Phase (2). DOJ Tax Approval Phase.

US DOJ (Department of Justice) Tax (Tax Section) authorizes all criminal tax prosecutions and sets national prosecution standards and priorities that further overall compliance with the federal tax system. In addition to its criminal tax role, DOJ Tax has principal authority for virtually all civil tax litigation except in the United States Tax Court. DOJ Tax Handles all tax trials in the District Courts, Bankruptcy Courts, and the Court of Federal Claims. DOJ Tax Handles all appeals (including appeals from the Tax Court) and all tax  cases in the Supreme Court. Thus, DOJ Tax is well situated to coordinate national priorities in authorizing criminal tax prosecutions. It has authority to approve all tax-related indictments.

DOJ Tax is headed by an Assistant Attorney General. The Assistant Attorney General has a deputy with principal responsibility for criminal tax matters. Criminal Tax maters are handled by one of DOJ Tax’s Sections – the Criminal Enforcement Section. This Section’s attorneys are based in Washington. Criminal Enforcement Section divides its jurisdiction geographically, such as Southern subsection, Northern and Western Subsections, with additional cites in major cities, including New York, Los Angeles, San Francisco etc.

Upon receipt of the referral from CI (Criminal Investigation, the IRS’s branch that investigates tax crimes) DOJ’s Criminal Enforcement Section determines whether the case is within its prosecution enforcement priorities.

1. The criminal tax enforcement system has limited resources. Therefore, it focuses on the strongest cases in which conviction is highly likely and picks targets with a sufficiently high profile such that the conviction will be publicized and will allegedly encourage compliance by persons of similar stature who would become aware of the convictions.

As such, DOJ’s Criminal Enforcement Section can decline to accept the IRS recommendation and return the matter to the IRS either for further investigation or with instructions to close out the criminal investigation.

1. If, however, DOJ’s Criminal Enforcement Section approves further processing, it will usually forward the matter to the United States Attorneys’ Office for the district where the venue for criminal prosecution lies.

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Phase (1). IRS Phase

The IRS is the chief investigator of tax crimes. The IRS’s branch that investigates tax crimes is Criminal Investigation (“CI’). CI agents are referred to as “Special Agents”. Special Agents are law enforcement officers, with many powers of the powers assigned to law enforcement officers generally, such as making arrests and carrying guns. CI sometimes conducts investigations internally, without any other law enforcement agency’s involvement. Such investigations are called “administrative investigations”.

1. By contrast, CI agents may be assigned to assist a federal grand jury conducting a criminal tax investigation, but such investigations are not CI investigations.

In administrative investigations, Special Agents may use the IRS administrative summons to compel testimony and the production of documents. They also may use other investigative techniques, including secretive observations, informants etc. Special Agents may also seek search warrants, with the assistance of local US Attorney, when they can show need and probable cause to believe that a crime has been committed.

CI’s significant resources include IRS counsel who are assigned to CI, much like  “in-house counsel”. The Special Agent has this legal advice readily available in all phases of the investigation. Counsel is expected to be actively involved on an as-needed basis and thus assist Special Agents in avoiding some or any of the procedural and strategic problems that might be encountered because of easy access to counsel.

CI investigations are typically thorough and time-consuming, depending upon statute-of-limitations considerations. The statute of limitations for most tax crimes is six years.

CI concludes an investigation by either:

(1) declining to pursue the matter further (referred to as a declination), or

(2) forwarding the matter to the Department of Justice Tax Division (“DOJ Tax”) for criminal prosecution or for further investigation by a grand jury.

If the IRS declines the case, it will be referred back to the IRS civil or collection agents for further processing as appropriate. Forwarding to DOJ Tax is called a “referral”.

The case will be referred to DOJ Tax via a Criminal Reference Letter (“CRL”). A key component of the referral package will be the Special Agent’s Report (“SAR”), in which the Special Agent develops all known considerations relevant to prosecution and sentencing.

1. The SAR is usually extremely thorough, reflecting the careful development of the case during the IRS phase of the criminal process. IRS counsel will review the SAR critically and encourage revisions where appropriate.

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The following prominent people in government where all convicted of federal tax crimes – Spiro Andrew, Vice President of the United States, Robert B. Anderson Secretary of the Treasury, Joseph D. Nunan, Jr., Commissioner of Internal Revenue, Mario Biaggi, Congressman and most decorated officer in history on NYC Police, George H. Ryan., Sr., Governor of Illinois, Jack Abramoff, Washington Superlobbyst. Given that we are in November 2023, who from current highest federal political establishment do you think potentiallly can be added to this list? Please, reply in the comment section. Thank you.

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