IRS Releases Criminal Investigation Statistics

irs-sealThe IRS released its Criminal Investigation Annual Report for fiscal year 2013 on Monday, February 24. The fiscal year ended September 30, 2013, so the report covers the fourth quarter of 2012 and the first three quarters of 2013. The report shows increases in enforcement actions and convictions for tax crimes. IRS Criminal Investigation continues its focus on identity theft crimes, recommending prosecution of over 1,250 individuals who were involved in identity theft crimes in fiscal year 2013.
As of September 30, 2013, the IRS was able to report the following:

  • IRS Criminal Investigation initiated 5,314 cases and recommended 4,364 cases for prosecution.
  • A 12.5% increase in investigations initiated compared to the 2012 fiscal year.
  • An 18% increase in prosecution recommendations compared to the 2012 fiscal year.
  • The conviction rate for fiscal year 2013 was 93%.
  • Total convictions increased by over 25% from fiscal year 2012 to fiscal year 2013.
  • 80% of convictions in fiscal year 2013 resulted in confinement to federal prison, halfway house, home detention, or some combination thereof.
  • IRS Criminal Investigation seized over $465 million in assets in fiscal year 2013.
  • Taxpayers forfeited over $517 million in assets in fiscal year 2013.

Notably, despite the controversy over regulation of return preparers, only 309 investigations of return preparers were initiated in fiscal year 2013, down from 443 in fiscal year 2012.

Here is the full report.

 

Court of Appeals Rules that IRS Cannot Regulate Return Preparers

The D.C. Circuit Court of Appeals has affirmed the ruling of the lower court and held that the IRS does not have the statutory authority to regulate tax return preparers.

In a unanimous and rather direct opinion, the Court of Appeals listed six reasons why the 130 year old statute, 31 U.S.C. § 330, relied upon by the IRS was insufficient to authorize regulation of non-accountant and non-attorney tax return preparers.

  1. Tax return preparers do not represent taxpayers, they assist them;
  2. Tax return preparers do not practice before the IRS;
  3. Tax return preparers are not representing taxpayers a contested proceeding;
  4. If valid, the authority of the underlying statute would make all other statutes regulating tax return preparers, e.g. the IRC, moot;
  5. The statute’s text and legislative history do not support the broad regulatory powers claimed by the IRS; and
  6. Finally, the IRS didn’t apply the century-old statute to regulate tax return preparers until 2011 and before that the agency’s statements about return preparer regulation were inconsistent with the current interpretation.

The court summarized its view: “the traditional tools of statutory interpretation – including the statute’s text, history, structure, and context – foreclose and render unreasonable the IRS’s interpretation of Section 330.” It also advised the IRS that if it wishes to regulate tax return preparers it should introduce and pass new legislation.

Despite the resounding defeat, the IRS may still petition the appellate court a for rehearing en banc, which would presumably include the three recently appointed members of the D.C. Circuit. The deadline for that motion is March 28.

If the IRS seeks a writ for certiorari with the U.S. Supreme Court, it must file a petition by May 12.

Read the entire opinion here:
Loving v. IRS, No. 13-5061 (D.C. Cir. Feb. 11, 2014)