Thursday, February 11, 2010

DOJ Tax Budget Request - The Criminal Parts #10 - Illegal Source Income

More on the DOJ Tax Budget Request


Illegal Source Income

Tax Division attorneys also play significant roles in investigating and prosecuting tax violations committed in the course of other criminal conduct. Where criminals evade taxes on income from illegal sources, tax charges provide a valuable complement to charges for the underlying criminal activity. One area where this frequently occurs is narcotics trafficking cases generated by the Organized Crime and Drug Enforcement Task Force program, which the Tax Division actively supports. Tax Division attorneys also fight against international terrorism, and litigate tax charges related to health care fraud, securities fraud, mortgage fraud, public corruption, and money laundering.

In October 2009, in United States v. Sims Lawson, Jr. (N.D. AL), Lawson was sentenced to 70 months in prison for three counts of filing false tax returns in connection with an embezzlement scheme. In June 2009, Lawson pleaded guilty to willfully failing to report income embezzled from an estate that he managed. Lawson was hired in 2002 to co-manage the estate and that his duties included managing the books and records of the estate, collecting on loans made by the estate, and determining the estate’s value for tax purposes. In 2005, the estate received an ex parte court order removing Lawson from his responsibilities as trustee. It was later determined that, from 2002 until 2004, Lawson had misappropriated at least $721,417 and failed to report that income on his personal tax returns. The estate also paid Lawson an additional $297,352, which he failed to report on his personal tax return.
International Cooperation to Investigate Evasion of U.S. Taxes

The Tax Division regularly provides advice and assistance to United States Attorneys, Tax Division attorneys, and IRS agents seeking extradition, information, and cooperation from other countries for both civil and criminal investigations and cases. Occasionally, the Tax Division provides assistance to attorneys from other agencies and offices of the United States government, including the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Department of Homeland Security. The Tax Division is also working closely with IRS Criminal Investigation - International to develop a nationwide continuing professional education class for Special Agents concerning international tax matters.


The Tax Division also works to increase cooperation with foreign nations, recognizing that reciprocal engagements ultimately further the Division’s mission. For example, the Division has participated in consultations both with France and Canada in an effort to improve the exchange of information under our income tax treaties with those countries. The Division periodically hosts visiting delegations of tax officials from countries interested in learning more about federal tax enforcement in the United States. The Division continues to work to increase cooperation between the United States and countries in Latin America and the Caribbean by providing instructors for the International Law Enforcement Academy in El Salvador.

The Tax Division is an important partner in the U.S. negotiating team for Double Taxation Conventions, Tax Information Exchange Agreements, and other international agreements concerning tax information. Recently, the Tax Division participated in the historic negotiations that led to the signing of Tax Information Exchange Agreements with the Principality of Liechtenstein and with Gibraltar. The Tax Division is also involved in negotiations with the governments of Switzerland and Luxembourg concerning historic changes to the exchange of information provisions in our income tax treaties with those countries. Other negotiations are ongoing.

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