IRS Collection Activities in the Area of Organized Crime

GAO was requested to provide information concerning the Internal Revenue Services's (IRS) efforts to collect monies owed IRS by organized crime figures.

GAO found that collection activity is considered a civil action and cannot begin until a case is referred by the Criminal Investigation Division (CID) to the Collection Division of IRS. However, CID will not close a case and refer it until all judicial proceedings are completed. Once an organized crime case is referred to the Collection Division, it loses its identity, and the Division does not specifically emphasize the collection of monies owed by organized crime individuals. Of the 66 organized crime cases reviewed, 12 had tax assessments totaling over $380,000. An internal IRS study showed a high incidence of uncollectible accounts in organized crime strike force cases. Because the study involved only organized crime cases for which criminal investigative work had been completed during fiscal years 1978 and 1979 and the first quarter of fiscal year 1980, and 81 percent of the cases examined had not reached the collection phase, GAO could not draw any overall conclusions concerning the IRS collection efforts of monies owed by organized criminals. Although IRS does not place any priority on the collection of monies from known organized criminals, there is nothing in IRS regulations precluding it from making such collections a high priority. IRS officials stated that currently dollar criterion takes precedence in their collection efforts.