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April 29, 2015


Criminal investigations are up, despite IRS budget problems

Due to budget cuts in recent years, the IRS has downsized its employee headcount significantly. But the agency’s pursuit of criminal investigations has been going up, not down.

This is a story we’ve been following for some time. We discussed it at length a couple of years ago in an article on criminal tax investigations.

In today’s post, we will update you with the latest data from the IRS on these investigations.

In fiscal year 2012, the Criminal Investigations division of the IRS began 5,125 investigations. Investigations, indictments and convictions were all up substantially from the year before. For convictions, the increase was 12 percent.

More than two years later, it is clear that this trend is continuing. According to IRS statistics for the second quarter of Fiscal Year 2015, the CI division initiated 1,949 investigations during the quarter. This suggests that the CI division may be on pace to far exceed the 5,000-some investigations it started in FY 2012.

Of course, not all criminal investigations result in criminal charges. There is essentially a funnel-like effect. Some cases that the CI division initiates are not recommended for prosecution. And not all prosecutions result in convictions.

Still, it is important to see the trend line here. Despite the overall budget problems of the IRS, the work of the CI division has kept increasing.

In the article we mentioned, we described how an investigation into alleged tax evasion played out in a specific Texas case. It is a case worth revisiting, as a reminder of how serious criminal tax penalties can be.


Tax Evasion