News flash for tax cheats: Enforcement is up significantly at the Internal Revenue Service. The recent annual report from IRS Criminal Investigation shows in fiscal year 2012, the Internal Revenue Service launched 5,125 investigations, recommended 3,701 prosecutions, and convicted 2,634 on tax charges.
The number of investigations per year rose 8 percent over the previous year, despite there being 2.7 percent fewer IRS special agents compared to the previous year.
Richard Weber, chief of Criminal Investigation, said in a statement “This annual report showcases some of the many significant cases that were completed by CI during fiscal year 2012 and the many program areas we cover as an organization. Weber continued, “These cases are just a few examples of the thousands of investigations initiated by CI last year, as we continue to make our mark as the finest financial investigators in the world.” Here are some things to consider from the report’s findings:
- The is IRS becoming more efficient and pursuing tax cheats more aggressively than ever before, even as the number of people working for the tax-collecting agency decreases.
- The IRS has increased its use of technology to identify potential tax cheats with suspicious tax returns referred to agents for closer review.
- The IRS’s use of sophisticated data collection and analytics to determine which taxpayers are most likely to be cheating on their tax returns.
To use a baseball analogy, the IRS has a better batting average than ever — spending time auditing returns that data suggests are the most likely to contain examples of cheating. Not only is the IRS better than ever at spotting potential tax cheats — the tax-collecting agency is more aggressive than ever in pursuing tax cheats. Collections agents are going after the taxes owed with a zeal never before seen.
Examples of increased tax collection efforts can be seen in IRS audits and tax liens statistics:
- The IRS audit rate today is 1.11 percent, meaning 1 of every 100 U.S. taxpayers is being audited. Nevertheless, for high-income earners making over $10 million per year, the audit risk is twice as high.
- In 2010, for example, the IRS filed 1 million tax liens — nearly twice the number filed in 2007. Tax liens have continued at their new pace through 2012.
What does this all mean?
For most of us who file taxes timely and honestly every year, this doesn’t mean much at all. On the other hand, if you’re hiding money overseas in unreported offshore bank accounts or cheating on your taxes in any way, you should be very, very worried.
If you’re a tax cheat, it’s time you meet with a qualified tax professional to resolve your tax issues today.
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