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The IRS criminal examination
deals with situations where a taxpayer willfully attempted to hide
income from the Federal Government as an integral part of proving other
criminal activity including fraud, money laundering or Bank Secrecy Act
violations. This examination is
done to enforce our country’s tax
laws and support tax administration.
Criminal Investigation may focus
on other financial crimes such as money laundering, currency violations,
and terrorist financing investigations as well as narcotics related
financial crimes. These
investigations are conducted by applying all available statutes under our
authority (Title 26, Title 18 and Title 31).
Criminal Investigation's (CI) primary
resource commitment is to develop and investigate Legal Source Tax Crimes.
The prosecution of these cases is key to supporting the Service's overall
compliance goals, enhancing voluntary compliance with the tax laws, and
promoting fairness and equity in our tax system. Legal Source Tax
investigations involve taxpayers in legal industries and legal occupations,
who earned income legally, but choose to evade taxes by violation of tax
laws. The Legal Source Tax Crimes
Program includes those cases that threaten the tax system, such as the
Questionable Refund Program (QRP) cases, unscrupulous return preparers and
frivolous filers/non-filers who challenge the legality of the filing
requirement. Additional important elements of the program are excise tax
and employment tax investigations. This Program emphasizes the importance
of cooperation between Service compliance functions as well as with Chief
Counsel's Office and Department of Justice Tax Division.
The Illegal Source Financial Crimes
Program recognizes that money gained through illegal sources, such as
dollars obtained through illegal gambling operations, is part of the
untaxed underground economy. This untaxed underground economy is a threat
to our voluntary tax compliance system and undermines the overall public
confidence in our tax system. The Internal Revenue Code states that all
income is taxable, from whatever source derived. hen money is derived through illegal
sources, the primary concern for the criminal is to legitimize the dollars.
This process of "cleaning" the illegally obtained dollars is
termed "money laundering." Money laundering activity is
considered to be "tax evasion in progress." Historically, money launderers used
legitimate businesses to "launder" their illegal proceeds. Now
money launderers use various schemes and types of transactions to conceal
their income and/or assets. Some of these schemes include the manipulation
of numerous currency reporting requirements and the layering of
transactions. The schemes are frequently international in scope. The Illegal Source Financial Crimes
Program encompasses all tax and tax-related violations, as well as money
laundering and currency violations. In fact, money laundering and currency
violations are often intertwined with tax violations. As part of the
criminal charges against an individual, Criminal Investigation makes
effective use of the forfeiture statutes. Forfeiture statutes deprive
individuals and organizations of their illegally obtained cash and assets.
Ccrimes dealing with or motivated by
money make up the majority of current criminal activity in the nation. Tax
evasion, public corruption, health care fraud, and even drug trafficking
are all examples of the types of crimes that revolve around money. In these
cases, a financial investigation often becomes the key to a
conviction. Traditional law
enforcement relies on investigative tools such as crime scene analysis,
physical evidence, fingerprint identification or eyewitness accounts. The
limitations of these techniques become obvious to those who are trying to
prove wrongdoing in a sophisticated financial crime. With no proof, there
is no conviction. When the Internal
Revenue Service astounded Public Enemy Number 1, Alphonse Capone by
obtaining a conviction for tax evasion and demanding millions of dollars in
back taxes, Capone said, "They can't collect legal taxes from illegal
money." But it's really pretty simple: No matter what the source of
income -- all income is taxable. And
this creates a real problem for drug dealers. What are they going to do
with their money -- so that IRS won't find it? For the IRS, money laundering and
narcotics investigations are the compliance effort to address criminal
violations of the Bank Secrecy Act, the Money Laundering Control Act of
1986 and section 6050(I) of the Internal Revenue Code.
In the aftermath of the
terrorist attacks of September 11, 2001, federal law enforcement agencies
have been mobilized to fight terrorism. In support of this national effort
IRS Criminal Investigation (CI) continues to devote resources to: 1) Liaison
with the Federal Bureau of Investigation’s (FBI) National Joint Terrorism
Task Force (NJTTF), the Joint Terrorism Task Forces (JTTF), Terrorism
Financing Operations Section (TFOS) and their National Domestic Terrorism
Squad; 2)Consult with Treasury Department’s Office of Foreign Assets
control (OFAC) and provide relevant insight to the Financial Action Task
Force (FATF), an inter-governmental policy making body to combat money laundering
and terrorist financing; 3) Provide financial investigative assistance in
terrorism matters to include the investigation of money laundering, tax
violations and the use of tax exempt organizations to raise money to
support foreign terrorist groups. CI’s Counterterrorism Lead Development
Center (CT-LDC) provides financial research and analysis to support ongoing
investigations and identify terrorist financing activities.; 4) Provide
assistance to terrorism investigations regarding the facilitation of emergency
disclosure of 6103 information; 5) Provide computer investigative
specialist (CIS) assistance to terrorist investigations; 6) Provide
security for government buildings and employees as necessary and
appropriate.
If the motive of the crime is money,
chances are Criminal Investigation special agents are involved in tracking
the money from the crime to the criminal. Today’s sophisticated schemes to
defraud the government and the American economy demand the financial analytical
ability of forensic investigators to wade through complex paper and
computerized financial records.
IRS special agents must follow strict
procedures to initiate an investigation and recommend prosecution to the
Department of Justice. These procedures include approval by several IRS
officials to ensure investigations are based on factual evidence that tax
fraud or another financial crime has occurred.
The Internal Revenue Service
Criminal Investigation Division conducts criminal investigations regarding
alleged violations of the Internal Revenue Code, the Bank Secrecy Act and
various money laundering statutes. The findings of these investigations are
referred to the Department of Justice for recommended prosecution.
Criminal Investigations can be
initiated from information obtained from within the IRS when a revenue
agent (auditor) or revenue officer (collection) detects possible fraud.
Information is also routinely received from the public as well as from
ongoing investigations underway by other law enforcement agencies or by
United States Attorneys offices across the country.
Special agents analyze
information to determine if criminal tax fraud or some other financial
crime may have occurred. Relevant information is evaluated. This
preliminary process is called a “primary investigation.” The special
agent’s front line supervisor reviews the preliminary information and makes
the determination to approve or decline the further development of the
information. If the supervisor approves, approval is obtained from the head
of the office, the special agent in charge, to initiate a “subject criminal
investigation.” At this point, at least two layers of CI management have
reviewed the
‘primary investigation’ material
and determined there is sufficient evidence to initiate a subject criminal
investigation.
Conducting
a Criminal Investigation
Once an investigation is opened,
the special agent obtains the facts and evidence needed to establish the
elements of criminal activity. Various investigative techniques are used to
obtain evidence, including interviews of third party witnesses, conducting
surveillance, executing search warrants, subpoenaing bank records, and
reviewing financial data.
