News report - increase in criminal cases at IRS

[Famspear]

[Here's an excerpt from the CCH 2007 Tax Day news, for November 8, 2007]:

IRS Criminal Investigation Director Reports Significant Uptick in Prosecutions

IRS Field Operations and Policy Director (Refund Crimes) Marsha Griffith updated a November 7 session of the National CPA/IRS Tax Issues Meeting of the American Institute of Certified Public Accountants (AICPA) held in Washington, D.C., on both the increase in cases handled by Criminal Investigation (CI) and its prosecutorial successes. Griffith also discussed CI annual business plan compliance strategies, which include abusive tax schemes, refund crimes, and corporate and employment tax fraud.

2007 Cases
According to Griffith, the CI's case initiatives are up nearly 8 percent (4211 cases) when compared to the number of initiatives in 2006. The number of completed investigations, prosecution recommendations, indictments, convictions and sentences also increased. Despite the increase in case initiatives, Griffith emphasized that the CI's publicity rate is at an "all time high" of 79.7 percent. This publicity rating is extremely important to the CI, Griffith emphasized, since CI strongly believes that publicity on case prosecutions and convictions exponentially deters tax fraud and evasion.

Corporate and Employment Fraud
The CI is taking a closer look at corporate and employment tax fraud. "We are asking our field agents to spend additional time looking at business returns," Griffith reported.

[ . . . ]

Tax Schemes
In fiscal year 2007, the CI initiated 152 cases and recommended 104 prosecutions for abusive tax schemes, Griffith reported. There were 86 indictments and 79 convictions. The abusive tax scheme cases are usually complex and involve multi-layer transactions designed to conceal the true nature and ownership of the taxable income, according to Griffith. The most common abusive tax schemes are "abusive trusts," she reported, adding that there was a conviction rate of 92.9 percent for such schemes.

Refund crimes
The IRS is taking an "aggressive stand "with regard to identity theft, Griffith stated. She reported that identity theft within the income tax realm most often translates into submission of multiple false refund claims. In these cases, a return is submitted for a refund and the IRS processes the refund. Later a second return is submitted for a refund under the same name as the first return and it is flagged by the agency's system. At this point, the IRS determines that an identity thief submitted the first return. The IRS is issuing internal procedures that will be applied cross functionally to resolve such false claims and to protect the true taxpayer from any further harm, Griffith stated.

By Chandra Walker, CCH News Staff

[end of excerpt from CCH news story; some bolding added]

[Demosthenes]

Number of IRS CI Special Agents in 2006: 2,800

Number of criminal referrals made in 2006: 2,469

I always thought that was an interesting ratio...