IRS CI FY2022 Annual Report Highlights Federal Tax Enforcement Priorities

IRS Criminal Investigation (IRS CI) recently released its Annual Report for the 2022 fiscal year. As always, IRS CI’s Annual Report highlights some of the agency’s top enforcement priorities—providing important insights for individual and corporate taxpayers alike heading into the New Year.

Notable Statistics from IRS CI’s FY2022 Annual Report

The FY2022 Annual Report contains several notable statistics. For example, according to IRS CI, from October 1, 2021 through September 30, 2022:

• IRS CI initiated more than 2,550 criminal investigations
• IRS CI identified more than $31 billion in tax fraud and other financial crimes
• IRS CI executed 1,210 warrants and referred 1,837 cases for prosecution
• IRS CI cases referred for prosecution resulted in a 90.6 percent conviction rate
• IRS CI initiated just 16 percent of its investigations independently, relying on the U.S. Attorney’s Office, other government agencies and the public for the remaining 84 percent.

Also noteworthy, during FY2022 IRS CI increased its enforcement staff substantially. As of the end of September, IRS CI has close to 2,100 Special Agents and 950 professional staffers devoted to uncovering and combating tax fraud and other financial crimes.

IRS CI’s Top Investigative Priorities in FY2022

While IRS CI has jurisdiction over a broad range of financial crimes, it devotes the substantial majority of its resources to combating tax fraud and other tax-related offenses. According to the FY2022 Annual Report, IRS CI devoted approximately 72 percent of its direct investigative time to suspected tax crimes last year. This includes cases involving allegations of:

• Abusive tax schemes
• Corporate tax fraud
• Cybercrimes
• Employment tax fraud
• General tax fraud
• Identity theft
• International tax violations
• Public corruption
• Refund fraud

In particular, IRS CI’s FY2022 Annual Report highlights the agency’s enforcement in the areas of:

Abusive Tax Schemes

IRS CI’s FY 2022 Annual Report notes a particular focus on investigating taxpayers who “willfully violate tax laws by participating in domestic and offshore tax schemes,” as well as individuals who promote these schemes.

Employment Tax Fraud

In the area of employment tax fraud, IRS CI prioritized cases involving “employee leasing, paying employees in cash, filing false payroll tax returns, failing to file payroll tax returns, and ‘pyramiding’” during the 2022 fiscal year.

General Tax Fraud

Regarding general tax fraud, IRS CI notes that it has placed particular emphasis on investigating and prosecuting “high-income taxpayers who have a filing requirement, but deliberately choose not to file returns and pay taxes owed, and . . . criminals who use two sets of financial records, make false entries in books and records, claim personal expenses as business expenses, claim false deductions or credits against taxes owed, and hide or transfer assets.”

Refund Fraud

IRS CI’s Refund Fraud Program focused on combating three main types of fraud during the 2022 fiscal year: (i) questionable refunds, (ii) identity theft for purposes of obtaining fraudulent refunds, and (iii) return preparer fraud.

Given IRS CI’s focus on these areas in FY2022, we expect these to remain top focus areas in FY2023 as well. With this in mind, all taxpayers should make compliance a priority, and those who have concerns about their past filings should consult with an experienced tax lawyer promptly.

Contact Tax Lawyer Kevin E. Thorn in Boston, MA

Tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, represents Boston residents and businesses in all IRS-related matters. To request a confidential initial consultation, please call 617-692-2989, email ket@thornlawgroup.com or contact us online today.