September 2017 JD Supra
jd supra logo

The IRS-Criminal Investigation Unit (IRS-CI) is the Criminal Law Enforcement Arm of the IRS.  Its conviction rate of over 90% is one of the highest in federal law enforcement.  Those convicted pay taxes, penalties and interest with the Courts imposing substantial prison sentences. IRS-CI recently launched 2 new IRS-programs

  • Data Investigations
  • International Tax Enforcement

The Data Investigations Program will use data analytics to better target tax noncompliance.  IRS will coordinate the efforts and findings of its data investigations. Every IRS field office will be able to identify areas of tax non-compliance with national geographical relevance from across the US; permitting IRS to assist its offices with case development.

The plan “leverages data analytics” to tackle:

  1. International tax enforcement: leverages the IRS-CI expertise developed from UBS and other Swiss Bank offshore tax evasion cases.
  2. Employment tax: investigates employers that fail to register with the IRS and deposit required withheld payroll taxes.  According to IRS Regulations, it is a form of theft, when an employer improperly retains already withheld employee payroll tax.
  3. Securities Exchange Commission (SEC) microcap fraud: covers the over the counter market where companies are not required to comply with certain financial reporting requirements.

The International Tax Enforcement Group will be a dedicated group working significant international tax cases.  The Group will consolidate under one umbrella, subject experts that have worked cases of international tax compliance.  The US Department of Justice Tax Division will provide support to this Group.  The use of data analytics is critical to the success of the Group; which will benefit from information sourced through:

  • The Bank Secrecy Act (BSA)
  • Whistleblowers
  • The Offshore Voluntary Disclosure Program
  • The Panama Papers

In addition to these sources, there are IRS tax attaches in foreign countries working in tandem with foreign Government officials.

International tax enforcement is a key priority for the US.  The US has collected a vault of valuable information over the years.  Via data analytics, IRS is going to leverage resources, knowledge and expertise.

Out-of-compliance Taxpayers should not be victims of their own making.  The addition of these two new IRS-Programs enhances the reach of IRS.  If you are an out of compliance Taxpayer, consult your tax specialist now.