Criminal Investigation Internal Revenue Service Internal Revenue Service Criminal Investigation (Accountants with Guns) Andrew T. Hromoko, Jr. Special Agent Public Information Officer

Criminal Investigation Internal Revenue Service OBJECTIVE Internal Revenue Service –Criminal Investigation Types of Investigations –Investigative Tools Scams and Schemes Questions

Criminal Investigation Internal Revenue Service Our Mission In support of the overall IRS Mission, Criminal Investigation serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.

Criminal Investigation Internal Revenue Service Civil vs. Criminal Tax System –Voluntary Compliance –Self Assessment –Income/Employment/Excise Civil –Notices/Audits Expectation of proof on the Taxpayer Additional tax, interest and penalties Criminal Willfulness and Intent Expectation of proof on the government Criminal Sanctions

Criminal Investigation Internal Revenue Service Our Special Agents Federal Law Enforcement Officers with Accounting Expertise Must Complete Training at the Federal Law Enforcement Training Center (FLETC) –9 weeks of basic techniques training –16 weeks of specialized training for financial investigation

Criminal Investigation Internal Revenue Service Investigative Techniques Subpoenas and Summons Search Warrants Surveillance Undercover operations Interviewing Analyzing Records Following the paper/computer/money trail

Criminal Investigation Internal Revenue Service Legal Source Tax Crimes Income derived from legal sources –Unreported Income/False Deductions –Foreign and Domestic Trusts –Return Preparer Fraud and Questionable Refunds –Non-Filers and Frivolous Filers

Criminal Investigation Internal Revenue Service Illegal Source Financial Crimes All Income Subject to tax –Individual commits other crimes Money Laundering –IRS working with other agencies Federal Bureau of Investigation Postal Inspection Service Drug Enforcement Administration Other Federal and State

Criminal Investigation Internal Revenue Service Illegal Source Financial Crimes Examples-All Taxable Income –Embezzlement Stealing from a company or corporation –Political Corruption Bribing Government Officials –Gambling –Organized Crime Money Laundering

Criminal Investigation Internal Revenue Service Narcotics-Related Financial Crimes Target the profit and financial gain of drug traffickers and money launderers Asset Forfeiture

Criminal Investigation Internal Revenue Service Scams and Schemes Tax Return Identity Theft Return Preparer Fraud Employment Tax Evasion Abusive Tax Schemes Frivolous Arguments

Criminal Investigation Internal Revenue Service Tax Return Identity Theft Tax Return Filed with your SSN –Early in filing season Refunds on Debit Type Cards Prevention Detection Victims Assistance Enforcement –Arrest in January

Criminal Investigation Internal Revenue Service Toll free – IRS identity theft affidavit (Form 14039) Pittsburgh Tip Line: Identity Protection Specialized Unit

Criminal Investigation Internal Revenue Service Tax Return Identity Theft Scams –Additional Refund/IRS is trying to contact you IRS never sends an unsolicited Confirm by calling Erie Scam –Economic Stimulus –Home made flyers/churches

Criminal Investigation Internal Revenue Service Return Preparer Fraud Two guilty pleas/one sent to jail Inflated/False Deductions Filing Status Change Client Involvement and Knowledge –Criminal and Civil Sanctions –Office of Professional Responsibility

Criminal Investigation Internal Revenue Service Employment Tax Evasion Employee vs. Independent Contractor –Can harm future benefits –Social Security, Medicare, Unemployment Courts taking very seriously –One case 40 months in prison Not a victimless crime

Criminal Investigation Internal Revenue Service Abusive Tax/Frivolous Arguments Use of Trusts to reduce/eliminate tax Offshore bank accounts Outlandish Claims Severe Civil and Criminal Sanctions “If it sounds too good to be true……”

Criminal Investigation Internal Revenue Service Conclusion Questions