FOR IMMEDIATE RELEASE|
TUESDAY, APRIL 3, 2007
TDD (202) 514-1888
INTERNAL REVENUE SERVICE
JUSTICE DEPARTMENT AND INTERNAL REVENUE SERVICE HIGHLIGHT TAX ENFORCEMENT RESULTS
WASHINGTON, D.C. - The Department of Justice and the Internal Revenue Service (IRS) today announced highlights of their work during the past year to defend and enforce federal tax laws.
Since 2001, the Justice Departments Tax Division has brought to justice hundreds of people who evaded their federal taxes or otherwise violated the internal revenue laws. The division has obtained hundreds of civil injunctions to stop the promotion of tax scams and the preparation of false and fraudulent tax returns, and has criminally prosecuted numerous tax fraud scheme promoters.
To curb the marketing of tax shelters to corporations and individuals, the Justice Departments Tax Division has helped the IRS to identify and pursue nearly every customer who engaged in certain abusive tax shelter transactions, while at the same time pursuing the professionals who designed, facilitated or accommodated the underlying tax shelter transactions.
Taxes are how we pay for what we ask our government to do for us. People who pay what the law requires deserve the assurance that those who dont, and those who promote or facilitate tax evasion, will not get away with it, said Eileen J. OConnor, Assistant Attorney General for the Tax Division. The Tax Division is using all available law enforcement tools to identify and punish tax offenders and to recover tax revenues.
The vast majority of Americans pay their taxes honestly and accurately, said IRS Commissioner Mark W. Everson. We enforce the law because people deserve to know their neighbors and competitors are doing the same.
Bringing Fraudulent Tax Return Preparation to a Halt
The Tax Division continues to bring civil injunction suits to stop tax preparers who habitually prepare bogus tax returns. In response to the governments efforts, courts across the country have barred tax preparers from preparing inaccurate returns.
Since January 2001, the Justice Department has sought and obtained injunctions against more than three dozen tax return preparers, including 18 since January 2006. It expects to obtain many more injunctions throughout the year. The United States recently has obtained injunctions that barred the following schemes by tax preparers:
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 related false returns.
Stopping Tax Evasion
During fiscal year 2006, the Justice Departments Tax Division authorized prosecutions of nearly 1,200 defendants for tax crimes, an increase of more than 34 percent over the number authorized for prosecution in 2001. The Tax Divisions criminal enforcement priorities include investigating schemes that involve:
Stopping the Promotion of Tax Fraud Schemes
Since April 2006, the Justice Department and the IRS have vigorously pursued the promoters of tax fraud schemes to stop their activity and to warn would-be promoters that promoting tax fraud schemes leads nowhere but to a federal court injunction or to a long stay in jail.
Since January 2001, the Justice Department has sought and obtained injunctions against nearly 200 promoters of tax fraud schemes, including 66 since January 2006. These injunctions have stopped promoters from selling tax evasion schemes on the Internet, at seminars, or though other means. The tax-scam promoters the government has sought to enjoin have cost the U.S. Treasury an estimated $2.5 billion, and have had an estimated 500,000 customers. Among the governments results in this area are:
Curbing High-End Tax Shelters
During the past year, the Justice Department and the IRS have continued their vigorous enforcement efforts against the promoters and facilitators of abusive tax shelters. Abusive shelters for large corporations and high-income individuals have cost the U.S. Treasury billions annually, according to Treasury Department estimates. The Tax Division also has had great success in federal court defending the U.S. Treasury against tax shelter-related claims of large companies and individual investors. The Tax Division is currently litigating approximately 86 tax shelter cases or groups of cases, including 47 separate cases involving the Son of BOSS tax shelter. Among the successes during the past year in this area are the following:
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. 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 Web site http://www.usdoj.gov/tax/, on the IRSs Web site http://www.irs.gov/, and on the IRS Criminal Divisions Web site http://www.ustreas.gov/irs/ci/.
The Justice Department encourages anyone who has information about suspected tax fraud to report it to the IRS Web site at http://www.irs.gov and click on the links Contact IRS and How Do You Report Suspected Tax Fraud Activity.