We just returned last week from attending the Criminal Fraud and Tax Controversy Conference in…
What I learned at the 2022 National Institute on Criminal Tax Fraud and Tax Controversy in Las Vegas
I just returned from the American Bar Association Section of Taxation’s annual National Institute on Criminal Tax Fraud and Tax Controversy in Las Vegas, which is the largest gathering of criminal tax fraud and tax controversy attorneys in the nation.
A major topic of discussion was the new $80 billion funding for the IRS, out of which $45 billion is dedicated for tax enforcement. Senior officials from the IRS made some interesting observations and statements. Below are some of my notes:
– The IRS is actively hiring personnel in all levels and positions, including auditors, criminal investigation agents, collection agents, etc. Senior officials from the IRS solicited attendees, including many seasoned tax attorneys, to consider applying for jobs at the IRS.
– The IRS has started training new personnel with more frequency and size. For example, the IRS just finished training 35 new criminal investigation special agents earlier this month. In 2023, the IRS expects to have far more trainings and larger classes than in recent history. As a result, it is expected that more than 500 newly trained criminal investigation special agents will be onboarded over the next year. It is expected that civil agents (mostly accounting professionals) will be trained in even larger numbers.
– The IRS’ audit rates in recent years’ has been at an all-time low. For example, the audit rate for 2019 was 0.4%. In 2023, with new personnel, the IRS expects to significantly increase its audit rates.
– The IRS has increased its IT budget by over 150%. As a result, the IRS plans to use artificial intelligence and data analytics to more intelligently identify noncompliance and new tax targets. In addition, the data analytics will be used to minimize erroneous IRS notices, which were common in recent years.
In summary, the new $45 billion funding for the IRS enforcement will lead to more audit activity in the future. However, due to training and onboarding of new personnel, it is expected that the new increased civil and criminal enforcement will take 1-2 years to see a noticeable heightened enforcement effect. In the meantime, taxpayers (and their advisors) should be aware that the 2022 tax year and onwards will be subjected to enhanced IRS scrutiny and increased examination.
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