IRS CI 2021 Annual Report Sheds Light On Enforcement Priorities for 2022

The Internal Revenue Service’s Criminal Investigation Division (IRS CI) recently released its Annual Report for fiscal year 2021. While the FY 2021 Annual Report discusses IRS CI’s enforcement efforts over the prior year, in doing so it sheds light on the division’s enforcement priorities heading into 2022. New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.

What Are IRS CI’s Current Enforcement Priorities?

IRS CI’s FY 2021 Annual Report identifies several current enforcement priorities. While some of these are long-standing priorities for IRS CI (among other federal law enforcement authorities), others have only garnered IRS CI’s attention in recent years.

For example, IRS CI is continuing to prioritize enforcement of international tax compliance, specifically with regard to the disclosure of foreign financial assets. This also dovetails with another more recent enforcement priority—ensuring accurate reporting and payment of cryptocurrency tax liability.

Other current enforcement priorities include COVID-19 fraud, high-income taxpayer fraud, and general tax fraud and tax evasion. While IRS CI tends to prioritize cases involving substantial unpaid tax liability, the division’s FY 2021 Annual Report shows that all U.S. taxpayers who underreport or underpay what they owe are potentially at risk for facing an investigation.

What Are the Risks of Facing an IRS CI Investigation in 2022?

The risks of facing an IRS CI investigation in 2022 are significant. The division increased its staff in 2021 and undertook various initiatives to enhance its enforcement capabilities—specifically with regard to international tax and cryptocurrency tax compliance. Individuals and businesses that are targeted in IRS CI investigations can face substantial penalties; and, of the roughly 2,500 investigations IRS CI initiated in 2021, about half resulted in sentencing.

What Are My Options if I May Be a Target for Enforcement?

If you are concerned that you or your business may be a target for IRS CI enforcement action, you should consult with a New Jersey tax attorney promptly. While you may have options available for correcting past filing deficiencies or underpayments, you will need to address any outstanding issues proactively in order to effectively mitigate against the risk of facing an IRS CI investigation. Depending on your circumstances, some examples of the options you may have available include:

• Negotiating a settlement agreement or offer in compromise (OIC)
• Utilizing IRS CI’s Voluntary Disclosure Program
• Utilizing the IRS’ Streamlined Filing Compliance Procedures

Once IRS CI initiates an investigation (or the IRS initiates an audit), these options generally go away. As a result, if you believe you or your business may be at risk for enforcement action, it is important that you work with an attorney to formulate a plan as soon as possible.

Schedule a Confidential Consultation with a New Jersey Tax Attorney

Are you concerned about the risk of facing an IRS audit or IRS CI investigation in 2022? If so, we encourage you to get in touch. To schedule a confidential consultation with New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, call 201-355-8202, email ket@thornlawgroup.com or contact us online today.