At first glance it may seem like good news that there has been a recent drop in the amount of tax fraud cases being prosecuted by the IRS. But the truth is that the drop in tax fraud case is probably due more to other circumstances rather than that there are less people committing the crime.
Last year, the IRS’s criminal division brought 795 cases in which tax fraud was the primary crime, a decline of almost a quarter since 2010. Don Fort, the chief of criminal investigations for the IRS. thinks, “That is a startling number,” which is what he acknowledged at a New York University tax conference in June.
According to Fort, bringing cases against people who evade taxes on legal income is central to the revenue service’s mission. In addition to recouping lost revenue, such cases are supposed “to influence taxpayer behavior for the hundreds of millions of American citizens filing tax returns,”.
Some experts fear that with fewer cases, Americans will get the message that it’s OK to break the law.
So, what is the reason for the apparent drop in cases? Some blame the republicans cutting of the IRS’s budget that has forced the agency to reduce its enforcement staff by a third. But that drop doesn’t entirely explain the reduction in tax fraud cases.
Chuck Pine, who used to be the third-ranking criminal enforcement officer at the IRS and is now a managing director at BDO Consulting believes that because of budget cuts, attrition and a shift in focus, there is now less commitment to take on tax fraud.
Experts believe that regardless of what the cause of less fraud cases being prosecuted is, the results will be huge losses for the government. According to IRS estimates, Business owners don’t pay $125 billion in taxes each year that they owe. That’s a hefty sum and the missing revenue may show its effects later on down the line.