In Dingman v. Commissioner, T.C. Memo. 2011-116, while the taxpayer was under criminal investigation, the taxpayer's attorney delivered delinquent returns and checks for some of the tax due to the IRS criminal investigation special agent. The IRS processed the checks and credited the amounts to his account on February 19, 2003; what exactly happened procedurally to the returns is unclear. On February 26, 2006, the IRS assessed a Section 6651(f), fraudulent failure to file, penalty. Bottom line, the court held that February 19, 2003 was the latest date that the returns were filed (by inference from the fact that the checks were credited that date) and thus that the ultimate assessment was untimely.
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Showing posts with label Criminal Tax Investigations. Show all posts
Showing posts with label Criminal Tax Investigations. Show all posts
Tuesday, June 7, 2011
Friday, August 27, 2010
New TIGTA Report on Trends in IRS CI Investigation Activities
TIGTA has released a report, titled Trends in the Criminal Investigation Division's Enforcement Activities Showed Improvements; However, Some Goals Were Not Attained (Reference Number: 2010-30-074), which may be viewed here. The Report has some amazing information, much of it compiled in very informative charts. The following is from the Highlights section:
Figure 1 -- Special Agent and Field Special Agent Staffing at the End of Each Fiscal Year
Figure 2 -- Special Agent Direct Investigative Time Expended Each Fiscal Year
Figure 3 -- Percentage of Direct Investigative Time Spent on Legal Source Tax and Total Tax Investigations Each Fiscal Year
Figure 4 -- Number of Subject Investigations Initiated and the Number Initiated per Field Agent Each Fiscal Year
Figure 5 -- Number of Subject Investigations Initiated Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 6 -- Number of Subject Investigations Initiated Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 7 -- Number of Subject Investigations Initiated Each Fiscal Year by Source of the Allegation or Information
Figure 8 -- Number of Fraud Referrals Received Each Fiscal Year and the Percentage Accepted
Figure 9 -- Number of Open Subject Investigations and the Total of All Investigations at the End of Each Fiscal Year and the Average Number of Each per Special Agent
Figure 10 -- Number of All Types of Investigations Open at the End of Each Fiscal Year
Figure 11 -- Number of Open Subject Investigations Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 12 -- Number of Open Subject Investigations Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 13 -- Average Elapsed Days of Subject Investigations Discontinued and Referred for Prosecution Each Fiscal Year
Figure 14 -- Number of Subject Investigations Referred for Prosecution Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 15 -- Number of Subject Investigations Referred for Prosecution Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 16 -- Number of Subjects Convicted and Sentenced for a Crime Each Fiscal Year
Figure 17 -- Number of Subjects Convicted of a Crime Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 18 -- Number of Subjects Sentenced for a Crime Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 19 -- Number of Subjects Sentenced for a Crime Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 20 -- Average Number of Months a Subject Is Incarcerated Each Fiscal Year by Compliance Strategy Program
Figure 21 -- Percentage of Investigations That Received Publicity Each Fiscal Year by Compliance Strategy Program
HighlightsThe Charts are:
Final Report issued on July 1, 2010
Highlights of Reference Number: 201030030 to the Internal Revenue Service Chief, Criminal Investigation.
IMPACT ON TAXPAYERS
The Criminal Investigation Division's (the Division) primary resource commitment is to develop and investigate legal source tax crimes. The prosecution of these cases is key to supporting the Internal Revenue Service's (IRS) overall compliance goals, enhancing voluntary compliance with the tax laws, and promoting fairness and equity in our tax system.
WHY TIGTA DID THE AUDIT
This audit was initiated as part of TIGTA's Fiscal Year (FY) 2010 Annual Audit Plan and addresses the IRS' major management challenge of Tax Compliance Initiatives. The overall objective of this review was to provide a statistical portrayal with trend analyses of the Division's enforcement activities for FYs 2000 through 2009.
WHAT TIGTA FOUND
The Division achieved its goal, spending 52.4 percent of its time on legal source tax and 72 percent on total tax investigations, both at a 10-year high. The Division also reported that the number of legal source tax investigation initiations increased by 13.3 percent and the number of tax-related initiations increased by 14.4 percent. Further, the number of subjects convicted of legal source tax crimes increased 2 percent from FY 2008 and has increased 17.5 percent since FY 2004. Similarly, the number of subjects sentenced for legal source tax crimes also increased 10.5 percent from FY 2008 and has increased 40.6 percent since FY 2004. These percentages validate that tax cases are a priority for the Division.
