The Internal Revenue Service recently released its annual report on criminal enforcement in fiscal 2018, which ended September 30. The announcement touted that the Criminal Investigation team is using “cutting-edge technology combined with sophisticated investigative work.”
Moving forward, the organization pointed to data analytics as the driving force for identifying areas of non-compliance. The IRS’s CI is also branching out despite the reduction in staff size to under 2,100, which is the lowest it has been since the early 1970s.
The focus of investigations
The Criminal Investigations unit initiated 2,886 cases in 2018, with traditional tax cases taking up 73 percent of total. These include:
- International tax enforcement
- Employment tax fraud
- Refund fraud
- Tax related identity theft
Criminal Investigation is looking at new areas of non-compliance as well. These include:
- Public corruption
- Terrorist financing
- Money laundering
A high conviction rate
The only federal law enforcement agency with jurisdiction over tax crimes, CI has a conviction rate of 91.7 percent in 2018, which is near the highest among all federal agencies. Moreover, federal prosecutors routinely called upon CI staff around the country to lead investigations involving a wide range of financial crimes.
Bad news for improper filings
Those looking to bend or break the new tax rules may be in for a rude awakening. While red flags can often be recognized by agents and staff, the data-centric approach of CI means that increasingly sophisticated technology will scour tax returns for errors and omissions. Whether it was due to an honest mistake or wishful thinking, those facing criminal charges, liens or other measures are advised to consult with an attorney who has experience handling tax law disputes.