The Internal Revenue Service (IRS) has issued the yearend report for 2012 from its Criminal Investigation (CI) division. The report details the performance of IRS-CI and the types of cases they prosecuted. Last year, CI began criminal investigation of 5,125 cases and they completed 4,937. They recommended 8.5 percent more prosecutions than in 2011 with 3,701 cases.
Convictions for all types of tax fraud were up, to 2,634 an increase of 12 percent, which allowed CI to slightly increase their conviction rate to 93 percent. Staffing in CI has declined by 2.7 percent for Special Agents and 4.7 percent of professional staff.
The report is interesting, as it lists the various types of tax fraud that they prosecute and it points to areas that should be watched by individuals and businesses, to protect themselves from schemes like identity fraud, which can be easily used to steal income tax refunds and create a massive nightmare for those who can be made victims.
Refund fraud can occur by preparers who falsify elements of their client’s income tax returns in order to receive greater refunds. They may file false income tax returns, claim inflated expenses, phony deductions and other excessive exemptions.
Identity theft has become a significant problem for the IRS, with stolen Social Security numbers or Employer Identification Numbers being used to file millions of false returns. The IRS has developed various units and programs to cope with this problem, including the Identity Theft Clearinghouse (ITC) and the Victim Waiver Pilot Program.
As their 93 percent conviction rate indicates, they prosecute cases they can win. The consequence of a prosecution by the CI includes the tax owed, fines, tax penalties, in addition to prison time. If you have received notice of an investigation by the IRS-CI for whatever reason, you need experienced legal representation.
Source: Internal Revenue Service, “IRS Criminal Investigation Issues Fiscal 2012 Report,” IR-2013-50, May 10, 2013