The Internal Revenue Service has a message for tax criminals: “We will not stop in our pursuit.”
There was a 91.2% conviction rate for tax criminal cases in 2019 -- a figure IRS officials vow to improve in coming years as the agency pursues an aggressive enforcement strategy.
The annual report of the IRS’s criminal investigations, released on Thursday, come as the agency is putting a heavy emphasis on enforcement and highlighting its image as a serious law enforcement agency as criminals have found new methods and technologies to evade tax laws.
“They took their money offshore and hid around the world, but we found them. They went on the dark web thinking that their actions were anonymous, but they weren’t, and we again found them,” Don Fort, head of the IRS’s criminal investigation unit, said in the report.
“They now deal in crypto-currency, again thinking this will make them anonymous, but our agents have once again proved that there is nowhere to hide,” Fort added.
About 79% of convicted criminals were incarcerated in 2019 with an average sentence of more than three years, according to the agency’s statistics. The remainder of those convicted were given other punishments, such as fines, restitution or house arrest.
The IRS said it identified $1.8 billion in tax fraud in 2019, along with an additional $4.4 billion in other financial crimes, such as money laundering or other fraud.
This year, the IRS has prioritized fighting tax evasion tied to cryptocurrency as digital currency has become more popular and gained value. Constant advances in technology have presented a challenge to the agency trying to keep up with new digital tools for criminals.
The agency sent out more than 10,000 letters earlier this year to cryptocurrency investors who may have under-reported -- or failed to disclose at all -- their virtual currency transactions on tax returns. IRS officials have said they’re planning to recommend criminal prosecutions in some of these cases.
The emphasize on curbing crime stems from the top of the agency. Commissioner Charles Rettig and the agency’s top lawyer Michael Desmond joined the IRS in 2018 and 2019, respectively, after working as tax litigators. Rettig and Desmond tout prosecuting criminal cases and shutting down tax shelters as a high priority.
The IRS is also expanding its global reach. The agency recently said it identified dozens of potential suspects using cryptocurrency to avoid taxes thanks to the help of officials from the U.S., U.K., Australia, Canada and the Netherlands, known as the Joint Chiefs of Global Tax Enforcement. The group shares data, tools and tax enforcement strategies to find new ways to mitigate cross-border money-laundering, tax evasion and cybercrime.
The IRS is also adding an agent in Singapore focused on criminal tax evasion, detailing an employee to Australia, and adding a second official in the Netherlands. The agency recently posted an agent, officially known as an attaché, in Dubai.
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