The special agent works closely
with IRS Chief Counsel Criminal Tax Attorneys during the course of the
criminal investigation. This process ensures all legal aspects of the
investigation and prosecution recommendation are correctly addressed.
Prosecution
Recommendations by the Special Agent
After all the evidence is
gathered and analyzed, the special agent and his or her supervisor either
make the determination that evidence does not substantiate criminal
activity, in which case the investigation is ‘discontinued,’ or the
evidence is sufficient to support the recommendation of prosecution, in
which case the agent proceeds with the preparation of a written report
detailing the findings of violation of the law and recommending
prosecution. This report is called a ‘special agent report’ and it is
reviewed by numerous officials, including: 1) The agent’s front line
supervisor, called the supervisory special agent called the supervisory
special agent; 2) A criminal investigation quality review team, Centralized
Case Review; 3) CI assistant special agent in charge; and 4) CI special agent in charge.
If CI determines the
investigation should be criminally prosecuted, a prosecution recommendation
is forwarded to: 1) The Department of Justice, Tax Division, (if it is a
tax investigation) or 2) The United
States Attorney for all other investigations. Each level of review may
determine that evidence does not substantiate criminal charges and the
investigation should not be prosecuted.
If the Department of Justice or
the United States Attorney accepts the investigation for prosecution, the
IRS special agent will be asked by the prosecutors to assist in preparation
for trial. However, once a special agent report is referred to for
prosecution, the investigation is managed by the prosecutors. The ultimate goal of an IRS Criminal Investigation
prosecution recommendation is to obtain a conviction or plea. Approximately
3,000 criminal prosecutions per year provide a deterrent effect and signals
to our compliant taxpayers that fraud will not be tolerated.
Federal crimes are statutory crimes. Statutory law
refers to laws enacted and established by a legislative body. Federal
prosecution is limited to the areas prescribed by Federal statute. Laws are rules of conduct which are prescribed or formally
recognized as binding and are enforced by the governing power.
Statutory law refers to laws enacted and
established by a legislative body. All Federal crimes are statutory, but
common law is frequently used for defining words used in the statutes. For
example, statutes provide penalties for attempted evasion of income tax,
but they do not define the terms "attempt" and
"evasion."
The
common law is the body of law that develops and derives through judicial
decisions, rather than from legislative enactments. Substantive
law creates, defines, and regulates rights, duties, responsibilities, and
obligations, whereas adjective or remedial law provides rules for enforcing
rights or obtaining redress for their invasion. Adjective
law provides rules of procedure or practice concerning proceedings before,
during, and after trial, and rules of evidence relating to the admission of
evidence at trial and the testing of the credibility and competency of
witnesses.
Criminal
law is the branch of law that defines crimes and provides punishment. A
crime is an offense against a state or the United States and is generally
not punished through a private action. Criminal sanctions, generally
involving imprisonment and fines, are covered in Chapter 75 of the USC. In
addition, some of the criminal sanctions in Title 18, and Title 31 of the
USC, also apply to Title 26 matters.
Except
as otherwise specifically provided, a defendant who has been found guilty
of an offense described in any Federal statute shall be sentenced in
accordance with 18 USC §3551, Authorized Sentences. Title 18 USC §3551
repealed 18 USC §1, Definition of Crimes.
Civil
law is the body of law concerning civil or private rights and remedies, as
contrasted with criminal law. Civil sanctions for tax offenses, which are
generally assessed as additions to the tax imposed and are also referred to
as ad valorem penalties, are covered in Chapter 68 of the Internal Revenue
Code (IRC). Examples of civil penalties include: 1) delinquency penalty (not exceeding 25
percent) for failure to file a timely return or to pay tax (26 USC §6651);
2) accuracy-related penalty, a 20 percent penalty for negligence or
disregard of rules or regulations (26 USC §6662); 3) fraud penalty, a 75
percent penalty on the portion of an underpayment that is due to fraud (26
USC §6663) .
Tax crimes are
defined in Chapter 75 of the Internal Revenue Code (IRC) of 1986, entitled
Crimes, Other Offenses, and Forfeitures. In addition, an offense under 26
USC §6050I may be subject to criminal sanctions. Unless otherwise
indicated, the following penal sections of the IRC apply to all taxes
imposed by Title 26. The subsections that follow provide links to the
statute and in some instances the elements of the offense and common law
interpretations.
Title 26 USC
§6050I requires trades and businesses to file Form 8300, Report of Cash
Payments Over $10,000 Received in a Trade or Business when in receipt of
more than $10,000 in cash from one transaction or two or more related
transactions.
Title 26 USC
§6050I(f) prohibits structuring transactions to evade these reporting
requirements. As of January 1, 2002,
pursuant to the provisions of the USA Patriot Act, Form 8300 has a dual
filing requirement under both Titles 26 and 31 (see 31 USC §5331).
Therefore, care must be taken to ensure that disclosure of Forms 8300 and
information extracted from these forms is made under the appropriate
guidelines.
Title 26 USC
§7201 prohibits willfully attempting in any manner to evade or defeat any
tax or the payment thereof. Under 26 USC §7201, a violation of the statute
is punishable by a maximum fine of $100,000 ($500,000 in the case of a
corporation), or imprisonment of not more than five years, or both,
together with the costs of prosecution. However, the criminal fine
provisions under 18 USC §3571 increase the maximum permissible fines for a
violation of 26 USC §7201 to not more than $250,000 for individuals and
$500,000 for corporations. Alternatively, if any person derives pecuniary
gain from the offense, or if the offense results in pecuniary loss to a
person other than the defendant, the defendant may be fined not more than
the greater of twice the gross gain or twice the gross loss.
Avoidance
of taxes is not a criminal offense. Any attempt to reduce, avoid, minimize,
or alleviate taxes by legitimate means is permissible. The distinction
between avoidance and evasion is fine, yet definite. One who avoids tax
does not conceal or misrepresent. He/she shapes events to reduce or
eliminate tax liability and, upon the happening of the events, makes a
complete disclosure. Evasion, on the other hand, involves deceit,
subterfuge, camouflage, concealment, some attempt to color or obscure
events or to make things seem other than they are. For example, the
creation of a bona fide partnership to reduce the tax liability of a
business by dividing the income among several individual partners is tax
avoidance. However, the facts a
particular investigation may show that an alleged partnership was not, in
fact, established and that one or more of the alleged partners secretly
returned his/her share of the profits to the real owner of the business,
who, in turn, did not report this income. This would be an instance of
attempted evasion.
