Efforts of IRS' Criminal Investigation Division To Detect and Deter Underreporters

The Internal Revenue Service (IRS) Criminal Investigation Division needs to enhance its ability to detect and deter those persons who underreport their income for tax purposes. IRS needs a better defined national criminal enforcement strategy to effectively deal with the extensive amount of unreported income from illegal sources. Routine audits and collection actions have little chance of detecting such schemes. The Criminal Investigations Division gathers information to detect complex tax evasions. However, the value and impact of these actions have been minimal because little effort is made to coordinate the information gathering activities of the 58 district offices. In addition, a lack of coordination between IRS and the Department of Justice during the criminal investigation planning process results in unnecessary staff-day expenditures which produce little in the way of prosecutions, let alone convictions. A need exists for better coordination between IRS and Justice. IRS needs to determine whether its criminal investigation activities are receiving sufficient resources, particularly in comparison to other compliance activities. Any allocation of investigative resources should be done as part of a carefully thought out, nationally coordinated criminal enforcement strategy. IRS may have to reallocate discretionary resources from districts not having national priority noncompliance problems to districts having such problems.