Study Shows IRS Prosecutions Down

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In a season when many Americans are paying their dues to the IRS, the agency is taking a few knocks as the result of a study released last week by Syracuse University's Transactional Records Access Clearinghouse (TRAC).

The study found that IRS criminal tax prosecutions are down about 50 percent from what they were a decade ago. The IRS led the prosecution on 1,064 tax cases in 1993, a number that had fallen to 512 by 2002. TRAC predicted about 360 prosecutions for 2003. On the civil side, the numbers are similar—dropping from 2,172 in 1993 to 575 in 2002.
Corporations are facing fewer negligence penalties, which also fell off from 2,376 in 1993 to 22 in 2002, with fewer corporate fraud penalties too—159 in 2000 as opposed to 555 in 1993.

These declines are in keeping with falling tax-crime investigation numbers with 2,500 cases begun by the IRS in 2002, contrasting with the 4,000 investigations launched in 1992.

The IRS contested TRAC's findings, which were generated using data from the IRS, the U.S. Department of Justice, the U.S. Office of Personnel Management and court records. IRS issued its own data last week, claiming in a New York Times article that IRS investigators instigated double the number of investigations listed by TRAC and called the Justice Department data undependable.

Regardless of IRS objections to the TRAC study, the IRS's own records showed the number of tax-crime prosecution recommendations dropped in half over the last decade. An IRS official was quoted by The Times as saying that the increasingly more complex nature of tax fraud results in fewer and more lengthy investigations due to various schemes and partnerships that can take years to unravel.


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