Whether
the offense at issue involves the evasion or defeat of the assessment of a
tax or of its payment, the elements of 26 USC §7201 are the same. However,
the courts have interpreted the terms differently in some instances. These
differences are noted in the explanations below. The elements of the
offense are: 1) an additional tax due and owing; an affirmative attempt in
any manner to evade or defeat any tax, or the payment thereof; 3)mwillfulness
26 USC §7201 – Additional Tax Due and Owing - The government must establish
that at the time the offense was committed the defendant owed more tax than
he/she reported. However, the government is not required to prove the
precise amount of tax evaded. Rather, the government may satisfy its
obligation by showing that the amount of tax evaded was substantial.
"Substantial" is a relative term and need not be measured in
terms of gross and net income or by any particular percentage of the tax
shown to be due and payable.
Where there is
an evasion or attempted evasion of the payment of tax, courts have
interpreted the element of additional tax due and owing somewhat
differently. In such cases, the amount of tax due and owing need not be an
amount in excess of the total tax reported. Instead, it could be an amount
of tax that was shown on the return but was not paid.
Carryback losses
are technically no legal impediment to prosecution for years in which they
eliminate a tax liability. However, the probability of conviction could be
lessened where it is shown that a tax deficiency does not exist by
operation of law.
Likewise, the
acceptance by government agents of a waiver agreement (Form 870, Waiver of
Restrictions on Assessment and Collection of Deficiency in Tax and
Acceptance of Overassessment) does not bar prosecution. However, experience
has demonstrated that attempts to pursue both the criminal and the civil
aspects of an investigation concurrently may jeopardize the successful
completion of the criminal investigation. As a result, Policy Statement
4-26 (formally P–4–84, Balancing Civil and Criminal Aspects) provides,
among other things, that the consequences of civil enforcement actions on
matters involved in a criminal investigation and prosecution investigation
should be carefully weighed.
26 USC §7201 – Attempt to Evade or Defeat Any Tax or Payment Thereof - The substance of the offense under 26 USC
§7201 is the term "attempt in any manner" . The statute does not
define attempt, nor does it limit or define the means or methods by which the
attempt to evade or defeat any tax may be accomplished. Courts have held,
however, that the term "attempt" implies some affirmative act or
the commission of some overt act. This affirmative act need not be the
filing of a false or fraudulent return, although most cases in this area do
involve the filing of such a return. Courts have also held that a false
statement made to Treasury agents for the purpose of concealing unreported
income is an attempt to evade or defeat a tax.
The willful
omission of a duty or the willful failure to perform a duty imposed by
statute does not per se constitute an attempt to evade or defeat a tax.
However, a willful omission or failure (such as a willful failure to make
and file a return) when coupled with affirmative acts or conduct from which
an attempt may be inferred would constitute an attempt. The Supreme Court
in Spies v. United States provided examples of conduct that may imply
"the attempt to evade or defeat any tax" , such as:
A.
keeping a
double set of books
B.
making false
entries, alterations, invoices, or documents
C.
destroying
books or records
D.
concealing
assets or covering up sources of income
E.
handling
one's affairs to avoid making records usual in transactions of the kind
F.
any conduct,
the likely effect of which would be to mislead or to conceal
The term
"attempt" does not mean that one whose efforts are unsuccessful
cannot be convicted under 26 USC §7201. The crime is complete when the
attempt is made and nothing is added to its criminality by success or
consummation, as would be the case with respect to attempted murder. It has
been held that attempts cover both successful and unsuccessful endeavors or
efforts. As the courts have stated, the real character of the offense lies,
not in the failure to file a return or in the filing of a false return, but
rather in the attempt to evade any tax.
It is well
settled that a separate offense may be committed with respect to each year.
Therefore, an attempt for one year is a separate offense from an attempt
for a different year. There may also be more than one violation in one year
resulting from the same acts, such as the willful attempt to evade the
payment of tax and the willful attempt to evade tax. Likewise, there may be
a willful attempt to evade tax and a willful failure to file a return for
the same year.
The mere failure
or willful failure to pay a tax does not constitute an attempt to evade or
defeat the payment of that tax. The above discussion of the need for an
affirmative action or the commission of some overt act applies equally to
this offense. Examples of actions that might constitute the attempted
evasion of the payment of tax include:
G.
concealing
assets
H.
reporting
income through others
I.
misappropriating,
converting, and diverting corporate assets
J.
filing late
returns
K.
failing to
withhold taxes as required by law
L.
filing false
declarations of estimated taxes
M.
filing false
tentative corporate returns
Courts have held
that disbursement of available funds to creditors other than the
government, or to corporate stockholders is not in itself an attempt to
evade or defeat the payment of taxes.
26 USC §7201 – Willfulness - To
satisfy the third element of 26 USC §7201, the attempt to evade or defeat a
tax or the payment thereof must be willful. Willfulness is defined as the
voluntary, intentional violation of a known legal duty. Mere understatement
of income and the filing of an incorrect return does not in itself
constitute a willful attempt to evade tax. Absent an admission or
confession, willfulness is rarely subject to direct proof and generally
must be inferred from the facts and circumstances. Willfulness may be
inferred from any conduct, the likely effect of which would be to mislead
or conceal, such as that exemplified in Spies. This definition of
willfulness applies to all Title 26 offenses where willfulness is an
element, unless stated otherwise.
A
willful failure to collect or pay over tax is a criminal offense under 26
USC §7202. Under 26 USC §7202, a
violation of the statute is punishable by a maximum fine of $10,000 or
imprisonment of not more than five years, or both, together with the costs
of prosecution. However, the criminal fine provisions under 18 USC §3571
increase the maximum permissible fines for a violation of 26 USC §7202 to
not more than $250,000 for individuals and $500,000 for corporations.
Alternatively, if any person derives pecuniary gain from the offense, or if
the offense results in pecuniary loss to a person other than the defendant,
the defendant may be fined not more than the greater of twice the gross
gain or twice the gross loss. Violations under this section usually involve
employers who fail to truthfully account for and pay over employment taxes,
including Social Security taxes, Federal unemployment tax, and income tax
withheld from employee wages. This type of offense is distinct from the
failure to file returns, which is covered by 26 USC §7203 and the filing of
false and fraudulent returns, which is covered by 26 USC §7206(1).
The elements of
the offense under 26 USC §7202 are:
A.
a duty to
collect, truthfully account for, and pay over the tax
B.
a failure to
collect and/or truthfully account for and pay over the tax
C.
willfulness
(see subsection 9.1.3.3.2.2.3).
