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:
- 72.5% of time was spent directly on tax investigations
- 14.7% on non-tax; 11.6% on narcotics; 1.2% uncategorized
- 1,811 tax crime investigations resulted in 1,196 indictments and 1,303 individuals sentenced
- 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
- 88% of individuals investigated for identity theft are sentenced to prison/jail terms averaging 34 months
- Healthcare fraud resulted in charges for 412 individuals and accounted for more than $1.3 billion in fraud losses
- 3,019 total investigations in 2017 is down from 3,853 in 2015
- 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.