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The New Age of International

           Criminal Tax Enforcement

           By Caroline D. Ciraolo and John D. Fort*

           Caroline D. Ciraolo and John D. Fort examine international

           criminal tax enforcement.

                                                  he current global economic landscape presents challenges for tax authorities
                                                  around the world—reduced tax revenue, limited resources for compliance
                                            T and enforcement, and increased risk of noncompliance. In the face of such
                                            challenges, governments are balancing taxpayer service with the need to refocus
                                            and maintain enforcement. In the United States, senior-level Internal Revenue
                                            Service (“IRS”) officials have recently been vocal about enforcement priorities,
                                            with the most visible example being the establishment of the Office of Fraud
                                            Enforcement (“OFE”) within the Small Business/Self Employee operating division
                                            to better coordinate potential fraud. It should not be lost on readers that the OFE
                                            is headed by a long-time IRS Criminal Investigation (CI) employee, whose last
                                            position with IRS-CI was the Director of International Operations.  Countries
                                            are working closer together to leverage and share information and resources to
                                            identify criminal tax operations and to hold those involved accountable. The
                                            United States has been a critical player in these efforts, establishing the Joint
                                            Chiefs of Global Tax Enforcement (“J5”) in 2018 and working closely with its
                                            treaty partners in cross-border investigations. Taxpayers and their advisors need
                                            to be aware of developments on the world stage and avoid the associated risk in
                                            their personal and professional financial operations.
                                               “IRS-CI” employs 2,030 special agents,  down from its high water mark of 3,363
                                            special agents in 1995, but these agents are expert financial investigators and focus on
                                            high impact cases with strong general deterrence. In Fiscal Year (FY) 2020, IRS-CI
                                            initiated 2,596 investigations, recommended 1,859 prosecutions, and assisted the
           CAROLINE D. CIRAOLO is a Partner   U.S. Department of Justice (“DOJ”) in obtaining 1,512 indictments and informa-
           with Kostelanetz & Fink, LLP.    tion. Of the investigations initiated during this period, 242 involve international
           JOHN D. FORT is the Director of   enforcement issues and operations.  This reflects a 13 percent increase from FY 2019.
           Investigations at Kostelanetz & Fink,   IRS-CI has developed a multiprong approach to international tax enforcement
                                            that demonstrates their continued emphasis on this area of noncompliance. The
                                            J5, National Coordinated Investigations Unit (“NCIU”), International Tax Group

           WINTER 2020                                                              © 2021 C.D. CIRAOLO AND J.D. FORT  55
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