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.