IRS efforts to catch tax and other financial crooks hindered by budget cuts and investigator attrition

The Internal Revenue Service’s Criminal Investigation (CI) division is charged with putting tax and other financial crooks behind bars.

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That job has gotten tougher, according the man who heads the CI, primarily because of the loss of experienced agents.

“We’re at the same staffing level as 1956, which is just unbelievable when you think about it,” CI Chief Richard Weber said during a press this week in conjunction with the release of the division’s 2016 annual report. “There’s still no realistic expectation of increasing that number anytime soon. It’s very difficult to be able to do everything we are mandated to do.”

Everything includes investigating identity theft, tax fraud, corporate fraud, gaming, abusive tax schemes, money laundering, cyber theft, narcotics and other non-tax cases, in addition to the basic enforcement of U.S. tax laws.

Fewer federal cases: The number of cases designated as non-tax issues dropped 11 percent in 2016, while new tax cases initiated fell 13 percent to fewer than 2,000. Overall, all types of cases handled by CI last year decreased by about 12 percent.

The drop in casework mirrors the staffing issue.

IRS CI staff attrition and case work 2016 annual report

There is a clear trend of IRS CI staffing decline affecting the division’s core tax mission work, noted the annual report. Between fiscal year 2012 and the 2016 fiscal year, 447 agents left the division (orange bars), which processed 485 fewer tax prosecution authorizations (white bars) during that period. 

The number of IRS criminal investigators dropped to 2,217 or 4.3 percent in fiscal year 2016. Since 2012, agent staffing levels have decreased 19.1 percent, according to the report.

Professional staff also has dropped, down 3.3 percent from the prior fiscal year and down almost 22 percent over the last five years.

Investigators still making progress: Still, Weber and IRS Commissioner John Koskinen say the agency continues to have success against tax criminals.

“I could not be more proud of all that our special agents and professional staff have accomplished in spite of our budget challenges,” said Weber. “Though the total number of cases has dropped for the third consecutive year due to fewer agents and professional staff, we have continued to find ways to become even more efficient and the quality of our cases has never been greater.”

Weber pointed to a conviction rate of more than 92 percent, a figure he said rivals all of federal law enforcement.

IRS CI 2016 annual report high impact area cases

IRS’ Criminal Investigation division focused in 2016 on what it describes as high impact efforts to fight worldwide tax and financial crimes.

Plus, Weber noted, IRS CI is routinely called upon by prosecutors across the country to lead financial investigations on a wide variety of financial crimes including international tax evasion, identity theft, terrorist financing and transnational organized crime.

Some investigatory increases: And CI did have a few areas where it increased investigations in 2016 over 2015. They were in employment tax, health care fraud, public corruption and international operations investigations.

“The IRS continues to work to ensure that everyone is playing by the same rules and paying their fair share,” said Koskinen. “The IRS is committed to fairly administering and enforcing the tax code, and our criminal investigators play a critical role in that effort.”

The CI report is released each year to highlight IRS successes, as well as provide a historical snapshot of the make-up and priorities of the tax agency. The very first Chief of IRS CI, Elmer Lincoln Irey, served from 1919 to 1946 and envisioned releasing such a document each year to showcase the agency’s investigative work.

More of the same: During his confirmation hearings, new Treasury Secretary Steven Mnuchin said his priorities would be to increase IRS staff and modernize the agency’s aging technology. He pointed to how IRS staff has plunged 30 percent over the past several years, as well as how the agency lacks internal technology experts to update its systems.

“I would use my expertise to bring the IRS up to date,” the former Goldman Sachs executive told Senators in January.

Mnuchin’s goals for Uncle Sam’s tax collection arm are to be lauded. But they take money.

And if reports of Trump’s fiscal year 2018 budget proposals are true, the IRS — including the Criminal Investigation unit — likely will asked to keep doing its job with less money.

Republican lawmakers, who have hammered the IRS since May 2013 when issues with tax-exempt applications by conservative Tea Party groups were revealed and are still trying to impeach Koskinen, are not inclined to give the IRS more money. 

Trump apparently agrees. His budget for the IRS, according to documents obtained by The New York Times, call for cutting the agency’s budget by 14 percent. 

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Source: http://feedproxy.google.com/~r/DontMessWithTaxes/~3/sNSvJoZr9zc/irs-efforts-to-catch-tax-and-other-financial-crooks-hindered-by-budget-cuts-and-investigator-attriti.html

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