Federal tax enforcement may be headed for significant change. With the Department of Justice (DOJ) moving to reorganize, and potentially dissolve, the stand-alone Tax Division, long-established processes for civil and criminal tax matters could shift in ways taxpayers and businesses need to understand. While the timing and scope of the restructuring remain uncertain, the implications for oversight, prosecution and consistency in enforcement are already raising important questions.
In a now-archived website page, the mission of the Tax Division was defined as, “to enforce the nation's tax laws fully, fairly and consistently through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system and promote the sound development of the law.”
In September, a memo describing a sweeping plan to reorganize the 90-year-old Tax Division was signed, but it remains unclear when the actions described in the memo will occur. The memo is essentially a blueprint for eliminating the stand-alone existence of the Division, which for decades has produced good results with high returns on a relatively low budget. Among other goals, remaining leadership positions will be evaluated for elimination and staff and tax lawyers will be transferred to already existing criminal and civil divisions within the DOJ. Given that the year is waning and the Division has been defunded in 2026, it is not clear what is ahead.
Karen Kelly, former acting assistant attorney general of the Tax Division co-authored an article on the American Bar Association (ABA) platform discussing the reorganization. In it, she describes the resources provided by the Tax Division to prosecute complex tax schemes through the U.S. Attorney’s Offices (AG) across the country, offering representation or legal advice as needed. The centralized nature of the expertise of the Tax Division, in concert with the 94 AG offices in the U.S., helped maintain uniform application and interpretation of tax laws.
Attorneys at the Tax Division are also involved with preliminary review of matters handled by the offices of the U.S. AG. Just some of their oversight involves certain search warrants and subpoenas, grand jury investigations regarding tax evasion and other tax crimes and other matters involving the Internal Revenue Service (IRS).
What is ahead?
Given recent shifts in enforcement priorities, it is possible that civil and criminal tax investigations may take a lighter hand going forward. Dissolving the Tax Division, a long-standing unit with significant institutional expertise, could affect the pace and scope of future tax enforcement. In the ABA article, the co-authors suggest there may be an uptick in matters related to immigration and tax offenses, and that prosecutions of those filing fraudulent tax credit claims may continue to go ahead. One thing seems clear, the reliable, stable method of pursuing federal tax laws is in for a big change.
Concerned about compliances? We can help
If you have reason to believe the IRS could be investigating your business, speak with one of our criminal tax attorneys. At Robert J. Fedor, Esq., L.L.C., we provide strong legal representation with the experience to advise you on options to help you avoid or deal with criminal charges. Contact our legal team today at 440-250-9709. We serve clients. internationally and Northeast Ohio, Chicago and New York City from our offices in Cleveland and Chicago.
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