The duty to
truthfully account for and pay over any tax is considered to be an
inseparable dual obligation. Failure to pay, even though an accounting is
made in the return filed, leaves the duty as a whole unfulfilled. However,
considerable difficulty has been encountered in determining the person
charged with the duty of collecting, accounting for and paying over taxes,
especially in investigations involving small corporations where the precise
duties of the officers are not clearly defined or consistently carried out.
For example, in one investigation, it was determined that although the
president of the corporation was the dominating force in the management of
the firm, there were other officers who signed some returns and engaged in
financial activities on behalf of the corporation. As a result, it was
unclear whether the president was the officer under a duty to perform the
required acts and the indictment was ultimately dismissed. Another case
held that the term "person" includes a chief executive officer of
a corporation who possesses the authority to determine how corporate funds
should be expended. Accordingly, it is imperative to ascertain the various
activities and responsibilities of all officers of a corporation before
recommending prosecution against any one of them as the "person"
referenced in 26 USC §7202 and defined in 26 USC §7343.
26 USC § 7202 – Willfulness - Willfulness under 26 USC §7202 is the same as
for all Title 26 offenses (i.e., the voluntary, intentional violation of a
known legal duty). Evil motive or bad purpose is not needed to establish
willfulness. For example, a successful prosecution under this section was
based upon the following facts: The subject filed timely employment tax
returns but habitually failed to pay the amount of tax shown to be due
thereon. He willingly signed agreements for partial payments, made the
first payment, and then ignored further requests for payments. When his
bank accounts were levied upon, he closed the accounts and made
arrangements with his customers to receive future payments in cash. All his
assets were then transferred to the names of others. His only defense was
that he used the money withheld from his/her employees to meet current
operating expenses. An analysis of his bank accounts and records of
personal expenditures showed that, contrary to his contentions, a profit
was realized from the business in all years and funds were available to pay
the taxes shown on the returns.
The
position of the Department of Justice (DOJ), Tax Division, is that the
statute of limitations for violations of 26 USC §7202 is six years, as
provided in 26 USC §6531(4). Two Federal district courts have concluded
that the statute of limitations is three years.
26 USC §7203 - Willful Failure to File Return, Supply Information, or Pay
Tax - Generally, a willful failure to file a return, supply information, or
pay tax is a misdemeanor under 26 USC §7203. However, in the case of a
willful violation of any provision of section 6050I, the violation is a
felony.
Although they
are covered by the same statute, any one of the following violations is
considered a separate offense:
A.
a willful
failure to make any type of required return
B.
a willful
failure to pay any estimated tax or tax
C.
a willful
failure to keep records
D.
a willful
failure to supply information
With respect to
misdemeanors under 26 USC §7203, the provision imposes a maximum fine of
$25,000 ($100,000 for a corporation), or imprisonment of not more than one
year, or both, together with the costs of prosecution. With respect to
felonies involving willful violations of 26 USC §6050I, the statute imposes
a fine and/or imprisonment of not more than five years. However, 18 USC
§3571 increases the maximum permissible fine for misdemeanor offenses under
26 USC §7203 to not more than $100,000 for individuals and not more than
$200,000 for corporations. Under 18
USC § 3571, felony offenses under 26 USC §7203 involving willful violations
of 26 USC §6050I are punishable by a maximum fine of not more than $250,000
for individuals and $500,000 for corporations. Alternatively, if any person derives
pecuniary gain from the offense, or if the offense results in pecuniary
loss to a person other than the defendant, the defendant may be fined not
more than the greater of twice the gross gain or twice the gross loss.
Title 26 USC
§7203 does not apply to a person who fails to pay estimated tax if there is
no addition to tax under section 6654 or 6655 with respect to such failure. The elements of
the offense under 26 USC §7203 are:
A.
a legal duty
to file an income tax return, supply information, maintain records, or pay
a tax for the taxable year charged
B.
a failure to
fulfill this legal duty
C.
willfulness
(see subsection 9.1.3.3.2.2.3)
26
USC §7203 - Legal Duty to File Return, Supply Information, Maintain
Records, or Pay a Tax - in general, persons liable under 26 USC §7203
include those defined in 26 USC §7343 as follows: " The term 'person'
includes an officer or employee of a corporation, or a member or employee
of a partnership, who as such officer, employee, or member is under a duty
to perform the act in respect of which the violation occurs. "
The requirements
for making and filing a return are set forth in Chapter 61 of the Code. In
corporate investigations, it may be difficult to determine which officer is
responsible for filing the corporate returns. The issue of who has the
legal duty to file is a question of fact to be determined by competent
evidence. Such evidence may include proof of signing past Federal or state
returns, or a statement in the corporate bylaws or minutes of directors'
meetings.
The general
requirement or duty to keep records is provided by 26 USC §6001. However,
the types of records kept by various individuals are not alike, and neither
the statute nor the regulations defines minimum standards for specific
transactions or types of businesses. For example, evidence that a return
was prepared from third-party records (banks, brokers, employers) may
obviate the necessity for an individual to keep records.
In
order to show that a return was not filed timely, the government must
establish the due date of the return as provided by statute or regulations
and a failure to file the return within such time. The time within which a
return must be filed has been held to be the date set out in the USC or under
regulations prescribed by the Secretary, as extended (if applicable) by the
Secretary or the Secretary's delegate. The date when a return is due under
the USC or regulations varies, depending upon the type of tax involved or
the type of return required to be filed. Thus, individual income tax
returns, self-employment tax returns, and partnership returns made on the
basis of the calendar year must be filed on or before the 15th day of April
following the close of the calendar year; or, if made on a fiscal year
basis, such returns must be filed on the 15th day of the fourth month
following the close of the fiscal year (26 USC §6072(a)). Corporate returns
for calendar years are due on the 15th day of March; or, if on a fiscal
year basis, such returns are due on the 15th day of the third month
following the close of the fiscal year (26 USC §6072(b)). Title 26 USC
§6075 provides the deadlines for filing estate and gift tax returns, and 26
USC §6071 and the regulations promulgated thereunder provide the deadlines
for filing excise tax returns and other returns required under the
particular type of tax involved.
The Treasury
regulations under 26 USC 6050I provide that Form 8300 is required to be
filed by the 15th day after the date the cash was received. If that date
falls on a Saturday, Sunday or legal holiday, the form is required to be
filed the next business day. In addition, the statute itself provides that
the individual/entity filing the form must provide a written statement to
each person required to be named on the Form 8300 on or before January 31
of the year following the calendar year for which the return was required
to be made. In addition to proving the due date of the return, the
government must establish that the person did not file the return by that
date. Usually, this is accomplished by providing evidence that the subject
did not file a return in the area of his/her legal residence or principal
place of business or IRS Campus.
26 USC §7203 - Willfulness - Willfulness
means the voluntary, intentional, violation of a known legal duty. The
government must establish that the failure to file the return was willful.
