ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – THE IRS’ CRIMINAL INVESTIGATION DIVISION HAS A HIGH CONVICTION RATE
By Robert S. Schriebman
When many people think of the IRS what they are really focusing on is a very small unit known as the Criminal Investigation Division (CID). Indeed, the fear associated with an IRS audit comes down to the fear of criminal prosecution for tax evasion. CID is the investigative arm of the IRS. It concentrates on financial crime investigations including tax fraud, money-laundering, narcotics trafficking, healthcare fraud and public corruption. The pandemic has also caused CID to focus on identity theft. CID has a very high federal conviction rate – over 90%! In other words, if CID has you in its sights, you might as well get your affairs in order because you may be headed to federal prison.
CID is a very small having only 20 field offices and a staff of less than 2,200. But during the fiscal year 2022, CID initiated close to 2600 criminal investigations, and identified over $31 billion in tax and financial crimes.
These days CID has an international presence and partners around the globe. CID is combating tax and financial crimes all over the world. Agents are also training their counterparts in Europe and South America working such issues as cyber crimes to human trafficking. Recently, CID coordinated with the Mexican Government to change Mexican law that enabled the extradition of tax fugitives. Mexico is no longer a safe haven for tax crooks. CID is even targeting Russian oligarchs and other sanctioned evaders. There are less than 2,100 special agents, but they are spending about 70% of their time investigation tax-related crimes like tax evasion and tax fraud. The other 30% of their time is being spent on money-laundering and drug-trafficking cases.
According to CID Chief Jim Lee, “We’ve been doing it for more than 100 years, and we’ve followed criminals into the dark web and now into the metaverse. Tax and other financial crimes know no borders.”
Recent Examples of CID Activity
According to the latest IRS press release IR-2022-194, CID traced billions of dollars of Bitcoin stolen from Bitfinex, a crypto currency exchange after a 2016 hack. This led to the February 2022 arrest of a husband and wife for alleged conspiracy to launder stolen crypto currency. CID agents lawfully seized and recovered more than 94,000 stolen Bitcoin valued at over $3.6 billion. This is the largest seizure in US history.
In January 2022, Michael Dexter Little was prosecuted for tax-related crimes. He was sentenced to over 19 years in federal prison for wire fraud, money-laundering and identity theft. He had to forfeit at least $12.3 million.
Jeff and Paulette Carpoff were prosecuted for running a billion-dollar fraud scheme, centered around DC Solar. Investors were duped into investing in DC Solar based on fake financial statements and engineering reports. The money was used to fund the Caroff’s lavish lifestyle. This lifestyle included a NASCAR sponsorship, ownership of a minor league baseball team and luxury real estate. The IRS seized and auctioned off 148 of the Caroffs’ vehicles to recoup more than $8 million from schemed victims. In November 2021, Jeff Caroff was sentenced to 30 years in prison and Paulette got 11 years.
Someone once said, “Crime does not pay like it used to.” CID is no longer that small unit that may be called in to investigate and prosecute solely income tax evasion. If the IRS auditor auditing your tax return suddenly stops the audit with no communication, he/she may be referring your matter to CID. And that is something to lose sleep over!
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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