Federal Criminal Tax Referrals at Eight-Year High

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News from CCH's Federal Tax Day:

NEWS-FEDERAL, 2008TAXDAY, (July 21, 2008), Item #T.2,
IRS Referrals of Criminal Tax Investigations at Eight-Year High

Referrals of criminal tax investigations by the IRS to the U.S. Department of Justice continue to climb dramatically, the Treasury Inspector General for Tax Administration (TIGTA) has reported. At the same time, however, the IRS's Criminal Investigation Division continues to lose experienced investigators faster than it can recruit new ones. TIGTA unveiled its findings in a special report, Statistical Portrayal of the Criminal Investigation Division's Enforcement Activities for Fiscal Years 2000 through 2007, 2008-10-133.


Investigations and Convictions

Investigations referred to the Justice Department has increased continually for five years and are now at an eight-year high, TIGTA discovered. Fiscal year (FY) 2007 ended with 4,600 subject investigations, a three-percent increase over FY 2006 and a nearly 50 percent increase since FY 2002. "For the first time since we began reporting on its enforcement activities, the Criminal Investigation Division had more investigations awaiting prosecution by the Justice Department than open criminal investigations," TIGTA reported.

Criminal convictions are also up, TIGTA found. "The number of taxpayers convicted of a crime was 2,155, which exceeded the FY 2007 performance plan goal of 2,069 and was an increase of 6.7 percent from FY 2006"


Enhanced Publicity

TIGTA also found that greater publicity of tax crimes fosters compliance. The publicity rate for prosecutions in FY 2007 was nearly 80 percent, an all-time high. Enhanced publicity, according to TIGTA, "sends a message to taxpayers that violations of the Internal Revenue Code and related financial crimes are investigated and prosecuted."


Staffing Shortfalls

Despite the uptick in criminal referrals and convictions, the Criminal Investigation Division appears troubled by high employee turnover. The total number of special agents fell three percent from FY 2006 to FY 2007 and the trend appears to be continuing. "According to most recent estimates, the Criminal Investigation Division's planned hiring of approximately 96 special agents would not offset the FY 2007 attrition of 150 agents or the FY 2008 attrition of approximately 150 agents." TIGTA predicted that the loss of experienced employees will negatively affect productivity in the near future.

By George L. Yaksick, Jr., CCH News Staff

TIGTA Report: Final Audit Report --Statistical Portrayal of the Criminal Investigation Division's Enforcement Activities for Fiscal years 2000 through 2007 (Reference Number: 2008-10-133) [Document will be available on July 22. --CCH.]

--from CCH Tax Research NetWork.

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http://www.treas.gov/tigta/auditreports ... 0133fr.pdf