Taxpayers in Maryland and around the country were informed recently that IRS investigation and enforcement activity regarding tax crimes took a hit during the first year of the Trump Administration due to cutbacks in funding to the federal revenue-collection agency. Prosecution of IRS tax cases after allegations of federal tax crimes including tax fraud and tax evasion dropped by hundreds of cases during 2017.
After the release of the IRS annual report, officials insisted that goals such as heightened enforcement of employment taxes would remain a priority despite the reduced amount of resources from the federal budget. The chief of the IRS Criminal Investigation Division, Douglas Fort, assured would-be targets of criminal tax evasion enforcement efforts that they should not relax despite the diminished capacity of the agency to participate in every investigation they would with full funding.
Fort noted that reduced results should be expected from such cutbacks, stating that the agency employing about 2,200 enforcement agents, roughly the same as in the late 1960s. Investigations of alleged tax fraud fell from 84 to 46 since 2015 and investigations of those arrested for a tax crime under the heading of money laundering declined to 1,096 from 1,436 two years earlier. However, according to the report, investigations into alleged non-filers stayed steady at the 2016 figure of 206.
For example, the number of investigations initiated on fraud by financial institutions dropped to 46 last year from 66 in 2016 and 84 in 2015. Money laundering cases dropped to 1,096 from 1,201 and 1,436 in the respective years. At the same time, investigations on non-filers, many of which could result in criminal consequences, remained at 206, the same level as in 2016 and only slightly down from 2015.
The agency may have reduced resources, but promises vigorous prosecution in the cases they choose to investigate. Individuals accused of tax crimes may not want to address such allegations without the assistance of an attorney with experience in representing clients charged by the IRS.