From the Tax Law Offices of David W. Klasing - Is the IRS Renewing its Historical Focus on Criminal Tax Enforcement?

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Tax Law Offices of David W. Klasing, PC

Jun 15, 2020, 06:33 ET

IRVINE, Calif., June 15, 2020 /PRNewswire/ -- Criminal tax enforcement by the IRS has often been compared to a pendulum for the way it swings back and forth between periods of heightened enforcement and periods of low enforcement.

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Recently, a new IRS commissioner, Charles Rettig, has begun heading up the agency. Mr. Rettig came over to the IRS from one of the most respected criminal tax defense firms in the nation. Under his leadership, multiple public statements have been made indicating that the agency plans on ramping up its referrals to the criminal investigators and its pursuit of criminal tax cases.

Don Fort, the IRS's chief of criminal investigations, issued a statement in June of 2019 indicating that Commissioner Rettig has indicated to him that increasing criminal prosecutions was a priority. The agency also promoted a deputy chief of criminal investigations, Eric Hylton, to head up a new division of the agency focused on taxpayers with small businesses or who are self-employed. The fact that a criminal tax investigator was appointed to head this division, coupled with Hylton's public statements indicating he plans to seek greater enforcement, indicates that this agency will have a large focus on making criminal fraud referrals in these cases.

The IRS has also outlined a new program in which IRS agents will make unannounced visits to high-income tax-filers, which is likely to lead to more audits and more criminal tax referrals. Additional enforcement initiatives introduced under Commissioner Rettig include increased cooperation with foreign tax authorities to promote worldwide enforcement of U.S. tax law violations, and aggressively hiring new special agents within the IRS criminal investigations department to replace those lost through the budget shortfalls and attrition of the early 2010s.

In the last year, the IRS under Commissioner Rettig has made it abundantly clear that they believe that the pendulum has swung too far in favor of non-enforcement, and that they intend to focus on increasing criminal tax enforcement as a result. While the coronavirus has delayed some of the IRS's criminal fraud initiatives, they are still in place, and will be carried out as the agency resumes normal operations.

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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

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