Analysis of the latest government case-by-case data obtained by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University shows that during January 2015 a total of 131 taxpayers were prosecuted as a result of IRS investigations.
The data tracking trends also show that many IRS prosecutions are timed to coincide with tax filing season, presumably to help remind taxpayers of their legal obligations to avoid underreporting taxes owed on the returns they file.
Year after year, April consistently has the greatest number of criminal prosecutions as a result of IRS investigations — two-thirds or more higher than those seen in January. Figure 1 and Table 1 show both the 10-year average as well as prosecution figures from January through December 2014.
[Table 1. Number of Criminal Prosecutions from IRS Investigations omitted]
[Figure 1. IRS Criminal Prosecutions by Month omitted]
The odds of criminal prosecution have also varied over time. The long term trend in prosecutions for these matters going back to FY 1994 is shown more clearly in Figure 2. The vertical bars in Figure 2 represent the number of prosecutions of this type recorded each fiscal year. Each presidential administration is distinguished by the color of the bars. While the numbers were highest during the early Clinton administration, the trend was downward and was substantially lower during the Bush administration. After President Obama assumed office, they began rising again. They climbed to 2,010 prosecutions during FY 2013 before falling by 16 percent to 1,689 during FY 2014.
[Figure 2. IRS Criminal Prosecutions Over The Past 20 Years omitted]
Top Ranked Lead Charges
Table 2 shows the top lead charges recorded in the prosecutions of matters filed in U.S. District Court during FY 2014.
[Table 2. Top Charges Filed omitted, but the ranking at the top is tax perjury (7206(1)), false statement conspiracy (18 USC 286), and tax evasion (7201)]
* "Fraud and False statements" (Title 26 U.S.C Section 7206) was the most frequent recorded lead charge. Title 26 U.S.C Section 7206 was ranked 1st a year ago, while it was the 1st most frequently invoked five years ago. It was ranked 1st ten years ago and 2nd twenty years ago.
* Ranked 2nd in frequency was the lead charge "Conspiracy to defraud the Government claims" under Title 18 U.S.C Section 286. Title 18 U.S.C Section 286 was ranked 6th a year ago, while it was the 5th most frequently invoked five years ago. It was ranked 7th ten years ago and 9th twenty years ago.
* Ranked 3rd was "Attempt to evade or defeat tax" under Title 26 U.S.C Section 7201. Title 26 U.S.C Section 7201 was ranked 2nd a year ago, while it was the 2nd most frequently invoked five years ago. It was ranked 2nd ten years ago and 1st twenty years ago.
Among these top ten lead charges, the one showing the greatest increase in prosecutions — up 37.0 percent — compared to one year ago was Title 18 U.S.C Section 286 that involves "Conspiracy to defraud the Government claims ". This was the same statute that had the largest increase — 888 percent — when compared with five years ago.
Again among the top ten lead charges, the one showing the sharpest decline in prosecutions compared to one year ago — down 48.4 percent — was "Public money, property or records " (Title 18 U.S.C Section 641 ). This was the same statute that had the largest decrease — 28.4 percent — when compared with five years ago.
[Top Ranked Judicial Districts omitted]The reason for the increase in charges for false statement conspiracy is the continuing proliferation of stolen identity fraud via tax return filings. Note that tax perjury ranks higher in number of prosecutions than tax fraud. I suspect that, in most of the tax perjury prosecutions, tax evasion could have been charged. Tax perjury charges generally require less intense prosecutorial resources and, in an environment where most cases are resolved by plea agreement, are easier for a defendant to accept than tax evasion. And, generally, tax perjury, although a 3-year felony as compared to tax evasion (5-years) will draw the same sentence as to the tax evasion charge because of the way the Guidelines work with the tax loss -- the same for either tax perjury or tax evasion -- being the principal driver in the Guidelines calculations.
I omitted the tables and figures with the data. I encourage readers, however, to look at those items on the TRAC website linked above. They are very interesting. But keep in mind that they are just statistics which can be deployed in the service of truth or deception. Still, over the years, I have observed TRAC to be honest in the collection, presentation and analysis of the data.