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IRS CI Releases FY 2021 Annual Report

Offshore Account Update

Posted on November 30, 2021 |

The Internal Revenue Service’s Criminal Investigation Division (IRS CI) recently released its Fiscal Year 2021 Annual Report. The report highlights several key aspects of IRS CI’s enforcement efforts from October 1, 2020 through September 30, 2021. Here, Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses some key takeaways for U.S. taxpayers.

5 Key Takeaways from IRS CI’s FY 2021 Annual Report

1. Most of IRS CI’s Enforcement Efforts Focus on Tax Evasion and Tax Fraud

In its news release announcing the publication of the report, the IRS notes that approximately 72 percent of IRS CI’s enforcement efforts focus on targeting individuals and businesses suspected of tax evasion and tax fraud. This includes a variety of forms of fraud—from identity theft and refund fraud to abusive tax schemes and underpayment of employment tax liability. The FY 2021 Annual Report also identifies specific enforcement priorities such as:

  • High-income taxpayers who fail to file returns or pay what they owe
  • Keeping two sets of books
  • Making false entries in books and records
  • Claiming personal expenses as business expenses
  • Claiming false credits and deductions
  • Hiding or transferring assets

2. COVID-19 Fraud has Quickly Become a Key Concern

Aside from general tax fraud and tax evasion, most of IRS CI’s other enforcement priorities have remained relatively consistent over the past several years. These include crimes such as money laundering, drug trafficking, public corruption and terrorism. But, there is one notable exception: IRS CI is currently devoting substantial resources to combating tax fraud and other crimes related to the COVID-19 pandemic. Some of the most common forms of COVID-19 fraud include fraudulently obtaining government assistance (i.e. Paycheck Protection Program (PPP) loans) and fraudulently claiming credits and other forms of relief offered to eligible taxpayers.

3. IRS CI is Going After Cryptocurrency

During FY 2021, IRS CI seized $3.5 billion in cryptocurrency assets. This accounted for 93 percent of total seizures during the year. Cryptocurrency tax fraud is another area in which we have seen a significant increase in enforcement activity in recent years.

4. IRS CI Is Expanding Its Global Reach

IRS CI is continuing to expand its global reach through its involvement with the Joint Chiefs of Global Tax Enforcement (J5). The FY 2021 Annual Report notes that IRS CI has recently forged new relationships in Europe, Africa, Asia and other locations around the world with a specific focus on targeting both large-scale international tax crimes and individual taxpayer offenses such as failing to report offshore assets to the U.S. Government.

5. Approximately Half of All IRS CI Investigations in 2021 Led to Sentencing

IRS CI Initiated more than 2,500 investigations in FY 2021. Of these investigations, approximately half led to sentencing. Individuals and businesses targeted in IRS CI investigations face significant risks, and hiring an experienced Boston tax attorney is imperative for avoiding unnecessary consequences.

Speak with a Boston Tax Attorney in Confidence

Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, represents both individuals and businesses in IRS CI investigations. If you have questions or need legal representation, please call 617-692-2989, email ket@thornlawgroup.com or contact us online today.

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