IRS, Justice Department Note Increase
in Tax Enforcement Civil and Criminal
Enforcement against Tax Cheats On the Rise

WASHINGTON - The Department of Justice, working closely with the Internal Revenue Service, has stepped up efforts to identify, investigate and punish tax cheats. Of particular note are the government´s efforts to enhance criminal enforcement, use civil injunctions to stop abusive tax schemes, and investigate promoters and users of tax shelters.

“Working with the Justice Department, the IRS is ramping up its enforcement efforts, particularly for high-income individuals and corporations, so that Americans know that when they pay taxes, their neighbors and competitors are doing the same,” said IRS Commissioner Mark W. Everson. “We have arrested the decline in enforcement actions that began in the early nineties.”

“People who engage in, facilitate or promote tax fraud are increasingly likely to be on the receiving end not only of civil enforcement actions, but also of criminal prosecution,” said Eileen J. O´Connor, Assistant Attorney General for the Tax Division. “If you participate in a scheme to defraud the IRS, you can wind up in federal prison, and you will still have to pay taxes, along with interest and penalties.”

Criminal Prosecutions of Tax Violations

The Justice Department´s Tax Division referred 1,129 defendants to U.S. Attorneys for criminal tax prosecution in 2003, an increase of 35 percent over the year 2000. Criminal tax charges were filed in 2003 against 1,036 defendants investigated by the IRS Criminal Investigation Division. The Tax Division's criminal enforcement priorities include investigating and prosecuting schemes that involve:

• Using bogus trusts to conceal control over income and assets
• Shifting assets and income to hidden offshore accounts
• Claiming fictitious deductions
• Using frivolous justifications for not filing truthful tax returns
• Failing to withhold, report and pay payroll and income taxes
• Failing to report income
• Failing to file tax returns

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