red flags for tax evasion.
If you have been selected for an IRS tax audit, or if you believe that you are in danger of being charged with tax fraud, it is critical to seek skilled legal help right away. With over 20 years of experience, including more than a decade of public auditing experience, the Tax Law Office of David W. Klasing provides strategic audit, appeals, and criminal tax defense representation throughout Northern and Southern California. To set up a reduced-rate consultation, contact us online today, or call (800) 681-1295.
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