According to their 2016 Annual Report, the Internal Revenue Service is conducting fewer criminal investigations, citing a lack of resources necessary to pursue suspected illegal activity. From 2013 through 2016, criminal investigations by the IRS CI dropped 36 percent. Concurrently, the number of IRS Special Agents shrunk by 13 percent.
Of all the categories, money-laundering stands atop the list as the most investigated criminal allegation at 1,210. Other prominent tax-related crimes include:
- Narcotics (788)
- Identity theft (573)
- Bank Secrecy Act violations (504)
The IRS has not forgotten about garden-variety tax cheats for the sake of going after big-ticket investigations. The powerful government entity will still pursue potential crimes with the most common being:
- Questionable Refund Program (495)
- International Operations (221)
- Non-Filer (206)
- Employment Tax (137)
- Corporate Fraud (62)
- Abusive Tax Scheme (56)
There are risks that come with waning intolerance for taxpayers who may be encouraged to continually break tax laws and outright evade paying taxes. Lacking more monetary and staffing resources, the IRS Criminal Investigation will continue to focus their efforts on high profile cases to remind all taxpayers that they will be held accountable for intentionally violating tax laws.
The IRS may make an example out of Caterpillar, Inc., a prominent manufacturing company, following a recent raid on their U.S. Headquarters over the allegations of aggressive tax avoidance.
Will taxpayers take notice and think twice about employing the same, potentially illegal strategies? Will the visceral images of the raid in real time scare them into compliance?
It is safe to say that most taxpayers would rather spare themselves from that level of “attention.”
