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IRS Crime Unit Reports $2.3B In Tax Fraud Amid Virus

By Joseph Boris · November 16, 2020, 7:29 PM EST

Internal Revenue Service criminal investigators identified more than $10 billion in financial crimes, including $2.3 billion in tax fraud as well as cases tied to COVID-19, in the government's most recent fiscal year, the agency said in a report Monday.

The IRS Criminal Investigation Division initiated nearly 1,600 investigations and identified $2.3 billion in tax fraud schemes, the agency said in a report Monday. (Photo by Chip Somodevilla/Getty Images)

The achievement came despite limits imposed by the novel coronavirus pandemic, which dominated the second half of the fiscal year that ended Sept. 30, according to the annual report from the IRS Criminal Investigation Division, known as IRS-CI.

"Even in the face of a global pandemic, the CI workforce initiated nearly 1,600 investigations and identified $2.3 billion in tax fraud schemes," IRS Commissioner Chuck Rettig said in announcing the report's release. "This is no small feat during a challenging year, and their work is critical to protecting taxpayers and the integrity of our tax system."

The report said IRS-CI was focused during fiscal 2020 on pandemic-related fraud, cybercrimes rooted in cryptocurrencies, traditional tax investigations, international tax enforcement, employment tax, tax refund fraud and tax-related identity theft.

Responding to crimes tied to COVID-19, the disease caused by the novel coronavirus, IRS-CI special agents adapted their investigative techniques to tackle cases involving fraudulent claims for Economic Impact Payments, Paycheck Protection Program loans and refundable payroll tax credits from the Coronavirus Aid, Relief and Economic Security Act , the $2.2 trillion legislation enacted in late March to help states cope with the pandemic's economic effects.

"Our mission and our highest priority continue to be enforcing our country's tax laws. The 2020 annual report highlights this," IRS-CI chief Jim Lee said in a conference call to discuss the report. "On the key takeaways, it talks about how 73.1% of our time was spent on tax-related crimes, and this is significant." 

The IRS unit initiated 1,598 cases during fiscal 2020, which began Oct. 1, 2019, the report said.

IRS-CI increased its ranks of special agents by 1%, following hiring to offset planned retirements, according to the report. In addition, the division continued trends of increasing the use of data analytics and strengthening international partnerships to help identify the most impactful cases.

One important partnership continued to be the Joint Chiefs of Global Tax Enforcement, or J5, a grouping of the tax agencies of the U.S., Canada, the U.K., the Netherlands and Australia that was formed in July 2018.

In fiscal 2020, the J5 shared more information about cryptocurrency, tax crimes and related enforcement areas than was shared through all programs in the previous 10 years combined, according to the annual report. IRS-CI also saw the first guilty pleas for a case brought under the J5 umbrella, it said.

As the only law enforcement agency with jurisdiction over federal tax crimes, IRS-CI has one of the highest conviction rates in the government — at 90.4%. This reflects the thoroughness of division investigations and the high caliber of its agents, Lee said. IRS-CI is routinely called on by prosecutors and partner agencies across the U.S. to lead investigations on a variety of financial crimes, he said.

Lee has led the division since his predecessor, Don Fort, retired at the end of the fiscal year. A 25-year veteran of IRS-CI, Lee had a number of special agent and leadership assignments, including work at IRS field offices in Boston, Chicago, New Orleans and Detroit.

--Editing by Neil Cohen.

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