The new chief of IRS Criminal Investigations (CI), Don Fort, has announced some enforcement priorities for his team. CI will organize a new nationally coordinated investigations unit, which will focus on employment tax enforcement, international tax enforcement and other projects. CI also is organizing a dedicated international tax investigations group.
“This [nationally coordinated investigations unit] is really cutting edge for CI, and part of the future of IRS Criminal Investigation,” Fort told reporters at a news conference in Washington, D.C. “This particular unit is going to report directly to our frontline 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,” he said. Fort took over as CI chief in June after the departure of Richard Weber.
International tax compliance has been a top priority of the IRS. CI has reported seeing certain trends involving offshore accounts and noncompliance with the U.S. tax laws. Taxpayers attempt to use foreign accounts, credit/debit cards, trusts, corporations, partnerships, and other entities to commit criminal violations of U.S. tax laws as well as narcotics, money laundering and Bank Secrecy Act (BSA) violations. CI coordinates with INTERPOL, the Terrorist Finance Working Group (TFWG), the Financial Action Task Force (FATF), and the Organisation for Economic Co-operation and Development (OECD).
Comment. “The international tax enforcement group will examine a wide range of data and see where the data leads us in terms of other countries, other jurisdictions, and other individuals to best focus our efforts from a criminal investigation standpoint,” Fort said.
As of June 30, 2016 (the most recent year for which statistics are available), some $60 billion of federal employment taxes remained unpaid. The IRS also reported that employment tax evasion makes up some $90 billion of the total tax gap, the difference between what taxpayers owe and what they pay.
Employment tax evasion schemes can take a variety of forms. Some of the more prevalent methods of evasion include pyramiding, employee leasing, paying employees in cash, filing false payroll tax returns or failing to file payroll tax returns.
Comment. The IRS reminds taxpayers that both employer and employee hold the responsibility for collecting and remitting withholding taxes. For the most part, the employer withholds these taxes on behalf of their employees, but in cases where an employer does not do this, or where an employee is self-employed, it is the responsibility of the employee to pay these withholding taxes.