FOR IMMEDIATE RELEASE|
TUESDAY, APRIL 11, 2006
TDD (202) 514-1888
JUSTICE DEPARTMENT AND IRS HIGHLIGHT TAX ENFORCEMENT EFFORTS
WASHINGTON, D.C. - The Department of Justice and the Internal Revenue Service have continued their vigorous criminal tax enforcement and civil injunction efforts against people who engage in tax fraud and other forms of non-compliance with federal tax laws.
Since 2001, the government has successfully prosecuted hundreds of tax cheats and promoters of abusive tax schemes; it has sought and obtained civil injunctions to stop the promotion of tax scams and the preparation of false and fraudulent tax returns; and it has continued to identify and pursue any company or individual who used an abusive tax shelter, while, at the same time, pursuing the professionals who designed, facilitated, or accommodated the underlying tax shelter transactions. These efforts have continued during 2005 and 2006.
The Department of Justice is committed to using all available law enforcement tools to recover tax revenue, punish tax offenders, and to prevent future misconduct, said Eileen J. OConnor, Assistant Attorney General for the Tax Division. People who promote, facilitate, or engage in plans or schemes to avoid reporting their income or another persons income are risking penalties and, where appropriate, criminal prosecution.
The vast majority of Americans pay their taxes honestly and accurately, said IRS Commissioner Mark W. Everson. With the help of the Justice Department, the IRS holds those who dont accountable.
Tax Shelter Enforcement
During the past year, the Justice Department and the IRS have significantly increased their enforcement efforts against the promoters and facilitators of abusive tax shelters. Abusive shelters for large corporations and high-income individuals have cost the federal treasury more than $10 billion annually, according to Treasury Department estimates. The Tax Division also had notable successes in federal court defending the federal Treasury against tax shelter-related claims of large companies and individual investors. Among the successes in this area are the following:
Criminal Prosecution of Tax Violations
During 2005, the Justice Departments Tax Division authorized prosecutions against 1,256 defendants for tax crimes, an increase of more than 43 percent over the 877 defendants authorized for prosecution in 2001. The Tax Divisions criminal enforcement priorities include investigating and prosecuting schemes that involve:
The Tax Division continues to bring civil injunction suits to stop illegal tax fraud schemes and tax preparers who habitually prepare bogus tax returns. In response to the governments suits, courts across the country have barred tax preparers from preparing inaccurate returns and promoters of tax fraud scams from selling tax-evasion schemes on the Internet, at seminars, or though other means.
Since January 2001, the Justice Department has sought and obtained injunctions against more 170 tax return preparers and promoters, including 66 since January 2005. It expects to obtain many more throughout the year. The United States recently has obtained injunctions that barred the following schemes:
The Department of Justice also has obtained injunctions against employers who fail to withhold, account for and pay over employment and withholding taxes and against return preparers who prepare false returns.
Our injunctions suits enable us to stop the harm caused by the promotion of tax fraud schemes and the preparation of false tax returns, said Assistant Attorney General OConnor. By taking action, we minimize the number of people who get caught up in these schemes and help to assure that everyone abides by this essential duty of citizenship—the duty to pay tax.
Coordinated Civil and Criminal Proceedings
The government brings both its civil and its criminal tools to bear in the fight against tax fraud. An ongoing tax scam causes continuing harm to the federal Treasury and it leaves participants owing taxes, interest and, often, penalties as well. The government does not wait until a criminal case has been developed to take action to stop the scam. Rather, the Justice Department brings civil injunction suits to stop both the promotion of tax scams and the preparation of false or fraudulent returns. Additionally, in appropriate cases, the Justice Department brings criminal charges against the promoters, preparers, and scam participants to punish them for their unlawful conduct.
Further details about these and other tax enforcement cases are available on the Tax Divisions website http://www.usdoj.gov/tax/index.html, on the IRSs website http://www.irs.gov/, and on the IRS Criminal Divisions website http://www.ustreas.gov/irs/ci/.
The Department of Justice encourages anyone who has information about suspected tax fraud to report it to the IRS tip line at 1-800-829-0433.