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IRS Criminal Investigations: Focus on data and international

IRS Criminal Investigation (CI) chief Don Fort recently announced two new programs that will focus on data analysis and international tax enforcement. Sworn in on June 26, the new chief has spent 26 years as criminal investigation agent.

The data investigations unit will have a national scope and tie together information coming out of field offices to better focus resources. The international tax enforcement group will be based in the Washington D.C. field office and bring together special agents who have becomes subject matter experts in a focused operational group.

Will there be more investigations and audits?

The announcement seems to indicate more of an organizational shift based on the larger volumes of data that the Service must digest. This may not result in more investigations; instead, the realignments look like trying to work smarter with declining resources.

Initial Priorities

Focus of initial projects, in addition to international tax compliance, will be:

  • Employment tax
  • SEC microcap fraud
  • Identity theft

With identity theft, CI notes that the level of sophistication is rapidly improving. Fort noted that several years ago it was more akin to “street-level crime,” but has since morphed into “complicated international cybercrime.” Schemes have been utilizing ransomware and phishing tactics targeted at tax professionals.

With international tax enforcement, the amount of information streaming in from the Foreign Account tax Compliance Act (FATCA), the Offshore Voluntary Disclosure Program, past completed investigations, the Swiss bank project, whistleblowers and the Panama Papers is staggering. Data analytics will be relied on heavily in case selection and to set future priorities.

Between 10 and 12 agents will focus on international tax in the new operational group. While based in Washington D.C., members of the team will be strategically located throughout the country and receive support from the Department of Justice’s Tax Division. A new team dedicated to international taxation cases is just the latest reason to ensure that diversified investment portfolios spread across the globe are US tax compliant.

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