Thursday, August 3, 2017

IRS CI Forming 2 New International Criminal Units Driven By Data Mining!

On September 7, 2012, we posted IRS’s Voluntary Disclosure Data-Mining Program where we discussed that the use of data-mining technology is widespread and the Internal Revenue Service has adopted it to find taxpayers with undisclosed offshore bank accounts. U.S. taxpayers who are still considering whether to disclose their accounts need to understand that IRS’s data-mining software increases their risk of being detected. They should act accordingly and seek legal advice immediately." We also discussed that the phasing in over the coming year of the Foreign Account Tax Compliance Act (FATCA) will only increase the breadth and depth of the data available to IRS and E-Trak.

Well Our Observation regarding the IRS
and "Data Mining" has Come to Fruition!
The IRS Criminal Investigation unit announced on August 2, 2017 that it is launching two groups that would centralize the unit’s national and international workloads and rely on data analysis to prioritize cases. The data initiative will tie together the information uncovered by IRS’s field offices around the country with headquarters in Washington, D.C.

“We are setting up a Nationally Coordinated
Data Investigations Unit.”
said IRS Criminal Investigation chief Don Fort during a conference call with reporters on August 2, 2017.
The International Group will comprise around 10-12 Special Agents who will be dedicated to working on significant projects, such as the UBS tax evasion controversy, starting in October. Fort said “there’s still a lot of work that still has to be done in this international arena.” 

“These will be Must Work Referrals that will come out of this group to the field offices,” he said.

“We also envision when this group stands up and is operational, it will have a very heavy data analytics component that will allow us not only to support and send great cases out from this unit, but to also look around the corner to see what the next areas of noncompliance are. There will be a lot of interaction with this group with research components of main IRS and other civil components of IRS to help determine future areas of noncompliance and get priority investigations out to the field offices.”

This particular unit is going to report directly to our front-line executives here in Washington, D.C. The goal of the unit is to really use all of the data that we have available to us to help identify and develop areas of noncompliance.” 

“We’ve got great case development initiatives in our field offices, but this allows us to see things at a national level and supplement the great case development efforts that are going on in the field, with other very significant projects that have a nationwide impact. This will help us nationally coordinate investigations on data.”

The new data program will also help the IRS deal with the perennial cutbacks in its budget and workforce. “One of the ways we combat the reduction in resources is better use of data to help identify areas of noncompliance and really to help with case selection and future cases that we’re rolling out nationwide,” said Fort. “This unit is going to stand up in several months. It’s already semi-operational now. We’ve been doing some training and putting the manpower in place.”

The first projects that this unit is going to focus on are:

  1. International Tax Enforcement,
  2. Employment Tax, and
  3. SEC Microcap Fraud. 
The new international tax enforcement program will leverage the expertise of IRS Criminal Investigation in previous cases involving UBS and other Swiss banks, as well as other cases involving offshore tax evasion.

In addition to the Washington, D.C., field office, members of the elite team will also be strategically located in other parts of the country. The IRS will also get support from the Department of Justice’s Tax Division.

“We’ll have a lot of involvement with the Department of Justice, as well as we’ll be leveraging the great relationships we have internationally with our international partners, as well as our constant involvement with our civil counterparts,” said Fort. “By consolidating these efforts in the Washington field office, it’s really going to allow us to better control the cases and work more efficiently as an organization in the international tax area.”
As in the data investigation program, the international enforcement program will also make heavy use of data. “You look at this particular effort with the international tax enforcement group, it’s very heavy on the use of data and data analytics,” said Fort.

 “You couple the Manipulation and Use of Data, with the Experts that have Worked These Cases Before.”

IRS Criminal Investigation plans to leverage not only tax data, but also information gleaned from the Bank Secrecy Act, whistleblowers, the Offshore Voluntary Disclosure Program, Panama Papers, and the Foreign Account Tax Compliance Act, or FATCA.

We will be analyzing the data to see where it leads us in terms of:
  1. other Countries,
  2. other Jurisdictions and
  3. other Individuals

to best focus our efforts from a Criminal Investigation Standpoint.” 

 Do You Still Have Undeclared Offshore Income?
Want to Know if the OVDP Program is Right
for You?
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243





Blumberg BNA


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