IRS’ law enforcement unit successes: COVID crimes, traditional tax investigations

November 16, 2020

IRS CI FY2020 annual report cover excerpt

The coronavirus pandemic has created challenges for Internal Revenue Service's law enforcement branch, but also was part of its successes during the last fiscal year.

During the 2020 accounting period, which started Oct. 1, 2019, and ran through Sept. 30, 2020, the IRS' Criminal Investigation (CI) Division initiated nearly 1,598 investigations and identified $2.3 billion in tax fraud schemes.

Some of those investigations were into COVID-19 related illegal activity.

"Unfortunately, criminals don’t stop committing crimes just because there is a national health emergency. In fact, some criminals pounce on the opportunity to take advantage of others as well as government programs designed to help the American people in times of crisis," noted the CI's FY 2020 annual report released today (Nov. 16, 2020).

COVID-19 tax and other investigations: CI agents' coronavirus-related investigations included fraudulent claims for economic impact payments, Paycheck Protection Program (PPP) loans and refundable payroll tax credits authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Those efforts are, like the virus, continuing into the current fiscal year.

Jim_Lee_IRS-CI-Chief_Wikipedia-Commons

Jim Lee, IRS CI Chief

"This year, more than any in recent memory, demonstrated the extraordinary agility and adaptability of the CI workforce," said Jim Lee, who took over as Chief of CI at the start of the current fiscal year.

"Clearly, unscrupulous individuals sought to exploit the economic safeguards put in place to buttress a nation in crisis. These individuals and groups were instead met with a cadre of special agents determined to thwart their efforts," added Lee.

In addition, CI's Nationally Coordinated Investigations Unit (NCIU), which utilizes data driven methods of case development, applied its specialized investigative techniques to the increasing pandemic tax fraud cases.

"Creativity and the ability to quickly adjust resources allowed the NCIU to successfully address this emerging threat," according to the report, compiled under Lee and his predecessor Don Fort.

This flexibility also expanded to CI's work in its nontax areas, with its agents participating in investigations into other pandemic-related fraud such as fake cures and masks.

"Working with our law enforcement partners, CI has opened investigations involving various allegations of individuals attempting to take advantage of the government programs designed to help struggling individuals and businesses," noted the report.

Non-pandemic tax investigations: While COVID-19 colored many CI investigations during the just-completed fiscal year, the division continued its crime-fighting efforts related to traditional tax investigations, international tax enforcement, employment tax, refund fraud and tax-related identity theft and cybercrimes, with an emphasis on virtual and cryptocurrencies.

The CI also continued its partnership with the Joint Chiefs of Global Tax Enforcement (J5). In FY20, this transnational committee of tax organizations from five countries shared more information among its members on global cryptocurrency, tax crimes and related enforcement than in the previous 10 years combined. CI also saw the first guilty pleas for a case under the J5 umbrella.

Tax 1040 form with handcuffs

The report also touted CI's notable success rate. As the only federal law enforcement agency with jurisdiction over federal tax crimes, CI's 90.4 percent conviction rate is one of the highest conviction rates in federal law enforcement.

"While the annual report is an excellent summation of the hard work and dedication exhibited by CI, this year’s report takes on special significance," Lee said. "This report unequivocally reflects the efforts of a workforce undaunted by unprecedented personal and professional challenges. I am profoundly grateful to serve with the men and women of CI."

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