However, as distinguished from willfulness in a tax evasion investigation,
the government need not prove a tax evasion motive. In this context,
"willful" means voluntary, purposeful, deliberate, and
intentional, as distinguished from accidental, inadvertent, or negligent.
Although
an additional tax due is not an essential element of the offense,
willfulness is difficult to establish without proof of a substantial tax
liability.
1.
When charging
willful failure to pay tax, repeated failure to pay taxes, coupled with
large expenditures for luxuries when taxes were owing, may be evidence of
willfulness within the meaning of the statute.
9.1.3.3.4.1.3.2
(05-15-2008)
26 USC §7203 - Willful Failure to Keep Records
1.
Willfulness
will also be inferred if a concealment motive is part of the failure to
keep records. However, an important factor in the probability of conviction
in these investigations may be a substantial deficiency attributable to the
failure to keep records.
9.1.3.3.4.1.3.3
(05-15-2008)
26 USC §7203 - Willful Failure to Supply Information
1.
The
willfulness required to be shown when charging willful failure to supply
information is the deliberate and intentional withholding of required
information. For example, the deliberate and intentional failure to furnish
a schedule of the partnership assets and liabilities as required on the
partnership return was held to be willful. Disclosure of such information
revealed considerable cash on hand.
9.1.3.3.4.1.4
(05-15-2008)
26 USC §7203 - Statute of Limitations
1.
Under 26 USC
§6531(4), the statute of limitations for willful failure to file returns
(other than information returns) or to pay tax is six years. A three-year
statute of limitations applies to willful failure to file information
returns such as partnership returns, and to willful failure to keep records
or supply information. The statute of limitations for willful failure to
file a Form 8300 is three years.
9.1.3.3.5
(05-15-2008)
26 USC §7204 - Fraudulent Statement or Failure to Make Statement to
Employees
1.
Title 26 USC
§7204 prohibits the willful furnishing of a withholding statement under 26
USC §6051 (i.e., Forms W-2 and W-3) that is false or fraudulent. The
statute also makes it a crime willfully to fail to furnish such a
statement.
2.
Under 26 USC
§7204, violations of the statute are punishable by a maximum fine of $1,000
or imprisonment of not more than one year, or both. However, 18 USC §3571
increases the maximum fine to not more than $100,000 for individuals or
$200,000 for corporations. Alternatively, if any person derives pecuniary
gain from the offense, or if the offense results in pecuniary loss to a
person other than the defendant, the defendant may be fined not more than
the greater of twice the gross gain or twice the gross loss.
9.1.3.3.5.1
(05-15-2008)
26 USC §7204 - Elements of the Offense
1.
The elements
of the offense under 26 USC §7204 are:
A.
a legal duty
to deduct employment tax or to withhold income tax (see 26 USC §3102(a) and
26 USC §3402(a))
B.
a legal duty
to timely furnish to the employee a written statement showing specified
information concerning the deductions (see 26 USC §6051)
C.
furnishing a
false or fraudulent statement to an employee, or failing to furnish the
required statement to an employee at the required time and in the required
manner
D.
willfulness,
(see subsection 9.1.3.3.2.2.3)
2.
A successful
prosecution under this section was based upon the following facts:
A.
In order to
attract and retain workers, an individual devised a scheme whereby actual
weekly wages paid were recorded on regular weekly payroll sheets, the sum
total of which was deducted by the company for income tax purposes.
B.
Individual
payroll sheets were maintained for most of the employees, but the amounts
of gross wages shown on the sheets were understated to accommodate the
employees so that they would not have to report their entire wages for
income tax purposes. The tax withheld from the wages was based upon the
understated figure. In some instances, individual payroll sheets were not
maintained for employees.
C.
At the end of
the year, the employees whose names were shown on individual payroll sheets
were furnished with false withholding statements (Forms W–2,) based upon
the false payroll sheets. The employees whose names did not appear on
payroll sheets did not receive withholding statements.
D.
The
furnishing of false and fraudulent statements to some employees and the
failure to furnish withholding statements to other employees constituted
separate violations under this section.
9.1.3.3.6
(05-15-2008)
26 USC §7205 - Fraudulent Withholding Exemption Certificate or Failure to
Supply Information
1.
Title 26 USC
§7205 prohibits the willful supplying of false or fraudulent information to
an employer on a withholding exemption certificate (Form W-4), as well as
the willful failure to supply information that would require an increase in
withholding.
2.
Under 26 USC
§7205, a violation of the statute is punishable by a maximum fine of $1,000
or imprisonment of not more than one year, or both. However, the criminal
fine provisions under 18 USC §3571 increase the maximum permissible fines
for a violation of 26 USC §7205 to not more than $100,000 for individuals
and $200,000 for corporations. Alternatively, if any person derives
pecuniary gain from the offense, or if the offense results in pecuniary
loss to a person other than the defendant, the defendant may be fined not
more than the greater of twice the gross gain or twice the gross loss.
9.1.3.3.6.1
(05-15-2008)
26 USC §7205(a) (Withholding on Wages) – Elements of the Offense
1.
The elements
of the offense under 26 USC §7205(a) are:
A.
the defendant
had a legal duty to supply an employer with a signed Form W-4 relating to
the number of withholding exemptions claimed (see 26 USC §3402(f)(2))
B.
the defendant
furnished the employer with a signed Form W-4, or failed to supply the
employer with a signed Form W-4
C.
if supplied,
the information provided was false or fraudulent
D.
willfulness
(see subsection 9.1.3.3.2.2.3)
2.
The employee
is required to notify his/her employer within 10 days of a change in
his/her withholding exemption status which requires an increase in tax to
be withheld. There is no penalty for failing to supply information which
would require a decrease in tax to be withheld, and a certificate is not
considered false or fraudulent if it contains information showing fewer
exemptions than the employee is entitled to claim.
9.1.3.3.6.2
(05-15-2008)
26 USC §7205(b) (Backup Withholding on Interest and Dividends) – Elements
of the Offense
1.
This criminal
provision applies to interest and dividend income. Generally, interest and
dividend income is not subject to the withholding tax.
However, the USC provides a system of backup withholding which applies.
When one of the following is true:
·
the payee
fails to provide a taxpayer identification number (TIN)
·
the IRS
notifies the payor that the payee's TIN is incorrect
·
the IRS
notifies the payor that the payee is underreporting interest and dividends;
or
·
the payee
fails to certify to the payor, when opening a new account after 1983, that
he/she is not subject to backup withholding
2.
