In the realm of federal tax enforcement, the IRS’s Criminal Investigation Division (CID) is known for its extraordinarily high conviction rate on the cases it refers to the Department of Justice for prosecution—at around 90%. In fiscal year 2024, IRS-CI reported 1,571 convictions, a figure that reflects both the agency’s laser-focused targeting of high-risk cases and its sophisticated criminal tax investigative methods. During that same period, IRS-CI investigations uncovered approximately $2.12 billion in tax fraud and an additional $7.03 billion in other financial crimes. These numbers underscore the alarming and severe consequences that tax evasion and related offenses can entail.
Suppose CI chooses to refer your matter for criminal tax prosecution. In that case, given the 90% conviction rate, the sooner you get in touch with an experienced dual licensed Tax Attorney & CPA like us at the Tax Law Offices of David W. Klasing, the better your chance of utilizing a defense strategy in the hopes that criminal tax charges will not ultimately be sought if you work honestly and diligently to get back into compliance. Our strategic approach of simultaneously handling a mix of civil and potential criminal tax controversies keeps the IRS on its toes.
If you need to defend yourself against a criminal tax investigation/allegations of criminal tax wrongdoing or simply have questions about how to make the most advantageous use of the Tax Code for your business or your family, rely on the award-winning dual-licensed Criminal Tax Defense Attorneys and CPAs for unparalleled client service with a focus on risk mitigation and wealth preservation. At the Tax Law Offices of David W. Klasing, we focus on high-risk civil and criminal tax controversies, always standing ready to offer our unmatched experience spanning nearly three decades to the residents and businesses of California and beyond. To learn more about our services, call us today at (888) 640-3408 or schedule a reduced rate initial consultation online here.
A New Era of Enforcement Powered by Technology
In recent years, there has been a dramatic transformation in IRS enforcement. Boosted by increased funding from the Inflation Reduction Act of 2022, the IRS has expanded its workforce to 3,474 employees—comprising 2,290 special agents and 1,184 professional staff members. Although this is the highest staffing level in nearly a decade, it still falls short of the over 4,000 employees seen in fiscal year 2010.
The IRS has dramatically increased its audits and investigations of high-income taxpayers in the last decade and even introduced a team of tax collectors explicitly aimed at targeting fraud and underpayment of taxes by the wealthy. While their official name is the “Global High-Wealth Industry Group,” they are informally known by those in the tax industry as the “Wealth Squad.” This renewed investment has allowed the agency to shift its focus from lower-income, simpler cases to more complex investigations involving high-net-worth individuals, large corporations, and intricate partnership structures.
Furthermore, advanced technologies such as artificial intelligence, machine learning, and digital forensics now play a pivotal role in the IRS’s enforcement strategy. These tools enable the agency to analyze millions of tax returns, identify industry outliers, and generate detailed risk profiles. For instance, the IRS uses AI-powered income matching to compare data from employers, banks, and other third-party sources with what is reported on tax returns. This capability not only improves efficiency but also ensures that cases with overwhelming evidence of fraud or noncompliance are prioritized for prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation/prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney-Client Privilege and Work Product Privileges that will prevent the very professional that you hire from potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for voluntary disclosure.
As uniquely qualified and extensively experienced criminal tax defense tax attorneys, Kovel CPAs, and EAs, our firm provides a one-stop-shop for efficiently achieving optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
Enforcement Milestones and Notable Cases
IRS’s heightened enforcement efforts have led to significant milestones. In fiscal year 2024, the IRS achieved its first sentences in syndicated conservation easement schemes—a practice where land values are often fraudulently inflated to secure unwarranted tax deductions. In one landmark case, an accountant and an attorney were sentenced to 25 and 23 years in prison, respectively, after orchestrating a scheme that involved over $1.3 billion in conservation easements and resulted in $450 million in losses to the IRS. Additional defendants have also pleaded guilty, reinforcing the agency’s determination to crack down on abusive tax shelters.
Moreover, the IRS made history by indicting an individual solely for failing to report or underreport cryptocurrency earnings. One case involved a taxpayer who sold roughly $4 million in Bitcoin and neglected to report over $650,000 in related gains on his 2018 and 2019 tax returns. Similarly, digital forensic efforts were crucial in the investigation of crypto exchange operator Binance, where the company’s former CEO pleaded guilty to Bank Secrecy Act violations. Binance ultimately agreed to pay over $4 billion in penalties after it was revealed that the exchange facilitated transactions involving sanctioned jurisdictions and even known terrorist organizations.
IRS Commissioner Danny Werfel has emphasized that these technological advancements are a game changer. “We are committed to staying at the forefront of technology so our agents can keep pace or stay a step ahead of criminals and leverage our skills to protect the U.S. tax system,” he stated. This commitment not only deters intentional tax evasion but also means that even minor discrepancies can trigger a thorough investigation.
Contact the Tax Law Offices of David W. Klasing If You are Worried About IRS-CID’s High Conviction Rate
For taxpayers, the high conviction rate is a stark warning. If you are subject to a CID investigation and criminal tax charges are filed, the likelihood of conviction is exceedingly high—approaching 90%. The consequences extend well beyond criminal tax penalties. Being the subject of a CID investigation alone can result in severe collateral consequences, including reputational damage, loss of professional licenses, and long-term legal disabilities. Whether the conviction occurs through plea or trial, the fallout from a criminal tax offense can be life-altering.
Representing a taxpayer or entity that is the subject of a criminal tax investigation requires specialized education, training, and experience, as well as a keen understanding of the internal investigative procedures of the IRS and California taxing authorities. At the Tax Law Offices of David W. Klasing, we pride ourselves on our long track record of success in this area. Often, a general criminal defense lawyer or an accountant may assume that little can be accomplished prior to the indictment of the client. In fact, the opposite is true—there is much that can be done to defend a subject of a criminal tax investigation, eggshell, or reverse eggshell audit before indictment. In our opinion, the highest odds of avoiding criminal tax prosecution are achieved when we are retained early in the investigation stage of an actual or even a potential criminal tax issue. Ideally, the criminal tax defense attorney is engaged early for their knowledge of tax law and theory and their familiarity with the internal workings of the Service. The goal is to resolve the criminal tax investigation or high-risk audit without prosecution and without the highly negative publicity that typically accompanies an indictment. Call us today at (888) 640-3408 or schedule a reduced rate initial consultation online here.
