The Criminal Division of Internal Revenue Service (IRS) recently issued its annual enforcement report, which clarifies the agency's criminal enforcement priorities. IRS investigators and auditors aren't just looking for civil violations and tax underpayments. They are also conducting criminal investigations that can result in far more than a new tax bill. In fact, if an IRS “Special Agent” shows up at your door, call a tax lawyer immediately. Because that signals an IRS is conducting a criminal investigation.
Criminal enforcement, according to the report, is up. Even during the COVID pandemic, the IRS initiated more criminal investigations in FY2021 than in 2019 or 2020. And enforcement will continue to increase in the coming years. Overall, the IRS hired new Special Agents and additional professional staff to expand and improve their investigations.
Importantly, these investigations are yielding fruit: In 2021, the IRS made more recommendations to prosecutors to issue indictments, and more prosecutors did just that. (The number of convictions was slightly down, but we can't consider that as indicative of anything at this point. It just could be that those cases haven't been fully adjudicated or reflect a pandemic-related court backlog.)
Significantly, the IRS criminal division's investigations revealed $2.19 billion in tax fraud. Still, it also uncovered four times that, $8.17 billion, due to other types of financial crimes. It seized another $3.5 billion in cryptocurrency being used on the dark web and in other criminal activity.
Once again, those statistics are a tangible reminder that IRS criminal enforcement is looking for much more than missing receipts for dinner at Binkley's.
EXPERIENCED TAX COUNSEL CAN MAKE ALL THE DIFFERENCE
Whether you have concerns about any kind of tax-related liability, civil or criminal, the important thing is to talk to an experienced tax attorney and get the facts. And you want to do that well before an IRS Special Agent shows you their badge. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.