The elements
of the offense under 26 USC §7205(b) are:
A.
the payee had
a legal duty under 26 USC §3406(d) to certify to the payor that the payee
was not subject to backup withholding on interest and dividends
B.
the payee
furnished a false certification of such information
C.
willfulness
(see subsection 9.1.3.3.2.2.3)
9.1.3.3.6.2.1
(05-15-2008)
26 USC §7205 - Statute of Limitations
1.
A three year
statute of limitations applies (26 USC §6531), and the offense is a
misdemeanor.
2.
For offenses
that involve furnishing false or fraudulent information, the statute of
limitations runs from the date the document is filed.
3.
It is unclear
whether willful failure to supply information to an employer is a
continuing offense for purposes of determining when the statute of
limitations begins to run, in which case the limitations period would begin
when the last act of the offense had occurred. The safe practice is to
assume that it is not a continuing offense, and that the statute of
limitations runs from the date the information was required to be supplied.
However, if all other facts indicate that prosecution should be recommended
for this offense, the continuing offense theory may be argued.
9.1.3.3.7
(05-15-2008)
26 USC §7206 - Fraud and False Statements
1.
The offenses
proscribed by 26 USC §7206 include:
A.
willfully
making a false declaration under penalties of perjury
B.
willfully
assisting in the preparation of a false tax document
C.
executing
fraudulent bonds, permits and entries
D.
removing or
concealing taxable goods with intent to defraud
E.
willfully
concealing property or withholding/falsifying documents in connection with
any compromise or closing agreement
2.
Under 26 USC
§7206, a violation of the statute is punishable by a maximum fine of
$100,000 ($500,000 in the case of a corporation), or imprisonment of not
more than three years, or both, together with the costs of prosecution.
However, the criminal fine provisions under 18 USC §3571 increase the
maximum permissible fines for a violation of 26 USC §7206 to not more than
$250,000 for individuals and $500,000 for corporations. Alternatively, if
any person derives pecuniary gain from the offense, or if the offense
results in pecuniary loss to a person other than the defendant, the
defendant may be fined not more than the greater of twice the gross gain or
twice the gross loss.
9.1.3.3.7.1
(05-15-2008)
26 USC §7206(1) (False or Fraudulent Return, Statement, or Other Document
Made Under Penalty of Perjury) – Elements of the Offense
1.
In general, a
person who willfully makes and subscribes, under penalty of perjury, any
return, statement, or other document, which he/she does not believe to be
true and correct as to every material matter, has committed a criminal
offense under 26 USC §7206(1).
2.
The elements
of this offense are:
A.
the making
and signing of a return, statement or other document containing a written
declaration that it was signed under the penalties of perjury
B.
the inclusion
in the document of information that was false as to a material matter
C.
the
defendant’s lack of belief that the document was true and correct as to
every material matter
D.
willfulness
(see subsection 9.1.3.3.2.2.3)
3.
This code
section may apply regardless of whether the defendant’s purpose was to
evade or defeat the payment of taxes. For example, prosecution for this
offense may be appropriate when the government is able to prove the falsity
of a partnership return, even if the government is not able to prove a
resulting tax deficiency.
4.
A matter is
material if:
A.
it must be
reported for a correct computation of tax
B.
it tends to
influence or is capable of influencing the ability of the Service to audit
or verify the accuracy of the return or a related return
It
is not necessary that the false statement actually affect the Service or
that the Service actually rely on the statement.
5.
Although the
offense is complete upon signing the statement or document, prosecutions
under this section should involve only false returns or statements
presented to or filed with the IRS. This sanction is appropriate when it is
possible to prove the falsity of a return but it is difficult to establish
a tax deficiency, or when the falsification results in a relatively small
amount of tax evaded when compared to the total tax liability.
6.
If an
individual files a false and fraudulent return, it is possible for him/her
to incur criminal liability both for attempting to defeat and evade the
payment of tax and for making a false and fraudulent statement under
penalty of perjury.
9.1.3.3.7.2
(05-15-2008)
26 USC §7206(2) (Aid or Assistance in Preparation or Presentation of False
or Fraudulent Return, Affidavit, Claim or Other) – Elements of the Offense
1.
The elements
of the offense under 26 USC §7206(2) are:
A.
the defendant
aided or assisted in, or procured, counseled, or advised the preparation or
presentation of a return or other document in connection with a matter
arising under the internal revenue laws;
B.
the return or
other document was false as to a material matter (see subsection
9.1.3.3.7.1); and
C.
willfulness
(see subsection 9.1.3.3.2.2.3)
2.
Actual
preparation of the false return is not necessary to sustain a conviction.
Therefore, this subsection applies not only to return preparers but also to
anyone who participates in the fraud. For example, it may apply to
corporate officers, preparers of corporate tax forms other than returns,
tax shelter promoters and others who provide legal advice knowing the
advice will be used for tax return preparation.
3.
Although the
offense generally is predicated on the filing of a tax return or other
document, courts have reached different conclusions as to whether filing is
a required element of the offense.
Note:
The
Ninth Circuit has held that an offense was not committed under 26 USC
§7206(2) unless the document containing the false statement was filed with
the IRS.
4.
In situations
where a defendant willfully provided information or a document to an
intermediary who was required by law to file an information return with or
to transmit the document to the IRS, courts have held that the offense
under 26 USC §7206(2) was complete when the defendant presented the
information or document to the intermediary.
5.
Aiding or
assisting in the preparation of a false return and subscribing to a false
return are two separate offenses. A defendant could therefore be prosecuted
under both 26 USC §7206(1) and 26 USC §7206(2) for the same false return.
6.
To establish
the element of willfulness, the government must prove that the defendant
acted with the purpose and objective of violating the internal revenue
laws. However, a defendant may have willfully and knowingly prepared false
and fraudulent income tax returns for another, even if the fraud involved
was without the knowledge or consent of the person required to make the
return. By contrast, if the person required to make the return was aware of
the fraud, the defendant is entitled to have the court caution the jury to
weigh accomplice testimony carefully.
7.
In all race
track payoff investigations, 26 USC §7206(2) should be used either as the
primary statutory provision or as a supplement to 18 USC §1001. Title 26
USC §7206(2) should be charged when prosecuting either the "ten
percenter" (i.e., a person who cashes the winning ticket in place of
the true winner, in exchange for a percentage of the winnings) or the true
winner.
9.1.3.3.7.3
(05-15-2008)
26 USC §7206(4) (Removal or Concealment with Intent to Defraud) – Elements
of the Offense
1.
The elements
of the offense under 26 USC §7206(4) are:
A.
a tax is or
shall be imposed on any goods or commodities, or levy is authorized upon
any property
B.
the defendant
removed, deposited or concealed, or was concerned in removing, depositing
or concealing, such goods, commodities or property
C.
the defendant
did so with intent to evade or defeat the assessment or collection of any
tax
2.
