While some may glaze over at the thought of another annual report, the latest report from the Internal Revenue Service Criminal Investigation Unit (IRS CI) offers a little something extra—a backward glance at 100 years of tax crime fighting since the inception of the agency in 1919.
With a tip of the fedora to history, let’s take a quick peek at some interesting points in the history of the IRS CI:
- The unit was formed on July 1, 1919, composed of six experienced Post Office Inspectors.
- While not quite G-men, those early agents did then what the agency does today—identify and prosecute criminal tax matters and tax fraud. “Public enemies” were sometimes taken down through IRS criminal investigations that took aim at ill-gotten gains, rather than outright criminal conduct. Gangster Al Capone was famously retired from a life of organized crime by the IRS.
- In the 1920’s, IRS agents investigated the credentials of attorneys and agents working with and around the Treasury. Corruption and graft were rampant among officials, judges, and politicians. Albert Fall was the first member of a presidential cabinet to go to prison for what became known as the “Teapot Dome Scandal.” In exchange for bribes, Mr. Fall secretly leased the oil production rights to the Teapot Dome Oil field in Wyoming to non-competitive bidders. The IRS eventually earned a $6,000,000 payday in taxes from the downfall of Mr. Fall.
- Prohibition gave the IRS more reasons to look within its own ranks for agents making bank on the side by working to ease the skids for bootleggers. Criminal tax frauds popped up involving taxes on gasoline, tobacco, and even theatre tickets.
- During World War II, the IRS participated in identifying and freezing assets of agents and citizens of foreign powers residing in the United States to stem the efforts of saboteurs operating in America.
- Throughout these decades, the agency continued to grow and expand. In the 1950’s, “Racket Squads” sought to run a list of 30,000 people suspected of being racketeers through an IRS criminal tax investigation. The agency also continued investigations into charges against its own members and continued to credential applicants who sought to work with the elite organization.
The 2019 report is an interesting dip into the history of an agency that continues to pursue a mandate to identify and prosecute criminal tax fraud today. Of important note to anyone who thinks the IRS lacks in mettle in 2019 what it lacks in budget? The agency has a 91.2 percent conviction rate for criminal tax matters prosecuted in 2019. Those six original Post Office Inspectors would be proud.
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