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Easier Access to Consumer Financial Information May Lead to More Criminal Tax Prosecutions

Table of Contents

    Date: 03/18/13

    Topic: Criminal Tax Representation

    U.S. intelligence agencies may soon have full access to a massive database that contains financial data on anyone who banks in the country.

    Already, financial institutions must report certain transactions which rise to the level of “suspicious customer activity” to the Treasury’s Financial Crimes Enforcement Network (FinCEN). The FBI has full access to this database, but intelligence agencies must currently make individual requests for information in FinCEN. This, however, will no longer be the case if the proposed plan is implemented.


    As a result, the intelligence community will have access to more raw financial data than ever before, which can aid them in spotting patterns related to terrorist attack plots or criminal schemes, but which will also invite heavy criticism from privacy advocates.

    The Bank Secrecy Act outlines safeguards designed to prevent the misuse of any such information obtained by federal agencies, but the new proposal may still raise concerns as to whether people could find themselves falsely accused, with their information in a file as a potential terrorist suspect. Indeed, there seems to be considerable freedom as to how the collected information will be used. Intelligence agencies can potentially hold on to the collected data for years, and once in their hands, there is no real way to determine if it is being misused, due to the classified privileges such agencies enjoy.


    Criminal tax investigations are on the rise, and your financial information is more accessible than ever.

    Combining this expanded access of financial information with the ever-increasing number of tax-related criminal investigations might cause concern to even the most diligent taxpayers.

    Around this time of year, the IRS likes to announce the names and details of taxpayers who were recently criminally prosecuted by the government for not paying their taxes. Coincidentally, there also is a noticeable uptick in criminal indictments and in convictions for tax crimes at this time of year. The findings are made publically available in the IRS Data Book.

    The Data Book reported that in 2011:

    • The IRS initiated 4,720 criminal investigations.
    • The IRS referred 3,410 for prosecution.

    Compare to 2001:

    • The IRS initiated 3,284 criminal investigations.
    • The IRS referred 2,335 for prosecution.

    Of those ultimately convicted, more than 81% of criminal tax fraud cases resulted in jail time in both 2011 and 2001, which shows judges are willing to hand out stiffer penalties than mere probation.

    Hiring a tax attorney early in the year can help you mitigate your risk of being targeted by the IRS when you file. If you have already been audited or subject to a criminal investigation, it is especially important to consult with a tax attorney who can help you explore your options and make a decision about the best course of action.

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