November 14, 2018
On November 14, 2018, IRS Criminal Investigation Division (“CID”) released its Annual Report for fiscal year 2018, detailing its enforcement actions for the past fiscal year. CID is the federal enforcement agency with exclusive jurisdiction over federal tax crimes, i.e., Title 26 and 31 offenses. CID was founded in 1919 and has published an annual report since 1920. As the agency enters its centennial, enforcement is down, but the agency maintains a high success rate in its initiated cases.
Here are some highlights from the Report:
- 2,019 Special Agents. The decline in agency staffing continues, as FY 2018 represents a decrease of almost 6.5% from fiscal year 2017, and places CID special agent staffing at its lowest level since the 1970s.
- Cases Initiated. Consistent with CID’s special agent decline, CID initiated just 2,886 cases in FY 2018, compared to 3,019 in FY 2017 and 3,395 in FY 2016.
- Case Mix. CID has jurisdiction over a wide variety of crimes, including tax-related virtual currency and bitcoin schemes, cybercrime, money laundering, and terrorist financing. In FY 2018, “traditional” tax crimes, such as employment tax, refund fraud, and tax-related identity theft, accounted for 73% of CID’s case mix.
- 91.7% Conviction Rate. Even with declining enforcement resources, CID boasts the highest conviction rate of any federal agency.
- Increased Reliance on Data Analytics. CID asserted in its FY 2018 Annual Report Press Release that CID frequently relies on data analytics to decide where to invest its limited resources and find “the most-impactful cases.” One statistic stressed in the report is the agency’s seizure of 1.76 petabytes of digital data during FY 2018 alone.
- Increased International Enforcement Efforts. In FY 2018, CID increased its international tax investigations, beyond the Swiss Bank Program which has been winding down, by joining an international alliance of tax enforcement authorities in July, 2018. Called the Joint Chiefs of Global Tax Enforcement (“J5”), the group includes criminal tax heads and senior officials from the U.S., Australia, Canada, the Netherlands, and the U.K. CID also increased staffing of its internal International Tax Group, which is dedicated to fighting large-scale international tax schemes.
Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.
About the Author:
Carolyn H. Kendall conducts internal investigations and defends corporations, officers and other individuals facing criminal and civil investigation. Her practice includes matters relating to potential criminal tax and money laundering violations, as well as allegations involving securities violations, mortgage, and financial institution fraud, the Federal Anti-Kickback Statute and Stark Law, and other fraud and regulatory statutes. She also assists clients in offshore account disclosure and compliance via IRS disclosure programs (OVDP and Streamlined Procedures). Learn More.