Concealment
under 26 USC §7206(4) includes not only secreting the item at issue or
hiding it away, but also preventing its discovery or withholding knowledge
of it. Thus, it is not necessary for the government to prove a physical
removal, concealment or transfer from one place to another. An offense
under 26 USC §7206(4) may be established by showing that book entries
falsified the transfer of property rights.
9.1.3.3.7.3.1
(05-15-2008)
26 USC §7206(4) – Statute of Limitations
1.
The statute
of limitations for removal or concealment with intent to defraud is three
years (26 USC §6531).
9.1.3.3.8
(05-15-2008)
26 USC §7207 - Fraudulent Returns, Statements, or Other Documents
1.
Title 26 USC
§7207 prohibits the willful and knowing delivery or disclosure to the IRS
of a false or fraudulent document (regardless of whether it is signed under
penalties of perjury).
2.
The elements
of this offense are:
A.
the defendant
delivered to any officer or employee of the IRS a list, return, account,
statement or other document
B.
the return,
statement, or other document was false or fraudulent as to any material
matter
C.
willfulness (see
subsection 9.1.3.3.2.2.3)
3.
Title 26 USC
§7207 is generally reserved for investigations arising out of the
presentation of false or altered documents by individuals in response to
requests for substantiation of claimed deductions during the course of an examination,
when the computed tax deficiencies are considered de minimus in relation to
the circumstances of the investigation, and the means and methods used in
committing the offense are commensurate with charging a misdemeanor rather
than a felony.
9.1.3.3.9
(05-15-2008)
26 USC §7208 - Offenses Relating to Stamps
1.
This offense
relates primarily to counterfeiting or fraudulently mutilating, removing,
or reusing tax stamps. It occurs most in the excise tax area. See 26 USC
§7208 for specific details.
9.1.3.3.10
(05-15-2008)
26 USC §7209 - Unauthorized Use or Sale of Stamps
1.
This offense
relates primarily to the unauthorized use or sale of tax stamps. See 26 USC
§7209 for specific details.
9.1.3.3.11
(05-15-2008)
26 USC §7210 - Failure to Obey Summons
1.
Failure to
obey an IRS summons is a criminal offense under 26 USC §7210.
9.1.3.3.12
(05-15-2008)
26 USC §7211 - False Statements to Purchasers or Lessees Relating to Tax
1.
Title 26 USC
§7211 prohibits making a false statement concerning taxes to a purchaser or
lessee.
9.1.3.3.13
(05-15-2008)
26 USC §7212 - Attempts to Interfere With Administration of Internal
Revenue Laws
1.
In general,
26 USC §7212 prohibits attempts to interfere with the administration of the
Internal Revenue laws.
2.
Title 26 USC
§7212(a) establishes two general categories of prohibited conduct: (i)
corruptly or forcibly endeavoring to impede any officer or employee from
acting in an official capacity; and (ii) corruptly or forcibly obstructing
or impeding (or endeavoring to obstruct or impede) the due administration
of the Internal Revenue Code. The second category of conduct prohibited by
26 USC §7212(a) is described in what is known as the " omnibus
clause." Title 26 USC §7212(b) prohibits the forcible rescue (or the
attempt to forcibly rescue) property that has been seized under the
Internal Revenue Code.
3.
Pursuant to
the statute, the two types of offenses established by 26 USC §7212(a) are
punishable by a maximum fine of $5,000 or imprisonment of not more than 3
years, or both, except that if the offense is committed only by threats of
force the punishment is a maximum fine of not more than $3,000 and
imprisonment of not more than one year. The statute also provides that the
offense established by 26 USC §7212(b) is punishable by a fine of not more
than $500, or not more than double the value of the property rescued
(whichever is greater), or imprisonment of not more than 2 years. However,
the criminal fine provisions under 18 USC §3571 increase the maximum
permissible fines for these offenses to not more than $250,000 for
individuals and $500,000 for corporations. Alternatively, if any person
derives pecuniary gain from the offense, or if the offense results in
pecuniary loss to a person other than the defendant, the defendant may be
fined not more than the greater of twice the gross gain or twice the gross
loss.
4.
Prosecutions
under the first clause of 26 USC §7212(a) typically involve acts or threats
of force against an individual IRS employee acting in an official capacity.
Such prosecutions do not require authorization from the Department of
Justice, Tax Division, and are directly referred to the US Attorney’s
Office (see Tax Division Directive No. 129; IRM 9.5.12).
5.
However, the
omnibus clause makes clear that force or the threat of force is not an
element of the offense under 26 USC §7212(a). Rather, the statute may apply
to an individual who "corruptly" endeavors to impede the
administration of the tax laws. The term "corruptly " generally
implies an intent to obtain an improper advantage, but there is no
requirement that the evidence establish such an intent.
6.
Examples of
conduct to which the omnibus clause may apply include, but are not limited
to, providing false information, destroying evidence, attempting to
influence a witness to give false testimony, and harassing an IRS employee.
A 26 USC §7212(a) charge may also be authorized in appropriate
circumstances to prosecute a person who, prior to any audit or
investigation, engaged in large-scale obstructive conduct involving the tax
liability of third parties. Examples include, but are not limited to,
assisting in preparing or filing a large number of fraudulent returns or
other tax forms, or engaging in other corrupt conduct designed to obstruct
the IRS from carrying out its lawful functions.
7.
In cases
where the obstructive conduct is in furtherance of a preexisting criminal
scheme, Tax Division Directive No. 129 (superseding Directive No. 77)
authorizes prosecutors to charge 26 USC §7212(a) in addition to charging
the underlying tax crime. Prosecutions under the omnibus provision of 26
USC §7212(a) require tax division authorization.
8.
The statute
of limitations for violations of 26 USC §7212(a) is 6 years.
9.1.3.3.13.1
(05-15-2008)
26 USC §7212(b) (Forcible Rescue) – Elements of the Offense
1.
The elements
of the offense under 26 USC §7212(b) are:
A.
property was
legally seized under Title 26
B.
the defendant
knew the property had been seized
C.
the defendant
forcibly and willfully retook the property
2.
To be
"forcible" , the rescue of property need not entail physical
violence. Threatening language or intimidating conduct may be sufficient.
The term "threats of force" as used in this subsection includes
threats of bodily harm to an officer or employee of the United States or to
a member of his/her family. It has been held that a forcible rescue under
26 USC §7212(b) includes the use of force against property, such as the
breaking of a bank window, the removal of the IRS seal on a safe deposit
box, or the removal of the box and its contents from the bank.
3.
