Internal Revenue Service
The Internal Revenue Service (IRS) is a federal agency within the Department of the Treasury responsible for enforcing U.S. tax laws, including income and excise taxes, and investigating violations of the Internal Revenue Code. Established in 1862 by President Abraham Lincoln, the IRS originated to fund the Civil War. It underwent significant restructuring in 1998, resulting in four main divisions that serve different categories of taxpayers: Wage and Investment, Small Business/Self-Employed, Large and Mid-Size Business, and Tax-Exempt and Government Entities.
A critical component of the IRS is its Criminal Investigation (CI) division, created in 1919 to combat tax fraud. This division has become well-known for high-profile cases, including the prosecution of gangster Al Capone for tax evasion. The CI division, which had a remarkable conviction rate of over 90% for federal tax prosecutions from 1919 to 2004, investigates a range of financial crimes, including fraud across various industries. In response to evolving threats and technological advancements, the IRS has enhanced its capabilities, notably in combating terrorism and cybercrime. The division has played key roles in significant cases, such as the FIFA corruption scandal and the shutdown of a major child exploitation website.
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Internal Revenue Service
IDENTIFICATION: Federal agency responsible for enforcing income and excise tax laws, and investigating criminal violations of the Internal Revenue Code and related financial crimes
SIGNIFICANCE: The Internal Revenue Service (IRS) is the only federal agency commissioned to investigate criminal violations of the U.S. Internal Revenue Code.
The IRS, a branch of the Department of the Treasury, was established in 1862 by President Abraham Lincoln to enact a tax to compensate for the expense of the Civil War. As a direct result of the IRS Restructuring and Reform Act of 1998, the IRS was reorganized into four major operating divisions, corresponding to various categories of taxpayers. The four divisions are the Wage and Investment division, the Small Business/Self-Employed division, the Large and Mid-Size Business division, and the Tax-Exempt and Government Entities division. There are three additional divisions: Communications and Liaison, Appeals, and Criminal Investigation. This discussion will focus on the Criminal Investigation division.
The predecessor of the Criminal Investigation division was created in 1919, when an IRS intelligence unit was assembled to investigate tax fraud. This unit attained much notoriety in the summer of 1930, when world-renowned gangster Al Capone saw his deviant career brought to an end by the IRS, not for his violent criminal activity but for income tax evasion. In 1978, the unit was named Criminal Investigation (IRA-CI) when its jurisdiction was expanded to include activities violating the Money Laundering Act and Bank Secrecy Act of 1970. This division is identified as the law-enforcement aspect of the Internal Revenue Service. From 1919 to 2004, the conviction rate for federal tax prosecutions was 90 percent or better, the highest among all federal law-enforcement agencies.
In 2021, the IRS implemented new login and ID verifications to help secure its online portals. In December 2022, the Criminal Investigation division comprised about twenty-six hundred special agents performing a combination of accounting and law-enforcement duties in the investigation of financial crimes. Its operations include surveillance and undercover work, intelligence, strike forces, and the organized crime drug task force. Six areas categorize financial crimes in a diverse combination of industries and professions for which this division is responsible: tax return preparer fraud, real estate fraud, automotive industry fraud, construction industry fraud, restaurant industry fraud, and medical fraud. In the wake of the, September 11, 2001 terrorist attacks on the United States, as well as myriad technological advancements in the use of computers to commit crime, the Criminal Investigation division augmented its financial skills and law-enforcement resources to create several task forces to combat terrorism.
Amongst their notable cases, the IRS-CI had integral roles in exposing the 2015 FIFA corruption case, which found fourteen leaders of FIFA—professional soccer's international governing body—indicted and seven top executives arrested for widespread corruption. They also participated in the October 2019 shutdown of Welcome to Video, one of the world's largest child pornography sites, by tracing bitcoin transactions.
Bibliography
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