IRS Criminal Investigations Rise While Number Convicted Declines

by Leroy Baker, Tax-News.com, New York

15 July 2004

A recent report compiled by the Treasury Inspector General for Tax Administration has stated that the IRS has begun to reverse the declining trend in the number of criminal investigations that it undertakes into non-compliance.

In the report, TIGTA observed that starting in 2002, the agency’s Criminal Investigations division began to increase the number of cases it initiated against suspected tax crimes, whilst also devoting more time to individual cases.

Despite the increased caseload, TIGTA noted that the number of convictions continues to decline. It added, however, that "we believe these downward trends reflect a timing issue."

"Actions on criminal investigations may span more than one year, so the more recent declines in convictions and sentences are more likely to be a function of the decline of special investigations initiated in previous years,” stated the report.

Nonetheless, the TIGTA report expressed concern that the reversal of the general trend may be compromised by prolonged staffing issues.

Between, fiscal years 2000 through 2002, the Criminal Investigations department of the IRS increased the number of special agents employed by 6%, or 600 agents. However, the high turnover of staff in the division resulted in a net increase of 161.

Furthermore, this high rate of attrition contributed to a net decline in the number of special agents employed in the 2003 fiscal year and the first half of 2004.

"We are concerned that this pattern threatens the continued growth in criminal investigations and related improvements in convictions and sentences," explained the TIGTA report.

TIGTA is expecting an additional 575 agents to be hired in fiscal years 2004 and 2005.

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