Treasury
Inspector General for Tax Administration
Office of Audit
CRIMINAL INVESTIGATION DIVISION
RESOURCES DEVOTED TO SUPPORTING RECOMMENDED PROSECUTIONS CAN BE ENHANCED WITH A
STRONGER STRATEGIC FOCUS
Issued on March 25, 2010
Highlights
Highlights of
Report Number: 2010-30-036 to the
Internal Revenue Service Chief, Criminal Investigation.
IMPACT ON TAXPAYERS
The
current Administration and Congress have recently begun to focus on reducing
tax evasion as a way to reduce the tax gap and help ease the current strain on
Federal budgets, potentially resulting in increased demand for Criminal
Investigation (CI) Division resources. The
CI Division needs stronger oversight and
coordination, both locally and nationally, to effectively manage the
prosecution pipeline process, help its management make sound decisions, and
identify opportunities to reduce the resources devoted to cases in prosecution
pipeline inventory. The successful
prosecution of a criminal tax violation deters other taxpayers who might
otherwise decide to not comply with the tax law and promotes confidence in the
WHY TIGTA DID THE AUDIT
This audit
was initiated because the CI Division suggested that TIGTA evaluate the
steady increase in prosecution pipeline inventory over a period of years. The CI Division’s criminal prosecution
recommendations to the Department of Justice are called prosecution pipeline
inventory until the prosecution efforts are completed. The audit’s objective was to evaluate the growth and determine
if there are ways to reduce the CI Division resources devoted to this area.
WHAT
TIGTA FOUND
The CI
Division has only a limited overall strategy to materially reduce and manage
the prosecution pipeline inventory. Because
an increase in the percentage of investigative time spent on cases in
prosecution pipeline status reduces the CI Division’s ability to initiate
new cases or complete ongoing cases, TIGTA believes it should expand the
monitoring of prosecution pipeline issues to identify opportunities for
improvement. While
the steady increases in the volume of prosecution pipeline cases and percentage
of investigative time expended are indicators to be used in identifying concerns
or trends, these measures alone do not provide CI Division executives
sufficient information for making sound management decisions.
WHAT TIGTA RECOMMENDED
TIGTA recommended that
the Chief, CI Division,1) create a structured oversight and coordination system
to monitor and more effectively manage the prosecution pipeline process, 2)
create an ad hoc strategic team to develop innovative policies and procedures
to ensure tax cases receive appropriate attention and resolution by the
Department of Justice, 3) develop additional techniques that refine the
prosecution pipeline volume and investigative time performance measures and
expand the information available for management purposes, and 4) ensure that
necessary information is added to the quarterly Business Performance Reviews to
provide a clear depiction of the resources devoted to prosecution pipeline
inventory activities.
In its
response to the report, Internal Revenue Service officials agreed with two
recommendations, providing an alternate corrective action on one, and disagreed
with the other two recommendations. The
CI Division plans to create a strategic team to examine how a more
structured approach to the oversight process can be implemented to support a
consistent pipeline methodology within all CI Division management
levels.
The
CI Division does not agree with modifying the CI Management Information System
to differentiate between the nature of time expended because it would be cost
prohibitive and would not impact the prosecution pipeline process. TIGTA believes the disagreement is
focused too narrowly on whether it is feasible to modify the system, rather than developing additional data analysis and summary reporting techniques
which can be based on the system data that are already available. Any assumptions about the nature of the
investigative time that makes up the prosecution pipeline percentage of total
investigative time would inherently be misleading without determining
underlying characteristics. For that
reason, TIGTA believes that existing
performance measures alone do not provide CI Division executives sufficient
information for making sound business decisions.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full Internal Revenue Service response,
go to:
http://www.treas.gov/tigta/auditreports/2010reports/201030036fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov