Tuesday, October 17, 2017

TIGTA Report on CI (10/17/17)

TIGTA recently issued a report titled Declining Resources Have Contributed to Unfavorable Trends in Several Key Criminal Investigation Business Results (Ref. #  2017-30-073 9/13/17), here.

Here is the excerpt of the summary of the findings:
Since FY 2011, reductions in staffing and available funding for CI activities contributed to a decrease in the number and size of CI field offices throughout the United States. While managing its core mission tax work with declining resources, the IRS continued to work general fraud, international, and Bank Secrecy Act (BSA) cases as well. 
For FY 2016, CI was budgeted approximately $576 million to fund programs that investigate potential criminal violations of the Internal Revenue tax laws and certain other laws, and recommend prosecution as warranted. Since FY 2012, the attrition of field special agents resulted in a decline in the number of cases initiated and completed. In FY 2016, CI initiated 3,395 cases, an overall decrease of 34 percent compared to the 5,125 cases initiated in FY 2012. 
Overall, special agents have consistently maintained inventory levels over an average of 5.30 cases per field special agent. Special agent inventories included a focus on international cases. In FY 2016, international cases resulting in sentencing improved approximately 33 percent from FY 2012.  
CI relies on a variety of internal and external sources to initiate cases. The percentage of cases initiated from functions within the IRS has decreased 5 percent from FY 2012 to FY 2016. The percentage of cases initiated from the United States Attorney’s Offices and other Government agency sources increased, representing 64 percent of the 3,395 initiations. 
Between FY 2012 and FY 2016, CI implemented policy changes that affected the BSA and identity theft cases. CI will no longer pursue seizure and forfeiture of funds related to legal source structuring cases under the BSA unless justified by exceptional circumstances. In September 2012, the Department of Justice implemented an expedited and parallel review of proposed indictments arising from stolen identity refund fraud cases resulting in a spike of initiations and completions for FY 2012 through FY 2013 of identity theft cases. 
TIGTA identified a trend of special agent inventory taking longer to turnover because of the increased time it takes for special agents to determine a case did not contain prosecution potential. In FY 2016, it took an average of 540 days (1.5 years) to determine that there was no prosecution potential, while it took an average of 422 days in FY 2012.
TIGTA made no recommendations, but did include IRS's response.  The following are key excerpts from the response:

1.  Noting the attrition of CI agents and the decrease in initiated cases, "CI fears a continued trend in this direction will negatively impact our mission and IRS's ability to assure the integrity and fairness of the tax system."

2.  "CI has ensured that in excess of 70% of direct investigative time is expended on tax-related charges, while continuing to meet our commitment to the nation's counter-narcotics and counter-terrorism programs, consistently maintained average case inventory levels, focused on international cases, and changed policies regarding investigation of Bank Secrecy Act and Identity Theft cases."

3.  "CI's 96% or higher prosecution referral and conviction rates, among the highest in federal law enforcement, further maximizes the impact of CI resources to help ensure the integrity and fairness of the U.S. tax system."

4.  IRS responds to the reports indication that Identity Theft and BSA cases are no longer treated as part of CI's core mission.  "The exclusion of those areas from 'core tax cases' does not mean that they are not important part of CI's mission.  Identity Theft and BSA cases are not what CI, IRS and the Department of Justice generally consider cases which address traditional tax crimes such as employment tax evasion and the use of offshore tax havens."

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