The United States government takes tax matters very seriously. In addition to having an agency dedicated to handling tax matters, there are also agents that focus specifically on investigating criminal tax matters. The Internal Revenue Service (IRS) recently released a report that covers the matters investigated the previous year, referred to as the Criminal Investigation (CI) 2016 Annual Report.
What is the IRS-CI? The IRS-CI is a division within the IRS that is focused on investigating legal source tax crimes. The annual report provides some guidance on the focus of the investigative unit, noting that priorities included abusive return preparer fraud, tax scheme fraud, identity theft fraud, cyber-crimes and public corruption.
What does the report find? There were 3,395 investigations initiated in 2016, 2,744 prosecutions were recommended and 2,699 sentences were issued.
The top areas investigated include:
- Money laundering. There were 1,201 investigations in this area, including a man that was sentenced for shipping illegal drugs and then attempting to “clean” the dirty money through various purchases and transactions.
- Narcotics. 788 investigations, including a gang member who faced multiple racketeering charges and a drug trafficker for conspiracy and money laundering.
- Identity theft. 573 investigations, including a food stamp conspiracy and income tax refund scheme.
- Bank Secrecy violations. 504 investigations conducted in 2016. The agency also notes that certain title insurance companies will be required to identify those who purchase high-end residential real estate with all cash transactions in an effort to further track potential violations.
- Questionable refunds. 495 investigations, including filing false tax claims and obstructing the IRS.
Although the rate of investigations initiated by the agency has dropped by more than one-third in recent years, it is important to note that if an investigation is initiated, it will be completed. A recent publication by Forbes notes that once a business has received notification that an investigation has commenced, the completion rate is 100 percent.
Anyone that is accused by the IRS of criminal activity should take the accusations seriously and promptly contact an attorney. An experienced tax lawyer, like those at Robert J. Fedor, Esq., L.L.C., can review the accusations and better ensure your legal interests are protected.