IRS teams with DOJ on tax fraud enforcement surge
- Key insight: Learn why the IRS is deploying data analytics despite budget cuts and staff reductions.
- What’s at stake: Local communities stand to lose funding for thousands of teacher and firefighter salaries.
- Forward look: Watch for continued investments in data analytics and technology to drive enforcement efforts.
The Internal Revenue Service and its Criminal Investigation division have partnered with U.S. Attorneys’ Offices around the country and the Department of Justice’s National Fraud Enforcement Division on a National Tax Enforcement Surge and said they have uncovered more than $490 million in tax fraud.
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Between early September and Wednesday, the first-ever National Tax Enforcement Surge resulted in prosecutorial actions against 76 defendants. “These cases are a small sampling of the extraordinary work accomplished on behalf of the American people in the last 45 days by the dedicated public servants in the Fraud Division’s Tax Section, U.S. Attorney’s offices, IRS Criminal Investigation and other law enforcement partners,” said Assistant Attorney General Colin McDonald of the Justice Department’s National Fraud Enforcement Division, during a press conference Wednesday. “We must protect and restore the billions of dollars being stolen from the American people every year. We will continue to prosecute fraudsters who intentionally violate a known legal duty by lying to the IRS, cheating the federal government out of lawful revenue, and stealing money that would otherwise fund vital government programs.”
The IRS is making greater use of technology to find tax fraud despite budget cuts and steep staff reductions. “Improving tax compliance is one of my top priorities,” said IRS CEO Frank Bisignano. “The IRS remains committed to having an enforcement presence that’s strong, visible and robust. Enforcement of the tax laws is critical to ensuring fairness in our tax system. Our compliance program uses data analytics and continues to advance and use enhanced technology to focus our enforcement efforts where they matter most. Technology can only assist us, and we will continue investing in it and using it to drive these efforts even further this year and in the years coming. We can’t be successful, though, without our people. That’s especially true of our amazing CI agents who investigate all types of tax noncompliance. Criminal Investigation is on the front lines of the fight against many different types of tax-related crimes. This includes going after tax evaders in the U.S. and beyond, rooting out COVID-related tax fraud, stopping abusive unscrupulous tax return preparers, helping to bring identity thieves and scammers to justice.”
IRS-CI chief Jarod Koopman said the criminal activity uncovered by the investigations spanned more than 28 states and multiple tax crimes, and he promised more to come. “Although this type of enforcement is the first of its kind, it will not be the last,” he said. “Let me be absolutely clear: If anyone thought or questioned whether criminal tax enforcement is a priority, today’s actions should dispel all doubt. The message is unmistakable. For those who attempt to cheat the system, these investigations are and will remain a top priority of this administration. Today’s cases represented more than $490 million in estimated tax loss.”
He noted that amount of revenue could support over 95 million school lunches, over 7,500 annual salaries for teachers or firefighters, and over 60,000 Pell grants for students attending college. “These comparisons make one thing clear: When someone steals from the tax system, they are stealing from the American communities, schools, public safety and our children’s future,” said Koopman. “IRS-CI’s work is about more than protecting a revenue stream. It’s about protecting opportunity, fairness and resources that allow communities to function.”
A number of the cases involved tax preparers and identity thieves. The owner of a North Carolina tax return preparation business was sentenced to 60 months in prison for conspiring to prepare false returns claiming fraudulent refunds based on COVID-19 tax credits. Five other tax preparers were sentenced for their roles in the scheme.
In another case, two brothers and a third man were charged with conspiracy to commit mail and wire fraud, mail fraud and conspiracy to commit money laundering, all arising out of a $74 million scheme to defraud the IRS through the filing of fraudulent tax returns by a group of Mexican citizens who obtained Mexican identification documents in the names of third parties and then used the identification documents to get Individual Taxpayer Identification Numbers from the IRS and file fraudulent tax returns.
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