However, the Division did not meet its goal to complete 3,900 investigations, and instead only completed 3,848 investigations during FY 2009. According to Division management, increased resources that were devoted to the prosecution of investigations in the pipeline inventory during FY 2008 resulted in a significant decrease in FY 2008 subject investigation initiations and a related decrease in case completions during FY 2009. The Division also uses the number of convictions and the conviction rate as budgetary performance measures. The Division did not meet either of its established goals for these measures, reporting declines in both the number of convictions and the conviction rate in FY 2009. Increased numbers of dismissals during FY 2009 (resulting from efforts to reduce the pipeline inventory) caused the drop in the overall conviction rate.
In addition, the Division continues to work on increasing its special agent staffing and coordinating with the operating divisions to strengthen the Fraud Referral Program.
WHAT TIGTA RECOMMENDED
Although TIGTA made no recommendations in this report, IRS officials were provided an opportunity to review the draft report. IRS management did not provide any report comments.
Figure 1 -- Special Agent and Field Special Agent Staffing at the End of Each Fiscal Year
Figure 2 -- Special Agent Direct Investigative Time Expended Each Fiscal Year
Figure 3 -- Percentage of Direct Investigative Time Spent on Legal Source Tax and Total Tax Investigations Each Fiscal Year
Figure 4 -- Number of Subject Investigations Initiated and the Number Initiated per Field Agent Each Fiscal Year
Figure 5 -- Number of Subject Investigations Initiated Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 6 -- Number of Subject Investigations Initiated Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 7 -- Number of Subject Investigations Initiated Each Fiscal Year by Source of the Allegation or Information
Figure 8 -- Number of Fraud Referrals Received Each Fiscal Year and the Percentage Accepted
Figure 9 -- Number of Open Subject Investigations and the Total of All Investigations at the End of Each Fiscal Year and the Average Number of Each per Special Agent
Figure 10 -- Number of All Types of Investigations Open at the End of Each Fiscal Year
Figure 11 -- Number of Open Subject Investigations Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 12 -- Number of Open Subject Investigations Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 13 -- Average Elapsed Days of Subject Investigations Discontinued and Referred for Prosecution Each Fiscal Year
Figure 14 -- Number of Subject Investigations Referred for Prosecution Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 15 -- Number of Subject Investigations Referred for Prosecution Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 16 -- Number of Subjects Convicted and Sentenced for a Crime Each Fiscal Year
Figure 17 -- Number of Subjects Convicted of a Crime Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 18 -- Number of Subjects Sentenced for a Crime Each Fiscal Year for Tax-Related or Nontax-Related Violations and the Percentage That Is Tax-Related
Figure 19 -- Number of Subjects Sentenced for a Crime Each Fiscal Year by Compliance Strategy Program and the Percentage That Is Legal Source Tax Crimes
Figure 20 -- Average Number of Months a Subject Is Incarcerated Each Fiscal Year by Compliance Strategy Program
Figure 21 -- Percentage of Investigations That Received Publicity Each Fiscal Year by Compliance Strategy Program
Tuesday, July 20, 2010
Even More on DOJ Authority to Investigate Tax Crimes
I have previously blogged this issue here to address DOJ Tax's claims that it has authority to investigate tax crimes. I had cited the Webster Report to the effect that the IRS was the only federal agency authorized to investigate tax crimes. I was reading a new TIGTA Report today titled The Criminal Investigation Division Can Take Steps to Ensure Its Seizure Opportunities Are Maximized, No. 2010-30-058 (6/18/10). The report also says (Background, p. 1): "The CI Division is the only Federal agency that can investigate potential criminal violations of the Internal Revenue Code."
Well, I thought, perhaps TIGTA is just not as smart or savvy as DOJ Tax and was just talking off the reservation (as was, presumably Judge Webster in the Webster report). So, I just did the trusty Google search and I find that the following sources, among many others, also repeat this notion, perhaps rotely (maybe cloning it from Judge Webster or whoever he cloned it from).
IRS CI
Treasury
Wikipedia
Facebook
You know, I guess if it is said often enough by somewhat credible sources (I am not among them, but can repeat what I read on the internet), someone may begin to believe this stuff.
Well, I thought, perhaps TIGTA is just not as smart or savvy as DOJ Tax and was just talking off the reservation (as was, presumably Judge Webster in the Webster report). So, I just did the trusty Google search and I find that the following sources, among many others, also repeat this notion, perhaps rotely (maybe cloning it from Judge Webster or whoever he cloned it from).
IRS CI
Treasury
Wikipedia
You know, I guess if it is said often enough by somewhat credible sources (I am not among them, but can repeat what I read on the internet), someone may begin to believe this stuff.
Thursday, July 8, 2010
More on HSBC Initiative and DOJ Tax Division Authority to Conduct Criminal Tax Investigations
The Wall Street Journal has an article today here with further discussion of the new HSBC initiative which I discussed earlier here. I just want to focus on one picky point in the article. The article quotes the DOJ Tax Division letter (signed by himself, Kevin Downing) as concluding with the following: "You are further advised, that you are the subject of a criminal investigation being conducted by the Tax Division."
