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The New Age oF INTerNATIoNAL CrImINAL TAx eNForCemeNT



           (“ITG”), and the Global Illicit Financial Team (“GIFT”)   In FY 2020, the NCIU initiated 117 referrals, including
           all have international components and involve unique and   numerous high dollar employment tax investigations,
           innovative approaches to this fast-evolving and complex   work that was recognized with the Commissioner’s Award
           area of tax enforcement.                             in October 2019.  NCIU also supports existing initia-
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             Cross-border investigations are often the most com-  tives involving the Foreign Account Tax Compliance Act
           plex and time-consuming matters in IRS-CI’s inventory.   (“FATCA”) and the broad category of “U.S. Citizens
           Led by IRS-CI’s Office of International Operations   Living Abroad (‘USCLA’).” 11
           (“IO”), these investigations are supported by the IRS-CI   The ITG consists of dozens of IRS-CI special agents,
           attaches, deputy attaches, and investigative aides based   investigative analysts, and professional staff with subject
           in 11 countries, including Germany (Frankfurt), China   matter expertise in international enforcement. Based in
           (Hong Kong), England (London), Australia (Sydney), the   Washington, D.C., and reporting to the Special Agent in
           Netherlands (the Hague), Colombia (Bogota), Barbados   Charge of the Washington Field Office, the ITG is focused
           (Bridgetown), Mexico (Mexico City), Canada (Ottawa),   “on investigations concerning international financial
           UAE (Dubai), and Panama (Panama City). “The vigi-    entities, ultra-high net worth individuals, and tax fraud
           lance of IRS-CI Special Agent Attaches serves to uncover   promotors.”  In addition to ITG, IRS-CI has GIFT, an
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           emerging schemes perpetrated by promoters, professional   “an IRS-CI-led task force to investigate organizations
           enablers, and financial institutions.” 4             that illicitly move money used to support international
             In addition to its cross-border investigations, IO   crime organizations.”  These interagency efforts include
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           “educates foreign governments and agencies on crime   Homeland Security Investigations (HSI) and the Defense
           detection, investigative techniques, case studies, emerg-  Criminal Investigative Service (DCIS), and focus on,
           ing trends, and best practices.”  IO also works with other   among other things, “illegal money transfer businesses;
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           organizations to leverage bi and multilateral agreements   international real estate fraud; financial institutions con-
           and resources.  From FY 2013 through FY 2020, IRS-CI   cealing and disguising illegal transactions; identity theft;
                       6
           recommended more than 1,400 international tax prosecu-  public corruption and extortion; government contract
           tions, including charges brought against approximately   fraud; and the sale of contraband goods.” 14
           two dozen foreign financial institutions. 7           In July 2018, IRS-CI joined tax enforcement authorities in
             IRS-CI’s international enforcement efforts are aided by   Australia, Canada, the Netherlands, and the United Kingdom
           the NCIU and ITG, initiatives established in May 2017.   to establish the J5, designed to increase collaboration in com-
           The NCIU was designed to develop and utilize data gath-  bating international and transnational tax crime and money
           ered by IRS business operating divisions (i.e., Exam, Field   laundering. The J5 shares information and intelligence within
           Collection, etc.) to identify areas of noncompliance and to   existing treaties and laws to identify opportunities to pursue
           assist in coordinating investigations at a national level. The   those engaging in and facilitating criminal conduct, enhance
           initial areas of concentration included international tax   enforcement tools, and conduct joint operations. By the end
           enforcement and significant money laundering, employ-  of its first year, the J5 was involved in more than 50 sophisti-
           ment tax enforcement, and microcap stock fraud.  The   cated international investigations involving individuals and
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           results of these efforts have been characterized by IRS-CI   entities, including one global financial institution and its
           leadership as “must work” referrals. In its first year, the   intermediaries suspected of enabling taxpayers to hide their
           NCIU referred 55 cases to all 25 CI field offices, resulting   income and assets. According to CI, “there have already been
           in 32 matters elevated to subject criminal investigations. 9  hundreds of data exchanges between J5 partner agencies with
             The NCIU uses sophisticated data analytics to identify   more data being exchanged in the [first year of the J5] than
           areas of noncompliance and select the most egregious   the previous 10 years combined.” 15
           cases for criminal investigations. The current areas of   The J5 deploys an innovative investigative concept
           emphasis include:                                    that we have not seen before, but are monitoring closely.
           ■ 	 COVID-19 related fraud,                          The previous standard model for international coopera-
           ■ 	 virtual currency,                                tion solely involved rigid treaty and information-sharing
           ■ 	 international tax,                               protocols. While these are essential to the legal sharing of
           ■ 	 significant money laundering,                    information between treaty partners, the J5 model appears
           ■ 	 employment tax,                                  to deploy a more hands-on interaction and sharing of
           ■ 	 the Department of Homeland Security’s National   expertise and best practices between various levels in each
               Targeting Center, and                            country to amplify the results. Offshore tax promoters
           ■ 	 the IRS Whistleblower Program.                   seldomly abide by Country borders or market only to one

      56   JOURNAL OF TAX PRACTICE & PROCEDURE                                                       WINTER 2020
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