The U.S. Department of Justice (DOJ) reorganized the storied Tax Division last year, shrinking it from 90 lawyers down to 60 and moving the criminal tax prosecutors into the Criminal Division. Many people took that as a signal that criminal tax enforcement was winding down. But a panel here in San Diego at the ABA White Collar Crime Institute, “The New Era of Tax Enforcement — What You Really Need to Know Now,” would have you think twice about that.
The Internal Revenue Service Criminal Investigation and DOJ keep bringing cases — domestically and in coordination with the “J5,” the international joint chiefs of global tax enforcement — and they’re going after bigger fish than ever. Overall case numbers are down, but the dollar figures are up. The government is concentrating its leaner resources on the highest-value cases — high-income non-filers, pandemic fraud, offshore tax schemes, employment tax violations, and abusive tax-advantaged transactions.
Also beware of state criminal tax prosecutions, which may well reflect a pattern of states stepping in where the federal government steps out. State criminal tax prosecutions look like the next wave, and clients who dismiss that risk are making a mistake.
Defense lawyers, take note. The Sentencing Commission proposed amendments that could significantly help criminal tax defendants — substantially raising the dollar thresholds in the offense-level table, and rewriting the sophisticated means enhancement to require real sophistication, not just the garden-variety complexity you find in most tax schemes. If those amendments take effect, expect them to be a hot topic at next year’s conference.
While the Tax Division lost its criminal lawyers, criminal tax enforcement lives. More to come from San Diego! Keep following Enforcement Edge for updates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
