1. An IRS representative said that
CI checks to ensure that taxpayers who undergo a pre-clearance check for acceptance into the voluntary disclosure programs follow through with disclosure. "Those [taxpayers] are suspect, and we are looking at those who decided not to continue to come through. Will it be Criminal Investigation? I don't know; it could be a civil audit,"2. The IRS representative also \
warned that taxpayers who make only partial disclosures or don't supply all the information about their offshore activity to the IRS will face severe consequences. "When [the taxpayer] is not truthful, yes, CI will come back in," and the taxpayer may be criminally liable, she said, adding that the same is true if badges of fraud or lies are uncovered during an examination.3. Practitioners discussed the civil agents' use of Fraud Technical Advisers (FTAs). I link some resources on the FTA below; those wanting a deeper level of analysis with the case background should review the IRS Memo dated 8/16/07. The practitioners discussed some possible ramifications of the lead case of United States v. Tweel, 550 F.2d 297 (5th Cir. 1977), The article says;
Richard Speier Jr., a consultant who previously served as IRS CI deputy chief, said that fraud technical advisers (FTAs) were introduced in the early 2000s as a way for experienced revenue agents to guide field personnel on what makes a viable fraud referral without involving CI or violating Tweel. He added that the intent was not for FTAs to be an alter ego for CI.
But Martin A. Schainbaum of the law firm Martin A. Schainbaum PLC disagreed, saying that the IRS was merely arguing form over substance in trying to avoid Tweel, because FTAs tell the agents what to do in gathering evidence for a potential fraud referral. FTAs -- now sometimes called fraud referral specialists -- are supposed to help revenue agents so that CI doesn't have to get involved, Speier said. Schainbaum said greater transparency would be evident if the IRS told taxpayers that an FTA was involved. Sparkman said that FTAs operate independently of CI, noting that CI does not weigh in on FTA decisions or have authority over them and that the civil division ultimately decides whether to make a fraud referral.4. Practitioners also discussed the sensitivity in claiming of the Fifth Amendment privilege in a civil audit and the sensitivities it would raise.
5. Finally, the article reports on IRS activity on teams with other federal agencies to review Suspicious Activity Reports filed by financial institutions. The SAR is here.
"We're finding not just Title 31 traditional money laundering cases, [but] we're finding tax evasion cases, tax fraud cases, and identity theft," she said. The IRS also has employees who perform civil audits of Title 31 Bank Secrecy Act compliance, essentially acting as contractors for Treasury's Financial Crimes Enforcement Network, she said.Links for Fraud Technical Adviser:
- IRS Memo - Malarkey to Howe re FTA's Role in Civil and Criminal Investigations dated 8/16/07, here.
- IRM 25.1.6. Civil Fraud, here.
- IRM 4.26.8 [Bank Secrecy Act] Special Procedures, here.