The Internal Revenue Service's Criminal Investigation Division has released its annual report, which highlights more than 2,500 investigations and law enforcement partnerships. Tax and COVID-related fraud, money laundering, and cybercrime were all targets of enforcement activities.
The IRS-Criminal Investigation (IRS-CI) Fiscal Year 2021 Annual Report highlights almost 2,500 criminal investigations, the discovery of more than $10 billion in tax fraud and financial crimes, and a nearly 90% conviction rate. The report includes data, key partnerships, and notable criminal enforcement actions from IRS-CI for the fiscal year that started Oct. 1, 2020, and ended Sept. 30, 2021.
“IRS-CI agents are the only federal law enforcement officers with the authority to investigate criminal violations of the U.S. tax code. Their work reinforces the backbone of our voluntary compliance tax system -- a system that funds services and benefits for our nation, including defense, infrastructure and education,” said IRS Commissioner Chuck Rettig.
During fiscal year 2021, IRS-CI agents spent the majority of their investigative man-hours (72%) investigating tax-related crimes like tax evasion and tax fraud, but they also made significant contributions to investigations into money laundering, narcotics trafficking, public corruption, terrorism, and COVID-19 fraud.
- $8.18 Billion of other financial crimes was identified, with 15.4% of total dollars from general fraud and money laundering cases and 11.2% coming from narcotics cases
- 1,209 investigations initiated with 1,132 prosecutions recommended and 635 sentenced
- $2.19 Billion of tax fraud was identified, with 72% of total dollars from tax-related cases (refund fraud, identity theft, employment tax fraud, abusive tax schemes, general tax fraud, international tax fraud, cybercrimes, public corporation, and corporate fraud)
- 1,372 investigations were initiated with 850 prosecutions recommended and 633 sentenced
Investigations into the Abusive Return Preparer Program involve dishonest return preparers orchestrating the preparation and submission of fake income tax returns. Inflated personal or business expenses, misleading deductions, excessive exemptions, and unallowable tax credits are common claims made by these preparers. Clients of the preparers may or may not be aware that their returns have been faked.
Cyber Crime Unit
In the second part of this article, we will cover the IRS-CI Cyber Crime Unit. The criminal investigations team has been developing a cyber crime program since 2015 to counter the exponential growth of cyber crime affecting the US tax, financial, and economic systems. The program currently maintains a headquarters Cyber Crimes office and cybercrimes coordinators in each of the 21 CI Field Offices. CI has prioritized training and the implementation of cryptocurrency, blockchain, and open-source intelligence (OSINT) technologies in recent years.