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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.
CAROLINE D. CIRAOLO is a Partner
with Kostelanetz & Fink, LLP.
JOHN D. FORT is the Director of
Investigations at Kostelanetz & Fink,
LLP.
WINTER 2020
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
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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
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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
U.S. Department of Justice (“DOJ”) in obtaining 1,512 indictments and informa-
tion. Of the investigations initiated during this period, 242 involve international
enforcement issues and operations. This reflects a 13 percent increase from FY 2019.
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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
© 2021 C.D. CIRAOLO AND J.D. FORT 55