Swiss Banking Program Archives - TAX CONTROVERSY 360

IRS Criminal Investigation Division Expects Official “Stand Up” of National Coordinated Investigation Units in January

In early August 2017 (as we previously reported), the Chief of the Internal Revenue Service’s (IRS) Criminal Investigation Division (CID), John D. Fort, announced that CID would be forming new National Coordinated Investigation Units over the next few months. In a recent conference, Fort has confirmed that these units will be fully operational in January, and they are already sending out referrals to field offices.

The units are intended to modernize CID’s investigative tools to rely more upon data analytics to harvest leads from information received through the Swiss Banking Program, the Foreign Account Tax Compliance Act (FATCA) and the Panama Papers investigation, among other sources. The effort is also clearly intended to maximize the Division’s resources in light of budgetary concerns.

Fort also noted that CID has increasingly focused on tax evasion issues related to cryptocurrencies, and that the use of cryptocurrencies in money laundering operations has become much more mainstream in the last few years. We have also observed a number of developments in this area. For example, the Department of Justice Tax Division is currently engaged in an IRS “John Doe” summons enforcement action against a Bitcoin clearinghouse, seeking the names of Coinbase’s customers who engaged in certain types of potentially reportable transactions. See United States v. Coinbase, Inc., 3:17-cv-01431-JSC (N.D. Cal.).

Practice Point: The new National Coordinated Investigation Units have the potential to reinvigorate and sharpen CID’s investigative efforts in the United States and for taxpayers abroad. Particularly in the area of undeclared offshore accounts, voluntary disclosure is strongly advisable; the world is getting smaller and smaller. Also, CID’s heightened focus upon Bitcoin and other cryptocurrencies may have far-reaching effects beyond criminal investigations. For example, as we have seen historically with the UBS and Jenkens & Gilchrist “John Doe” summons enforcement cases, among others, these summons proceedings can hold open statutes of limitations for assessment in civil audits as well.

IRS Criminal Investigation Division Announces Two New Initiatives

In a press call on August 2, 2017, the Chief of the Internal Revenue Service’s (IRS) Criminal Investigation Division (CID), John D. Fort, announced two new enforcement initiatives: a National Coordinated Investigations Unit and an International Tax Enforcement Group.

The National Coordinated Investigations Unit is intended to be, in Fort’s words, a “cutting edge” group answering directly to CID’s management. It is intended to harness data already being gathered by the IRS’s civil departments to identify areas of non-compliance, so that major investigations can be coordinated at a national level.

The first three areas of inquiry for the new unit will be international tax enforcement, employment tax enforcement and microcap stock fraud (an effort that will be coordinated with the Security and Exchange Commission). In Fort’s words, these efforts will generate “must-work referrals that come out of this group to the field offices.” International tax and employment tax enforcement are already longstanding CID priorities, so it will be interesting to see how CID’s use of data analytics will further those goals and whether greater coordination at the national level will result. (more…)