Thoughts on IRS Web Page titled "How criminal investigations are initiated" (11/13/24)

The IRS has a web page titled “How criminal investigations are initiated, here” (last reviewed or updated 8/20/24 and visited 11/13/24). It is a “lite” introduction to the topic. I found the concluding “claim” interesting: 

Conviction

The ultimate goal of an IRS Criminal Investigation prosecution recommendation is to obtain a conviction - either by a guilty verdict or plea. Approximately 3,000 criminal prosecutions per year provide a deterrent effect and signals to our compliant taxpayers that fraud will not be tolerated.

Notice how the subject shifts from the first sentence to the second. The first sentence talks about conviction (as does the heading). The second sentence talks about prosecutions which is not the same as convictions unless the implication is that there is a 100% conviction rate. (The conviction rate is not 100% which I address later in this blog post.)

The IRS offers these statistics in its annual Data Book, Table 26 currently titled “SOI Tax Stats - Criminal Investigation Program, by Status or Disposition - IRS Data Book Table 26,” here (last reviewed or updated 8/20/24; viewed 11/13/24). Here is a screenshot of the 2023 Table 26:

Note that the indictments and informations were 1,676, the total for legal source and illegal source financial crimes. The 2022 numbers were 1,670 for legal and illegal source prosecutions. So, the claim of 3,000 prosecutions is incorrect based on the IRS numbers. However, the above statistics are for prosecutions from investigations by IRS CI. Tax prosecutions may come from other sources (e.g., government investigations other than from IRS CI in which tax crimes may be added to nontax crimes for prosecution reasons). So, such nontax prosecutions may account for the difference of about 1,300.

My particular interest in tax prosecutions and convictions is to a subset of all prosecutions and convictions—legal income source prosecutions and convictions. Many readers will remember the Webster Commission Report, which I have previously cited as Webster Commission, Review of the Internal Revenue Service's Criminal Investigation Division (April 1999) from William H. Webster and the Criminal Investigation Division Review Task Force (often referred to as the “Webster Report”), here. Webster was formerly FBI Director and trial and appellate judge. In my now no-longer updated Federal Tax Crimes 2013 book, SSRN here, I summarize the Report (p. 18): 

The Webster Report recommended that the IRS's CI refocus its efforts on its “central mission” – “to act as the Internal Revenue Service's criminal investigative component in support of the administration of the federal internal revenue laws.” A significant portion of CI's investigative resources had been focused on other national priorities -- such as drugs and organized crime – and away from its role in reinforcing the tax system. The Webster Report recommended that much of those diverted resources be shifted back to general tax enforcement. CI can continue to be involved in these other areas that can effectively use its financial skills, but the principal focus must be on tax administration.

I keep a running spreadsheet on IRS CI and DOJ Tax prosecutions and convictions (including subsets for example of prosecution recommendations) for legal source tax prosecutions and convictions related to prosecution recommendations made by IRS CI. For my interests and, I suspect, the interests of most readers of this blog, legal source statistics are the more relevant because, as suggested by the Webster Report, illegal source prosecutions and indictments divert IRS resources away from the principal role of CI to reinforce the tax system (as opposed to boosting general criminal enforcement). I draw the legal source information from the IRS spreadsheets (see screenshot above). My statistics show the following for the 2019-2023 period:

 

Of course, a reminder, these are statistics only for CI investigated tax crimes ending in prosecutions and convictions.

For a broader term view, here are some statistics:

 

For earlier posts on such statistics, see

• TRAC Offerings on IRS and DOJ Criminal Tax Enforcement (Federal Tax Crimes Blog 3/24/16), here.
• DOJ Tax Representative Touts Government Successes (Federal Tax Crimes Blog 11/8/14), here.
• TRAC Posts Statistics on Criminal Tax Enforcement Related to IRS Referrals (Federal Tax Crimes Blog 1/5/14), here.
• More on Conviction Rates in Tax Cases (Federal Tax Crimes Blog (Federal Tax Crimes Blog 5/12/13), here.
• Plea Bargains Generally and in Tax Cases; Moneyball (Federal Tax Crimes Blog 3/24/12), here.