IRS Tougher on Tax Crimes

Today the Criminal Investigation (CI) division of the IRS announced the release of its annual report which covers fiscal year 2013.  Everything in this report suggests that the IRS is more aggressively pursuing tax criminals.  Here are just a few highlights:

  • Criminal investigations: 12.5% increase
  • Criminal prosecution recommendations: 18% increase
  • Criminal convictions: 25% increase

But the most shocking statistic is not even reflected in this short list.  Get this: the conviction rate for fiscal year 2013 was 93 percent!  In other words, I don’t think the IRS is going to recommend prosecution of a case that it isn’t almost certain to win.  Of course, the IRS’ interpretation of this statistic is that they just have top notch attorneys:

The conviction rate is especially important because it reflects the quality of our case work, our teamwork with law enforcement partners and the U.S. Attorneys’ Offices

~ Richard Weber, Chief of Criminal Investigation

The IRS is especially intolerant of identity theft (it boasts membership in over 35 identity theft task forces) and I am sure that this accounts for many of the recent convictions.  Some of the other tax crimes mentioned in this report include public corruption, money laundering, terrorist financing, and narcotics trafficking.

If you are wondering / stressing about whether or not you will go to jail for failure to file a tax return or failure to pay your taxes, I still think the answer still has to be “you could be.”  However, this phrase picked from the IRS’ official Newswire statement is very revealing:

CI investigates potential criminal violations of the Internal Revenue Code and related financial crimes in a manner to foster confidence in the tax system and compliance with the law.

I don’t think its a coincidence that the first concern of CI is to “foster confidence in the tax system” — secondary to fostering voluntary compliance.  How does the IRS foster confidence in the tax system?  It is not done by nailing “small fish,” which would probably have the opposite effect.  It is done by high profile convictions.  The IRS is more aggressive with high-dollar cases and cases involving public figures; the kinds of stories that make the evening news.

IRS to Sell Drug Cartel Horses at Auction

photo via

The Zeta drug cartel has a little IRS problem, and it’s no ordinary tax debt.

Zeta had been laundering drug money under the cover of a race horse ranch run by one Miguel Angel Treviño Morales near Oklahoma City.  The Criminal Investigation division of the IRS (CI) went in with other law enforcement to seize the property and arrest the suspects back in May, and now a judge has decided that the property will be sold.  Hopefully CI did not have to brandish any weapons in the raid.  Probably not, since it appears the bust went smoothly and without incident.  The IRS plans to sell 379 horses at auction November 1-3.

CI is a special division of the IRS responsible for investigating financial crimes and criminal violations of the Internal Revenue Code.  CI targets both “legal source” and “illegal source” financial crimes, including narcotics related financial crimes.  That’s why CI would be involved in the activities of drug cartels that occur on US soil.

These Mexican cartel families are so arrogant; they think they are invincible.  They just couldn’t resist using drug references in the names of some of their prominent horses.  Also, they do not appear to have been trying to keep a low profile since their horses were winning major races (and prize money) left and right.

Ironically, the last time I blogged about CI, I quipped (in reference to the fact that they don’t have many opportunities to use their weapons) that they aren’t chasing down drug dealers.  Well, I stand corrected.

Can We Trust the IRS with Guns?

"desk pop" from the movie The Other Guys

TIGTA recently audited and reported on the firearm policies of the Criminal Investigation (CI) division of the IRS and found them to be somewhat lacking.  Usually I like to focus on tax relief, but this has got to be the strangest TIGTA report I have ever seen.  I couldn’t pass it up.

CI special agents are a unique breed, to say the least.  They are like the offspring of two completely opposite carreers: one’s tools are a pocket protector and calculator, and the other’s are a bullet proof vest and concealed handgun.  These are probably guys who really wanted to be FBI or CIA but ended up at the IRS instead.  And, let’s face it, a tax attorney probably sees as much action as they do.  They aren’t chasing down drug dealers; they are apprehending people who cheated on their taxes or who are running from a massive tax debt.  They definitely aren’t firing their weapons on a regular basis, so it’s no huge surprise to me that the firearm policies are subpar.

Their firearms qualification passage rate is pretty high; that’s not the problem.  TIGTA’s report has more to do with CI putting in place consistent policies and consequences.  The scenario that really stood out to me was what to do when a CI special agent accidentally discharges his firearm!  The report states that this is not a common occurence, but according to the report, there are more accidental discharges than intentional discharges!

During fiscal years 2009-2011, there were a total of 19 reported discharge incidents in all of CI; 8 intentional and 11 accidental.  Is is just me or does this report make CI agents look like a bunch of clowns?