As I discussed in a prior blog here, I question the authority of the Tax Division to conduct a criminal tax investigation. A grand jury can certainly conduct a criminal tax investigation, but I presume that, if Mr. Downing were acting as a designated attorney for the grand jury, he would have had to identify himself as doing so and stated that the investigation was a grand jury investigation. That is not what he says. So I guess he is acting, as he says, under some authority that he assumes the Tax Division has to conduct criminal tax investigations. If he is right, then I am wrong.
One other thing I do note with respect to these supposed DOJ Tax criminal tax investigations -- there seems to be a glitch in the secrecy safeguards around tax matters. Criminal tax investigations conducted by the IRS are covered by Section 6103; criminal tax investigations conducted by the grand jury are covered by Rule 6(e); criminal tax investigations conducted by the Tax Division are not covered, meaning, I suppose, that information and documents gathered in such investigations may be disseminated as DOJ Tax and its attorneys see fit. I don't think that is the right result if one considers the spirit of Section 6103 and Rule 6(e) in the context of criminal tax investigations. Which may be a good reason to question DOJ Tax's claim of authority to conduct such investigations.
As I discussed in a prior blog here, I question the authority of the Tax Division to conduct a criminal tax investigation. A grand jury can certainly conduct a criminal tax investigation, but I presume that, if Mr. Downing were acting as a designated attorney for the grand jury, he would have had to identify himself as doing so and stated that the investigation was a grand jury investigation. That is not what he says. So I guess he is acting, as he says, under some authority that he assumes the Tax Division has to conduct criminal tax investigations. If he is right, then I am wrong.
One other thing I do note with respect to these supposed DOJ Tax criminal tax investigations -- there seems to be a glitch in the secrecy safeguards around tax matters. Criminal tax investigations conducted by the IRS are covered by Section 6103; criminal tax investigations conducted by the grand jury are covered by Rule 6(e); criminal tax investigations conducted by the Tax Division are not covered, meaning, I suppose, that information and documents gathered in such investigations may be disseminated as DOJ Tax and its attorneys see fit. I don't think that is the right result if one considers the spirit of Section 6103 and Rule 6(e) in the context of criminal tax investigations. Which may be a good reason to question DOJ Tax's claim of authority to conduct such investigations.
Friday, June 5, 2009
DOJ Tax Division Criminal Tax Investigation Authority
In the KPMG-related criminal case in the Southern District of New York, two issues arose regarding the scope of the authority of the Department of Justice Tax Division ("DOJ Tax") with respect to criminal tax matters. The issues were:
1. Does DOJ Tax have authority to conduct a criminal tax investigation independent of a grand jury investigation?
2. Does DOJ Tax have authority to prosecute or authorize prosecution of a federal tax crime if the IRS does not agree with the prosecution?
Each of these questions have a context that I shall discuss. Suffice it to say at this point that I made a FOIA request to DOJ Tax (here) to try to obtain answers to these questions. The DOJ Tax FOIA response (here) is quite cryptic and simply refers to the provisions of 28 CFR Section 0.70 (online version here). (Actually, the copy of the CFR provision enclosed with DOJ Tax's response is an earlier version than the current one I link to, but I don't think there were any changes in the later version, other than that redesignating the provision as subpart M rather than subpart N in the earlier version provided by DOJ Tax.) The DOJ Tax response also refers generally to the IRS Internal Revenue Manual ("IRM") (access here) without specific citation; I have been unable to discern how the IRM could possibly establish DOJ Tax authority in the subject areas, since the IRM deals with internal IRS procedures.
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1. Does DOJ Tax have authority to conduct a criminal tax investigation independent of a grand jury investigation?
2. Does DOJ Tax have authority to prosecute or authorize prosecution of a federal tax crime if the IRS does not agree with the prosecution?
Each of these questions have a context that I shall discuss. Suffice it to say at this point that I made a FOIA request to DOJ Tax (here) to try to obtain answers to these questions. The DOJ Tax FOIA response (here) is quite cryptic and simply refers to the provisions of 28 CFR Section 0.70 (online version here). (Actually, the copy of the CFR provision enclosed with DOJ Tax's response is an earlier version than the current one I link to, but I don't think there were any changes in the later version, other than that redesignating the provision as subpart M rather than subpart N in the earlier version provided by DOJ Tax.) The DOJ Tax response also refers generally to the IRS Internal Revenue Manual ("IRM") (access here) without specific citation; I have been unable to discern how the IRM could possibly establish DOJ Tax authority in the subject areas, since the IRM deals with internal IRS procedures.
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