By Laura Saunders
Weekend Investor’s recent “IRS Whistleblower” feature story, about how to turn in a tax cheat to the Internal Revenue Service and collect part of the proceeds, drew a host of reader comments. Reaction ranged from enthusiastic support of the program—“White-collar crime detection deserves the help of citizens”—to outright condemnation of it, with detractors comparing the IRS’s efforts to police-state tactics.
Tax cheats have more to worry about than just whistleblowers. According to recent report from a governmental watchdog, the criminal division of the IRS is getting more efficient. The study was issued by the Treasury Inspector General for Tax Administration, known as TIGTA, which closely monitors the IRS and often issues assessments critical of it.
This TIGTA report was unusually positive. It praised IRS agents for taking an average of 365 days to complete a case vs. 401 days in 2009. The agency spent about $660 million on criminal tax cases during the 2010 fiscal year.
Overall, the IRS criminal division initiated some 4,700 investigations and completed 4,300 during the same period, exceeding preset goals in both categories.
Most important, say outside experts, is that the IRS continues to make progress on initiating “pure” criminal tax cases. These are cases in which the tax charges are central to the case, instead of simply an add-on to a long list of more important charges, such as drug running or money laundering. The agency calls these cases “legal-source investigations.”
Bryan Skarlatos, an attorney with Kostelanetz & Fink in New York with extensive experience in criminal tax cases, says the increased focus on such cases is apparent not only in the statistics but also from conversations with agents. “They want citizens know that it’s not just crooks who have criminal tax problems,” he says. “It can be a business owner or investor who gets caught as well.”
J. Russell George, who leads the TIGTA office, said this work “continues to be critical to IRS efforts to reduce the Tax Gap.” IRS officials had no comment on the report.