International Tax Crime—How the IRS Pursues Global Tax Fraud

The Criminal Investigation unit of the IRS (IRS-CI) collaborates with international partners to identify, investigate, and prosecute a variety of crimes around the world.

On a global scale, tax compliance is critical not only for the collection of revenue due, but to create pressure and cut funding to organizations that traffic in drugs, humans, and terrorism. While offshore tax evasion and money laundering is carried out by individuals and corporations, these activities also fuel dangerous multi-national gangs, organizations, and nation-state actors.

According to its 2019 Criminal Investigation Annual Report, the IRS has special agents in place in 11 countries including Dubai, England, Australia, Germany, Panama, The Netherlands, England, Canada, Columbia, China, and Barbados. Additionally, the IRS partners with the Joint Chiefs of Global Tax Enforcement (J5). The J5 consists regions consist of The Netherlands, Australia, the United Kingdom, the US, and Canada.

The JF works to combat “transnational tax crime through increased enforcement collaboration. We will work together to gather information, share intelligence, conduct operations and build the capacity of tax crime enforcement officials.”

Pared down objectives of the J5 include:

• Develop strategies to gather intelligence
• Drive processes to create and carry out joint investigations
• Collaborate on communications to revisit objectives

International Operations (IO) units of the IRS work independently and with other J5 units. Some investigations brought to fruition in recent years include:

• By pursuing UniCredit Bank AG, a financial entity headquartered in Munich, IRS IO was able to obtain a guilty plea for violation of the International Emergency Economic Powers Act (IEEPA). UniCredit Bank AG was alleged to have laundered “hundreds of millions of dollars through the U.S. financial system on behalf of an entity designated as a weapons of mass destruction proliferator and other Iranian entities subject to U.S. economic sanctions.”
• Walmart ran afoul of the IRS by failing to attend to corruption that attended its international expansion into China, Brazil, Mexico, and India. Walmart Inc. and a wholly owned subsidiary agreed to pay $137 million in criminal fines to resolve government allegations.
• A $10 million penalty against private Swiss bank LLB Verwaltung AG resolved IRS allegations of tax crimes using foreign bank accounts to conceal assets required to be reported to the US.

In partnership and through its regional agents, the IRS continues to be a driving force in international tax compliance even as domestic enforcement declines due to chronic congressional underfunding. Best bet? Stay off the radar by ensuring your corporate or personal accounting can be defended if scrutinized by an IRS audit or investigation.

Trusted tax attorneys in Cleveland and Chicago

Serving clients nationwide from offices in Cleveland and Chicago, the law firm of Robert J. Fedor Esq., LLC delivers experienced legal guidance on defense on criminal tax matters, tax litigation, and other tax challenges.  Contact us or call 800-579-0997 today.