For the past decade or more, the federal government has not prioritized prosecutions of white-collar crimes. Many analysts predicted that it would change with the administration of President Joe Biden, but so far, the expected increases have yet to happen. In fact, by some reckonings, the number of federal white-collar prosecutions in 2022 was the lowest in 20 years.
It’s too early to say yet, but this may be set to change in 2023. In particular, some analysts expect to see more prosecution of tax fraud in the years ahead.
The IRS-Criminal Investigations agency
One feature of the massive Inflation Reduction Act passed by Congress last year is an allocation of nearly $80 billion over the next 10 years for the IRS. About half of this money is intended for enforcement.
Most of us know the IRS as the federal government tax authority that sets rules, collects revenue and so on, but it also has a criminal justice role.
The IRS-Criminal Investigations agency, or IRS-CI, investigates criminal tax fraud and other financial crimes, both in the United States and abroad. If it finds evidence of criminal activity, the IRS-CI recommends prosecution to the Department of Justice. The IRS-CI claims to have a 90% conviction rate with these cases.
In recent years, the IRS-CI has emphasized investigation into so-called cyber-crimes involving cryptocurrency and other digital assets. It has also been heavily involved in tracking down violations of international sanctions against certain Russian businesses and individuals.
Criminal tax fraud
The law sees a difference between simply making a mistake on one’s taxes and committing criminal tax fraud. To convict someone of criminal tax fraud, the prosecution must show that the defendant intentionally misreported their taxes.
For instance, in a case where a person falsely claims personal expenses as business expenses, the prosecution must prove that the person knew that what they were doing was wrong.
Communication between the tax authorities and the accused party is a key part of the evidence in these cases. For instance, a person who simply neglects to file their taxes one year might face tax penalties without criminal charges. However, if the IRS contacts this person about the problem and then they fail to file their taxes again the next year, the prosecution may argue that this person deliberately misreported their taxes. The prior communication shows that the person knew that they were supposed to file their taxes and deliberately declined to do so.
It isn’t always easy for the prosecution to prove its case in criminal tax fraud cases, but neither is it easy for the defendant to protect themselves. Attorneys with experience in white-collar crime defense can help the accused to understand their options.