More On Tax Planningfrom The Advisor's Professional Library
- IRAs: Eligibility The eligibility rules for contributing to traditional and Roth IRAs are complicated. Learn how to effectively use them in retirement plans.
- Cafeteria Plans The income tax treatment of cafeteria plans is key to their popularity. Learn how to maximize the tax benefits of these “flexible benefit plans”.
The IRS Criminal Investigation unit significantly increased enforcement actions against tax criminals and saw a robust rise in convictions, including identity theft, in FY 2013, according to its annual report.
CI investigates potential criminal violations of the Internal Revenue Code and related financial crimes.
CI chief Richard Weber wrote in the annual report that his group had continued to be challenged by declining resources in the last fiscal year. “Our staffing of special agents and professional staff were at the lowest in years, and budget constraints curtailed our official travel and training.”
As of Sept. 30, CI had 2,541 Special Agents on board, down 5.4% from the number of special agents at the conclusion of FY 2012, and down from 2,771 in FY 2009. Professional staff assigned at the conclusion of FY 2013 was 1,083, a 3.6% decrease from the end of FY 2012.
“However, we still remained a strong organization—working complex and sensitive investigations where we have the advantage of strong financial expertise,” Weber said.
Weber reported that CI initiated 5,314 multifaceted investigations in total; completed 5,557, a 12.5% increase over FY 2012; recommended upward of 4,364 for prosecution, 18% more than in FY 2012; and supported prosecutors as they indicted nearly 3,800 individuals and convicted 93% of the cases closed last year.
The conviction rate represented an increase over 2011 and 2012, he said.
Weber listed some of the biggest stories of the year in which CI was involved:
- Kwame Kilpatrick, the former mayor of Detroit, was convicted in FY 2013 and subsequently received the longest sentence ever in a public corruption and tax case
- Liberty Reserve, one of the largest digital currency and international money laundering cases in U.S. history, was indicted and operations shutdown by CI agents and law enforcement partners
- HSBC entered into a deferred prosecution agreement and agreed to forfeit $1.3 billion
- Rashia Wilson, who claimed to be the “Queen of ID Theft,” was arrested, tried and sentenced to 234 months in prison
- Tim Turner, the self-proclaimed “President” of the sovereign citizen movements, was sentenced to 216 months in prison
- Top members of the Los Zetas drug cartel were sentenced to lengthy prison terms
Weber noted that CI also plays a vital role in the IRS’s effort to combat identity theft—one of its top priorities and its No. 1 concern during the current tax season.
Other investigative priorities in the coming year are return preparer fraud and questionable refund fraud, international tax fraud, fraud referral program, political/public corruption, Organized Crime Drug Enforcement Task Force, Bank Secrecy Act and Suspicious Activity Report review teams, asset forfeiture, voluntary disclosure program, counterterrorism and sovereign citizens.
Weber said CI worked closely with other IRS business units, providing them with trends and filing patterns they can in turn use to develop filters in identifying bad returns and stopping them prior to the refund being released.
For example, in conjunction with its civil tax partners, CI prevented more than 1.3 million fraudulent returns from being released last fiscal year. Those fraudulent returns claimed some $7.1 billion in false refunds.
Related ThinkAdvisor story: Top 9 Biggest Tax Scams of 2013
For more tax planing stories, check out our Special Report 21 Days of Tax Planning Advice for 2014 home page.