IRS: “Nearly 90%” of Criminal Tax Cases Result in Convictions

The Internal Revenue Service (IRS) recently released its Strategic Plan FY2022-2026. While the IRS’ new five-year plan provides U.S. taxpayers with several important insights, one of the most notable lines in the plan appears buried in the plan’s “Enforcement” section:

“A crucial part of deterrence involves increasing our presence in the communities we serve, publicizing enforcement successes, like our nearly 90% conviction rate from criminal cases . . . .”

This conviction rate is extraordinarily high, and it highlights the importance of avoiding IRS scrutiny whenever possible—and working to resolve tax controversies with the IRS out of court when necessary.

What Types of Criminal Charges Does the IRS Pursue?

The IRS’ Strategic Plan FY2022-2026 breaks down the agency’s criminal enforcement efforts into three areas: (i) tax, (ii) non-tax, and (iii) narcotics. As you might expect, the substantial majority of the IRS’ criminal enforcement efforts are focused on tax-related matters, but the IRS still devotes approximately 25 percent of its investigative efforts to other areas. Some of the IRS’s top enforcement priorities include:

• Abusive tax schemes
• Corporate and employment tax fraud
• Cyber crimes
• Identity theft and refund fraud
• International tax fraud
• Money laundering
• Public corruption
• Organized crime

Additionally, the IRS’ new five-year plan indicates that the agency plans to devote substantial resources to enforcement in the areas of COVID-19 relief fraud and cryptocurrency tax compliance in the years to come. These have both been recent priorities as well, but the IRS’ Strategic Plan FY2022-2026 notes that the agency has lacked the necessary resources to effectively enforce compliance on a broad scale.

How Can U.S. Taxpayers in Maryland Avoid IRS Scrutiny?

Given the risks of facing a criminal IRS investigation, what can—and should—U.S. taxpayers in Maryland do to avoid unwanted scrutiny? Broadly speaking, taxpayers should:

• Prioritize Tax Compliance – With the IRS adopting new predictive and analytics software applications to identify cases of suspected tax fraud as a matter of course, taxpayers will need to prioritize compliance going forward.
• Identify Past Reporting and Payment Deficiencies – Taxpayers should consider reviewing their past filings to assess their compliance and identify any outstanding reporting or payment deficiencies.
• Proactively Resolve Tax Issues – For taxpayers who are behind on their reporting or payment obligations, rectifying these issues proactively (before the IRS initiates an audit or investigation) can significantly reduce the risks involved.

What Should Taxpayers Do When Targeted By the IRS?

What if it is already too late to avoid IRS scrutiny? If you are currently facing an IRS audit or investigation, you should engage experienced defense counsel promptly. Despite the IRS’ high conviction rate, it is possible to avoid penalties in many cases. An experienced tax lawyer will be able to deal with the IRS on your behalf, help you evaluate your options, and work to steer your audit or investigation toward a favorable (and pre-trial) resolution.

Need Tax Help? Schedule a Confidential Consultation at US International Tax Advisors

Do you need tax help in Maryland? If so, we encourage you to contact us promptly. Call 844-796-8565 or contact us confidentially online to schedule a confidential consultation with US International Tax Advisors.