IRS Criminal Investigation Report Blog

Last week, the IRS announced the release of the Criminal Investigation Division’s (CI) annual report, reflecting significant accomplishments & criminal enforcement actions taken in fiscal year 2017. This public report serves as a reminder to use strict security protocol within your tax practice and to adhere to the latest laws as a professional tax preparer.

IRS CI fills a unique niche in federal law enforcement due to their broad jurisdiction on Title 18 & Title 31 crimes, in addition to their primary traditional tax enforcement mission. As a result, they routinely get involved in large, complex investigations that require financial expertise. Simply put, when there is a sophisticated financial component to an investigation, the first phone call prosecutors make is usually to IRS CI.

Here are 7 takeaways from the Criminal Investigation 2017 Annual Report:

  1. 72.5% of time was spent directly on tax investigations
    • 14.7% on non-tax; 11.6% on narcotics; 1.2% uncategorized
  2. 1,811 tax crime investigations resulted in 1,196 indictments and 1,303 individuals sentenced
  3. There has been a substantial increase in phishing attempts to acquire payroll records or PII for use in filing false returns or for selling on the Dark web
  4. 88% of individuals investigated for identity theft are sentenced to prison/jail terms averaging 34 months
  5. Healthcare fraud resulted in charges for 412 individuals and accounted for more than $1.3 billion in fraud losses
  6. 3,019 total investigations in 2017 is down from 3,853 in 2015
  7. The Abusive Return Preparer Program (RPP) initiated 304 investigations on professional tax return preparers
    • Involve the orchestrated preparation and filing of false income tax returns by corrupt return preparers who often claim inflated personal or business expenses, false deductions, excessive exemptions, and/or unallowable tax credits

Read the full 2017 Annual Report published on December 20, 2017 by the Internal Revenue Service and the Criminal Investigation Division.