Syracuse, N.Y. April 13 Criminal enforcement of the
nation's tax laws by the IRS has plummeted to an all time low, according
to an analysis of very timely Justice Department data obtained by
the Transactional Records Access Clearinghouse (TRAC).
Tax prosecutions brought as a result of IRS investigations currently
are running at about half what they were only ten years ago. The sharp
decline has continued at the same time that the nation has been swept
by a flood of reports about corporate fraud studded with such names
as Enron, Arthur Anderson, WorldCom, Adelphi Communications and Health
The apparent surge in big-time white collar crime prompted President
George Bush to travel to Wall Street last summer and announce the
launching of what he said would be a broad new federal program "to
expose and punish acts of corruption, move corporate accounting out
of the shadows and protect small investors and pension holders."
Curiously, however, government enforcement records show that criminal
investigators of the IRS -- long considered the government's most
sophisticated sleuths when it came to serious financial fraud -- apparently
did not get the word. In addition, other records show the Bush Administration
did not include the tax agency in its new plan to "punish those who
refuse to play by the rules."
Here are the highlights:
In FY 1993, the
Justice Department credited the IRS with being the lead agency for
1,064 tax prosecutions. In FY 2002, there were 512 such prosecutions,
about half of the 1993 total. If current trends continue, annual tax
prosecutions may fall as low as 360 based upon data covering the first
four months of FY 2003.
for nontax crimes where IRS was the lead agency – drug offenses, money
laundering, currency violations, etc. – have also collapsed from 1,705
in FY 1993 down to 667 for FY 2002.
Civil suits filed
by the IRS in federal courts dropped off even more sharply, from 2,172
in FY 1993 to 575 in FY 2002.
The Justice Department
data show that, despite the concerns expressed by President Bush in
the summer of 2002, securities fraud prosecutions brought each year
on the basis of IRS investigations are minimal: 10 in 1993, 6 in 1994,
4 in 1995, 2 in 1996, 7 in 1997, 6 in 1998, 22 in 1999, 12 in 2000,
9 in 2001 and 10 in 2002.
The collapse of IRS criminal and civil enforcement
actions brought in district court do not appear to be explained by
changes in IRS staffing levels. While there have been some recent
ups and downs, IRS figures show special agent staffing for tax fraud
and financial investigations today are about the same as a decade ago
when criminal prosecution levels were much higher. In 1990 there were
2,794 IRS criminal investigators employed; in 2002 there were 2,907.
The centerpiece of President Bush's plan to
combat what many believe has been a business crime wave is the Justice
Department's Corporate Fraud Task Force. Headed by the Deputy Attorney
General, the other members
of the new Justice Department task force include the FBI director, the
assistant attorneys general in charge of the department's criminal and
tax divisions and six U.S. Attorneys.
An interagency group working with the task force includes
the Secretary of Treasury, the Chairman of the Securities and Exchange
Commission (SEC) and the Chief Inspector of the Postal Inspection
Service. The IRS, however, is not listed as a member of the task force or its
(TRAC, associated with Syracuse University, is
a non-partisan organization established in 1989 to provide the American
people with comprehensive information about the operations of the
federal government. Its operations have been supported by the university
and a number of philanthropic organizations including the Knight
Foundation, the Rockefeller Family Fund, the Open Society Institute,
the Beldon Fund, and the New York Times Company Foundation. For
detailed information about where the latest data are now available
go to http://trac.syr.edu/media.)
Washington, D.C.: Suite 200, 1718 Connecticut Avenue, N.W., 20009
Tel. (202) 518-9020
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