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IRS criminal cases fall by 12 percent as agents head for the exits

By DAVID VOREACOS | Bloomberg | Published: February 27, 2017

Sending tax cheats to prison has become increasingly difficult for the Internal Revenue Service amid an exodus of staffers from its Criminal Investigation Division and a 12 percent drop in new cases.

Budget cuts and a battering by House Republicans led experienced criminal agents to retire, with the number falling 4.3 percent to 2,217 in 2016. Over the past five years, agent staffing levels have decreased 19.1 percent, according to an annual report released Monday by the IRS division.

IRS Criminal Investigation agents enforce U.S. tax laws, but also work on money laundering, identity theft, cybertheft, narcotics and other non-tax cases. Such "other financial cases" dropped 11 percent last year, while new tax cases fell 13 percent to 1,963. Combined, the decrease is about 12 percent.

In recent years, retiring agents and former prosecutors have questioned whether the IRS spends too much time on non-tax cases as new hires have slowed dramatically.

"IRS CI has a unique position in the government in its ability to investigate core tax cases," Kathryn Keneally, the Justice Department's former top tax prosecutor, said in an interview. "To the extent that IRS CI has limited resources, they should be directed at its core mission."

In the report, investigation division Chief Richard Weber lauded the work of his agents, who also examine employment tax fraud, offshore tax evasion and public corruption. Weber, who has run the unit since 2012, visits Capitol Hill and field offices around the U.S. to tout his agents and their relevance.

"We simply cannot underestimate the impact or the deterrent effect we are having on would-be criminals around the world," Weber said in the report, while noting the division's "diminishing resources" and urging agents to "stay mission focused."

Just as new tax investigations fell, the number of tax cases resulting in criminal charges fell 13.6 percent. CI agents are also dramatically scaling back their identity theft cases, from a high of 1,492 new investigations in 2013 to 537 cases opened last year.

Some investigative areas saw upticks. New cases in health care fraud grew to 127 last year, from 122 in 2015. New employment tax fraud cases went to 134 from 102 from 2015, while public corruption probes rose to 84 from 68. The division also saw an increase in new terrorism cases to 42 last year from 18 in 2015, according to the report.
 

The Internal Revenue Service building is in Washington, D.C., is seen on Thursday, August 22, 2013.
CHUCK MYERS/TNS FILE PHOTO

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