|
Treasury Inspector General for Tax
Administration Inspections and Evaluations Highlights Highlights of
Report Number: 2010-IE-R006 to the
Internal Revenue Service Chief, Criminal Investigation. WHY TIGTA DID THIS STUDY This project
was initiated to document the Criminal Investigation’s efforts to investigate
criminal fraud related to tax-exempt organizations and assess the procedures
used to conduct and manage such investigations. The Internal Revenue Service estimates there are
approximately 1.8 million tax-exempt organizations in the WHAT TIGTA RECOMMENDED TIGTA recommended that Criminal Investigation modify the
Criminal Investigation Management Information System to capture data required
to readily assess the timeliness of fraud referral evaluations. Criminal Investigation
did not agree with our recommendation.
Instead, Criminal Investigation proposed assessing the timeliness of
fraud referral evaluations based on information currently available in its
management information system, and issuing guidance to ensure special agents
timely record information related to fraud referral evaluations. We believe these measures will provide a general
indication of whether evaluations are processed timely. In cases where the evaluation period
exceeds Criminal Investigation guidelines, additional research will be
required to determine whether there were delays in posting information to the
management information system or actual delays in the evaluation process. |
Issued
on July 2, 2010 Review of
the Internal Revenue Service Criminal Investigation Division’s Nonprofit
Fraud Referral Process WHAT
TIGTA FOUND During Fiscal Years 2007 through 2009, Criminal Investigation
had an inventory of 168 tax-exempt investigations. Twenty-seven percent of the referrals
received by Criminal Investigation came from other Internal Revenue Service
functions while about 20 percent came from the United States Attorney’s
Office. The third largest number came
from other Federal agencies including the Federal Bureau of
Investigation. In general, the
percentage of investigations related to tax-exempt entities seems reasonable
compared to the number of tax-exempt returns filed. Approximately 72 percent of tax-exempt investigations (121
of 168) are subject criminal investigations, which are investigations related
to a specific individual or entity alleged to be in violation of laws
enforced by the Internal Revenue Service and having criminal prosecution
potential. About one‑third of the
subject criminal investigations completed by Criminal Investigation resulted
in a conviction. We were unable to fully determine if fraud referrals were
accepted or declined within 30 calendar days as stipulated in Criminal Investigation
procedures. In March 2005, TIGTA reported
that Criminal Investigation took an average of 93 calendar days to
decide to accept or decline fraud referrals during Fiscal
Year 2003. In response to that
report, Chief, Criminal Investigation, replied that several actions to address
that finding were to be implemented by September 2004. The actions included implementing a fraud
referral tracking system and re-emphasizing established operating
procedures. Included was a requirement
to better track referrals and to evaluate referrals within 30 workdays of
receipt. We attempted
to determine if Criminal Investigation timely evaluated the referrals
included in our review. Criminal Investigation
staff was able to provide information on only 14 cases, and only 5 of
the 14 were evaluated timely. 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/iereports/2010reports/2010IER006fr.html Email Address: inquiries@tigta.treas.gov Phone
Number: 202-622-6500 Web Site:
http://www.tigta.gov |