As tax attorneys in Columbus, Ohio, Nardone Limited routinely assists individuals and businesses with representation in tax examinations, audits, appeals, and civil litigation with the Internal Revenue Service (the “IRS”) and the Ohio Department of Taxation. As part of that representation, our tax attorneys keep individuals and businesses informed about new information and guidance provided by the IRS.
Updates regarding Criminal Tax Enforcement
The Internal Revenue Service recently released the Criminal Investigation Division’s (CI) annual report reflecting significant accomplishments and criminal enforcement actions taken in fiscal year 2018. According to the IRS:
“This report shows that as financial crime has evolved and proliferated around the world, so have IRS Criminal Investigation special agents and their abilities to track the proceeds of financial crime,” said IRS Commissioner Chuck Rettig. “CI uses cutting-edge technology combined with sophisticated investigative work to bring the most impactful cases that affect tax administration. I am extremely proud of our special agents and professional staff and their work serving the nation.”
In prior years, CI would involve itself with violent crime-type matters, like drug cases and criminal organizations. But, from our perspective, that is not the best use of their time. Thus, it was good to see that a major focus of CI in fiscal 2018 was traditional tax cases, including international tax enforcement, employment tax, refund fraud and tax-related identity theft. Other areas of emphasis included public corruption, cybercrime, terrorist financing and money laundering.
Criminal Tax Enforcement Statistics
Again, according to the IRS:
“We prioritized the use of data in our investigations in fiscal 2018,” said Don Fort, Chief of CI. “The future for CI must involve leveraging the vast amount of data we have to help drive case selection and make us more efficient in the critical work that we do. Data analytics is a powerful tool for identifying areas of tax non-compliance.”
CI initiated 2,886 cases in fiscal 2018, with traditional tax cases accounting for 73 percent of the total. The number of CI special agents dipped below 2,100 by the end of fiscal 2018, which is the lowest level since the early 1970’s. Consequently, CI turned to data analytics to assist in finding the most impactful cases.
CI is the only federal law enforcement agency with jurisdiction over federal tax crimes. CI achieved a conviction rate of 91.7 percent in fiscal 2018, which is among the highest of all federal law enforcement agencies. According to commentators, which we would agree with, the high conviction rate reflects the thoroughness of CI investigations and the high quality of CI agents. CI is routinely called upon by prosecutors across the country to lead financial investigations on a wide variety of financial crimes.
Nardone Limited Comment: The takeaway for our individual and business clients is, seek the appropriate tax advice and tax professionals to ensure that integrity, fairness, and respect for our voluntary tax system. We want to make sure that you are not put in a position where you have intentionally crossed the line or inadvertently crossed the line by following the advice of your tax professional. These statistics make it pretty clear that the IRS, once they have placed their focus and efforts on your particular case, it will be difficult to cause CI to redirect their focus. Rather, at that point, it becomes more of an effort of minimizing the potential disruption or punishment, versus all-together avoiding it.
Contact Nardone Limited
Nardone Limited frequently represents individuals and businesses in federal, state, and local civil tax matters. If you or your business have been contacted by the IRS, or are struggling with tax liabilities, you should contact one of our tax attorneys today. We will thoroughly review your case to determine what options and alternatives are available to you.