IRS Highlights “Global Reach, Billion-Dollar Impact” in End-of-Year Reports

The Internal Revenue Service (IRS) recently released two end-of-year reports highlighting its enforcement efforts during the 2024 fiscal year. In the IRS’s own words, these reports reflect the agency’s “global reach” and “billion-dollar impact” and “outlin[e] key milestones in criminal investigations . . . and advancements in digital modernization that have transformed agency operations while protecting billions of taxpayer dollars.” Learn more from Texas IRS lawyer Lawrence Brown.

IRS Criminal Investigation (IRS CI) Fiscal Year 2024 Annual Report

The first end-of-year report to be published was IRS Criminal Investigation’s (IRS CI) Fiscal Year 2024 (FY24) Annual Report. As the IRS stated in a December 5, 2024 News Release accompanying the FY24 Annual Report’s publication:

“In FY24, IRS-CI initiated more than 2,667 criminal investigations, obtained 1,571 convictions, and reclaimed its 90% conviction rate. The agency’s investigative work identified over $9.1 billion in fraud from tax and financial crimes, obtained court orders totaling $1.7 billion in restitution to the IRS and seized criminal assets totaling approximately $1.2 billion.”

The IRS’s News Release goes on to describe 2024 as a year “for this history books” that saw many firsts for IRS CI. As further detailed in the FY24 Annual Report, these included:

• The first sentencings in cases involving syndicated conservation easement schemes (which have long been on the IRS’s list of “dirty dozen” tax fraud schemes);
• The first indictment and guilty plea in a case focused solely on non-payment of income tax owed on gains from cryptocurrency sales and,
• The U.S. Treasury Department’s first targeted efforts to combat fentanyl trafficking both into and within the United States.

The FY2024 Annual Report also notes that just 69.2 percent of IRS CI’s enforcement activity over the past year focused on tax-related matters, with the remaining 30.8 percent focusing on narcotics crimes and other white-collar offenses. It also notes that just 20 percent of IRS CI’s investigations originated within the division, with 66 percent being triggered by referrals from the U.S. Department of Justice (DOJ), Financial Crimes Enforcement Network (FinCEN), and other federal agencies.

Along with syndicated conservation easements, cryptocurrency and narcotics, IRS CI’s FY2024 Annual Report sheds light on some other ongoing enforcement priorities as well. These include:

• Gambling and gaming income tax compliance
• Money laundering and offshore accounts
• Pandemic-era fraud (ERC, PPP and EIDL fraud)
• Abusive tax shelters (other than syndicated conservation easements)
• Financial transactions that implicate potential threats to national security

Notably, Texas is one of just three states that is home to two IRS CI Field Offices at the start of 2025. While IRS CI operates nationwide, it places its Field Offices in locations where it is most active. We have seen a significant amount of IRS CI activity in Texas over the past year, with investigations targeting all of the priority enforcement areas discussed above.

Quarterly Update to the IRS’s Strategic Operating Plan

On December 12, 2024, the IRS published its most recent quarterly update to the agency’s Strategic Operating Plan. The IRS developed its Strategic Operating Plan following the enactment of the Inflation Reduction Act (IRA) in 2022, and the plan outlines the agency’s core initiatives and priorities through 2031.

Similar to IRS CI’s FY2024 Annual Report, the IRS’s quarterly update identifies several focus areas from the prior year—which are also likely to remain focus areas for IRS audits in 2025. These include:

• Overdue tax enforcement for high-income and high-wealth individuals
• Financial crimes related to drug trafficking, cybercrime and terrorist financing
• Tax law violations reported by IRS whistleblowers

Regarding high-income and high-wealth individual taxpayer enforcement, the IRS’s quarterly update states that the agency has recovered “more than $1.3 billion” since launching this initiative. This includes “$292 million from more than 28,000 non-filers” who the IRS has identified through third-party sources, “such as through Forms W-2 and 1099s.”

In both individual and corporate taxpayer enforcement cases, the IRS is increasingly relying on whistleblowers to come forward. Of the approximately $4.7 billion that the IRS has recovered under its ongoing enforcement initiatives, $474.4 million—or roughly 10 percent—has been recovered in whistleblower-initiated cases. This includes cases involving “unreported/underreported income, hidden offshore assets, overstated deductions, general allegations of tax fraud and abusive international transactions.”

Preparing for (and Withstanding) IRS or IRS CI Scrutiny in 2025

With all of this in mind, what can (and should) high-income and high-wealth taxpayers do to prepare for the possibility of facing scrutiny from the IRS or IRS CI in 2025?

Even though tax season only comes once a year, the IRS and IRS CI pursue enforcement year-round. As a result, for those who have concerns, waiting to file an amended return on Tax Day is not the best approach. In fact, filing an amended return might not be the best approach at all.

While taxpayers can use amended returns to correct past filing errors in some cases, submitting an amended return does not provide any protection against facing an enforcement action for historical violations. If an amended return tips off the IRS to previous errors, this can lead to an extremely high-risk audit or investigation.

Filing an amended return on its own also does not provide an opportunity to mitigate a taxpayer’s federal liability. As a result, high-income and high-wealth taxpayers who have concerns about outstanding exposure may need to consider options such as submitting a voluntary disclosure, submitting a streamlined filing and/or seeking to negotiate a settlement with the IRS. All of these require a proactive approach, and, ultimately, taking a proactive approach is the best way not only to mitigate the risk of facing an audit or investigation but also to ensure that taxpayers are prepared to withstand scrutiny from the IRS or IRS CI if necessary.

Request a Call with Texas IRS Lawyer Lawrence Brown

Do you have questions about what you can (and should) be doing to mitigate your risk of facing costly scrutiny from the IRS or IRS CI in 2025? If so, we invite you to get in touch. Please call 888-870-0025 or contact us online to request a call with Texas IRS lawyer Lawrence Brown.