A defendant
may be charged under 26 USC §7212(b) for forcibly retaking property that
the government seized from a third party. To support a conviction under 26
USC §7212(b), the property must have been seized by an official with
authority under the tax code to make the seizure. Disputes concerning other
aspects of the legality of the seizure do not constitute a defense to the
crime. Thus, it is no defense that the person retaking the property claims
to be the real owner and that the property was seized by mistake.
Note:
Title
18 USC §2233 also prohibits the forcible rescue of property and gives the
IRS concurrent jurisdiction with the Federal Bureau of Investigation (FBI)
over such crimes. Current practice dictates that determination of whether
an alleged forcible rescue is to be investigated by CI or the FBI depends
on whether the property was taken before or after it was adjudicated
government property. The elements of 18 USC §2233 are provided below, in
the section describing Title 18 statutes.
9.1.3.3.14
(05-15-2008)
26 USC §7215 - Offenses with Respect to Collected Taxes
1.
Failure to
comply with any provision of 26 USC §7512(b), which requires employers and
others, upon notice, to collect employment taxes and deposit the withheld
taxes in a special bank account held in trust for the United States, is a
criminal offense under 26 USC §7215(a). Title 26 USC §7215(b) provides
exceptions to the penalty if there was reasonable doubt as to whether the
law required collection of tax, or if the failure to comply was due to
circumstances beyond the control of the person required to collect the tax.
For purposes of this statute, a lack of funds existing immediately after
the payment of wages (whether or not created by the payment of such wages)
is not considered "circumstances beyond the control " of a
person.
9.1.3.3.14.1
(05-15-2008)
26 USC §7215 - Elements of the Offense
1.
The elements
of the offense under 26 USC §7215 are:
A.
The defendant
was a person required to collect, account for, and pay over employment
taxes.
B.
The defendant
was provided with the statutory notice prescribed by 26 USC §7512(a).
C.
The defendant
failed to comply with the collection requirements.
D.
There was no reasonable
doubt as to whether the law required collection of tax, and the failure was
not due to circumstances beyond the defendant’s control (see IRM 9.5.3,
Criminal Investigation Strategies).
Title
18 USC §2 is known as the "accomplice statute " and generally
provides that a person may be convicted of a crime even if he/she did not
personally perform every act constituting the crime. More specifically, 18
USC §2(a) provides that the following persons are punishable as principals:
(i) a person who commits an offense against the United States; and (ii) a
person who aids, abets, counsels, commands, induces or procures the
commission of an offense against the United States. Title 18 USC §2(b)
(frequently referred to as "causing" ) provides that a person is
also punishable as a principal if that person willfully causes an act to be
done which if directly performed by him or another would be an offense
against the United States.
Note:
Aiding
and abetting is not an independent crime. Some underlying criminal offense
must be proven in order for liability to attach under 18 USC §2.
1.
So long as
the government can show that an underlying offense was committed by a
principal and that the principal was aided and abetted by the defendant,
the defendant may be convicted under this statute even if the principal has
not been indicted, convicted or even identified. Moreover, the fact that
the principal may have been acquitted of the underlying offense does not
bar prosecution of the aider and abettor for the same offense.
2.
The elements
of the offense under 18 USC §2 are:
A.
the defendant
associated with the criminal venture
B.
the defendant
knowingly participated in the venture
C.
the defendant
sought by his or her actions to make the venture succeed
3.
Association
with the criminal venture has been interpreted to mean the defendant shared
the criminal intent of the principal. In prosecutions under 18 USC §2(a),
the government must show that:
A.
the principal
had the requisite criminal intent to commit the underlying offense; and
B.
the aider and
abettor had the same requisite intent. Under 18 USC §2(b), the government
need only show that the one causing the commission of the prohibited act
had the requisite criminal intent to commit the underlying offense. The
intent of the principal is irrelevant.
4.
In order to
aid and abet, a person must do more than merely be present at the scene of
a crime and have knowledge of its commission. The element of participation
requires the government to show some active participation or encouragement,
or some affirmative act designed to further the crime.
5.
A corporation
may be convicted for the criminal acts of its agents, under the theory of
respondent superior, but criminal liability may be imposed on the
corporation only where its agents are acting within the scope of their
employment. However, the officers themselves may also be criminally liable
for these same acts.
9.1.3.4.2
(05-15-2008)
18 USC §3 - Accessory After the Fact
1.
Under 18 USC
§3, a person who, knowing that a crime has been committed, assists the
offender in order to hinder or prevent his apprehension, trial or
punishment is an accessory after the fact.
Note:
This
statute may be invoked by CI only when it relates to some other tax, money
laundering or currency violation over which CI has jurisdiction.
9.1.3.4.3
(05-15-2008)
18 USC §4 - Misprision of Felony
1.
Under 18 USC
§4, a person who, with knowledge of the actual commission of a felony,
conceals this knowledge from a person in civil or military authority is
guilty of misprision of felony.
Note:
This
statute may be invoked by CI only when it relates to some other tax, money
laundering or currency violation over which CI has jurisdiction.
9.1.3.4.4
(05-15-2008)
18 USC §111 - Assaulting, Resisting, or Impeding Certain Officers or
Employees
1.
Title 18 USC
§111 prohibits forcibly assaulting, resisting or impeding a current or
former Federal officer or employee while engaged in or on account of the
performance of official duties.
2.
This statute
is broader than 26 USC §7212, which addresses attempts to interfere with
administration of Internal Revenue laws and is set forth in the previous
section.
3.
Although
relevant to the work of CI, 18 USC §111 is primarily enforced by the
Treasury Inspector General for Tax Administration (TIGTA) (see IRM 9.5.11,
Other Investigations).
Business
Strategies and Program Priorities
Criminal Investigation's Annual Business Plan sets
priorities and guidance for our criminal investigators. Overall our
investigations fall into four interdependent categories:
Within these four interdependent
categories, our investigations are further defined in our program and emphasis areas,
such as Abusive Tax Schemes and Employment Tax Fraud. Through the link
above you can view summaries of sentenced cases for all our program and
emphasis areas; however, we have highlighted some tax and money laundering
cases sentenced in fiscal year 2011.
If the motive of the crime is
money, chances are Criminal Investigation (CI) special agents are involved
in tracking the money from the crime to the criminal. Today’s sophisticated
schemes to defraud the government and the American economy demand the
financial analytical ability of forensic investigators to wade through
complex paper and computerized financial records.
Initiating
an Investigation
IRS special agents must follow
strict procedures to initiate an investigation and recommend prosecution to
the Department of Justice. These procedures include approval by several IRS
officials to ensure investigations are based on factual evidence that tax
fraud or another financial crime has occurred.
United
States Code Statutes
Internal Revenue
Manual
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