CRIMINAL

INVESTIGATION

Legal Source

Tax Crimes

Program Strategy

Criminal

Investigation

Mission

Criminal Investigation

serves the American

public by investigating

potential criminal

violations of the Internal

Revenue Code and

related financial crimes

in a manner that fosters

confidence in the tax

system and compliance

with the law.

For additional information, visit IRS-CI’s web-site at:

http://www.treas.gov/irs/ci

Publication 3861 (7-2001)

Catalog Number 32332V
IRS-CI’s investigations, whether tax, money laundering,

or narcotics-related, all have a positive effect on tax

compliance. However, tax investigations involving legal

industries, and more specifically legally earned income,

have a significant impact on the broadest range of

taxpayers by promoting confidence that our tax laws 

are administered fairly. IRS-CI is therefore committed to

devoting significant resources to support this critical

program strategy.

AREAS OF EMPHASIS 

To develop and select Legal Source investigations that

support the overall IRS compliance strategy, Criminal

Investigation will continue to focus on emerging areas 

of tax fraud and the development of national priorities.

IRS-CI will also coordinate with the Service’s civil

components to identify specific areas of non-compliance.

Within the Legal Source Tax Crimes Strategy, the following

areas have been designated as national priority areas and

receive priority consideration by the 35 IRS-CI field offices

across the country:

Foreign & Domestic Trusts Program

This priority involves fraudulent foreign and domestic 

trust schemes that are promoted as a means to “protect

assets”, to evade the payment of income taxes, or to

utilize fraudulent trusts as a primary means to evade tax.

The promoters of these schemes target professionals,

such as physicians and dentists, small business owners,

and high-end wage earners. To combat these schemes,

IRS-CI’s enforcement strategy is to focus primarily on

promoters and on clients who have used the promotion to

willfully evade tax. Further, fraudulent trust issues are

addressed through a national strategy that includes

Criminal Investigation, civil compliance operating units,

IRS Chief Counsel’s Office, and the Department of Justice.

As part of this strategy, emphasis is placed on multifunction coordination, the identification of fraudulent

offshore promotions, and the use of civil and criminal

enforcement actions.

Return Preparer Fraud Program

This priority was established to promote compliance

by identifying, investigating, and assisting in the

prosecution of abusive return preparers. The program

was developed to enhance compliance in the return

preparer community by engaging in civil and criminal

enforcement actions against unscrupulous or incompetent

return preparers. IRS-CI’s Office of Refund Crimes and the

Fraud Detection Centers located within each of the ten IRS

Service Centers are using numerous techniques to identify

preparers engaged in fraudulent activity.

Questionable Refund Program 

This priority is a multifunctional program designed 

to identify fraudulent returns, stop the payment of

fraudulent refunds and to refer identified fraudulent

refund schemes to the IRS-CI field offices. Both

business and individual tax returns are reviewed under

this program.

Non-Filer Program

One of the basic tenets of our tax system is the belief

that all citizens must comply with the requirements to

file returns and pay taxes. Taxpayers who willfully fail 

to file income tax returns pose a serious threat to tax

administration and voluntary compliance. The non-filer

population has been increasing throughout the decade.

To address this concern, IRS has implemented a crossfunctional National Non-Filer Strategy. The overall goal

of this strategy is to bring taxpayers back into

compliance. IRS-CI’s role in this program is the

enforcement of the tax laws for individuals who are not

responsive to outreach efforts. IRS-CI has devoted

resources to identify these individuals, and in the most

flagrant cases, criminal prosecution has been and will

continue to be recommended. Criminal Investigation

will be developing and investigating high impact

investigations of non-filers in various occupations 

and industries, as well as those non-filers who file 

non-processable returns or employ frivolous arguments

which the courts have repeatedly rejected.

PROGRAM RESPONSIBILITIES

• General Tax Fraud 

• Foreign & Domestic Trusts

• Return Preparer Fraud

• Questionable Refunds

• Frivolous Filer/Non-Filer

• Employment Tax Fraud 

• Excise Tax Fraud

• Bankruptcy Fraud

Focus on Tax

Tax cases involving legally earned income are and continue

to be a priority for IRS Criminal Investigation, followed by

money laundering and illegal source income cases.

Legal Source Tax Crimes Strategy

The Legal Source Tax Crime Strategy will enable IRS-CI to

identify, develop and

investigate Legal Source

tax cases that will support

the Internal Revenue

Service’s overall

compliance goals and will

promote fairness and equity

in our tax system.

This Strategy addresses tax

investigations involving

taxpayers in legal

occupations and legal

industries, where only tax

or tax-related violations are

investigated by 

IRS-CI. Legal Source Tax

Crimes also includes those

cases that threaten the tax

system, such as

questionable refund schemes, return preparer cases,

excise tax cases, employment tax case, and frivolous

filers/non-filers who challenge the legality of the filing

requirement.