IRS Criminal Investigation Statistics

The IRS has published the new 2011 Data Book, which is available here. The book contains various interesting statistics relating to the IRS's criminal investigation function.

Table 18, Criminal Investigation Program, by Status or Disposition, Fiscal Year 2011 is reproduced below. This table contains some revealing data regarding tax crime convictions. Specifically, the second column containing data regarding legal source crimes provides helpful insight. This column contains the data for legal source tax crimes or investigations, which generally involve taxpayers in legal industries or occupations who have earned income legally, but who the IRS believes intended to evade taxes.

In determining whether to accept a criminal referral, the Criminal Investigation Division (CID) looks for significant egregious conduct by the taxpayer. Generally, simple understatement of income is not sufficient to convert a civil audit into a criminal prosecution case. Instead, CID looks for a pattern of substantial understatement or non-filing, resulting in an aggregate tax loss sufficient to warrant incarceration under the US Sentencing Guidelines. Roughly 60% of the legal source tax crime investigations initiated by the Criminal Investigation Division (CID) were referred for prosecution. Of those cases referred for prosecution, 68% of cases resulted in a conviction. These statistics bear out the fact that CID is highly selective in the investigations it undertakes because given its limited resources, its seeking to get the biggest "bang for the buck".

Keep in mind, however, that these statistics do not track individual cases over time. The convictions reported for one year likely pertain to investigations initiated one or more years before the actual convictions. Therefore, a precise percentage of investigations resulting in convictions cannot necessarily be gleaned from the data presented.

Table 18. Criminal Investigation Program, by Status or Disposition, Fiscal Year 2011

Status or disposition

Total

Legal source tax crimes [1]

Illegal source financial crimes [2]

Narcotics-related financial crimes [3]

(1)

(2)

(3)

(4)

Investigations initiated

4,720

1,922

1,810

988

Investigations completed

4,697

1,842

1,866

989

Referrals for prosecution

3,410

1,160

1,451

799

Investigations completed without prosecution

1,287

682

415

190

Indictments and informations [4]

2,998

905

1,313

780

Convictions

2,350

787

1,095

468

Sentenced

2,206

771

989

446

Incarcerated [5]

1,802

609

790

403

Percentage of those sentenced who were incarcerated [5]

81.7

79.0

79.9

90.4

[1] Under the Legal Source Tax Crimes Program, IRS Criminal Investigation identifies, investigates, and assists in the prosecution of crimes involving legal industries, legal occupations, and, more specifically, legally earned income associated with the violation of Title 26 (tax violations) and Title 18 (tax-related violations) of the U.S. Code. The Legal Source Tax Crimes Program also includes those cases that threaten the tax system, such as Questionable Refund Program (QRP) cases, unscrupulous return preparers, and frivolous filers/nonfilers who challenge the legality of the filing requirements. Excise tax and employment tax cases are also important elements of the Legal Source Tax Crimes Program.

[2] Under the Illegal Source Financial Crimes Program, IRS Criminal Investigation identifies, investigates, and assists in the prosecution of crimes involving proceeds derived from illegal sources other than narcotics. These encompass all tax and tax-related violations, as well as money-laundering and currency violations under the following statutes: Title 26 (tax violations); Title 18 (tax-related and money-laundering violations); and Title 31 (currency violations) of the U.S. Code. The utilization of forfeiture statutes to deprive individuals and organizations of illegally obtained assets is also linked to the investigation of criminal charges within this program.

[3] Under the Narcotics-Related Financial Crimes Program, IRS Criminal Investigation seeks to identify, investigate, and assist in the prosecution of the most significant narcotics-related tax and money-laundering offenders. The IRS derives authority for this program from the statutes for which it has jurisdiction: Title 26 (tax violations); Title 18 (tax-related and money-laundering violations); and Title 31 (currency violations) of the U.S. Code. IRS Criminal Investigation also devotes resources to high-level multiagency narcotics investigations warranting Organized Crime Drug Enforcement Task Force (OCDETF) designation in accordance with OCDETF Program reimbursable funding.

[4] Both "indictments" and "informations" are accusations of criminal charges. An "indictment" is an accusation made by a Federal prosecutor and issued by a Federal grand jury. An "information" is an accusation brought by a Federal prosecutor without the requirement of a grand jury.

[5] The term "incarcerated" may include prison time, home confinement, electronic monitoring, or a combination thereof.

NOTE: Investigations may cross fiscal years. Therefore, the disposition of investigations shown in this table may be related to investigations initiated in prior years.

SOURCE: Criminal Investigation, Communications and Education Division.

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