The Tax Division's mission is to enforce the nation's tax laws fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system, and promote the sound development of the law.
Office of the Assistant Attorney General
An Assistant Attorney General, who is appointed by the President and confirmed by the Senate, runs the Tax Division. Four Deputy Assistant Attorneys General, one of whom is a career attorney, help to manage the Division.
The Tax Division employs more than 350 attorneys in fourteen civil, criminal, and appellate sections. All Tax Division sections are based in Washington, D.C., except for the Southwestern Civil Trial Section, which is located in Dallas, Texas.
Civil Trial Sections
Tax Division attorneys conducting civil litigation are charged with promoting public compliance with the internal revenue laws by ensuring strict and even-handed enforcement. The work of the Tax Division's Civil Trial Sections covers a broad spectrum of litigation in United States District courts, United States Bankruptcy Courts, and state courts. The civil trial work performed by the Division is handled by six regional trial sections and the Court of Federal Claims section (see below).
The Tax Division handles most affirmative and defensive civil litigation arising under the internal revenue laws in federal district and bankruptcy courts and in state courts. The work of the civil trial attorney includes defending the United States in tax refund and civil damages suits, representing IRS and Justice Department employees in lawsuits for damages allegedly caused in the performance of their official duties, and defending the Secretary of the Treasury, the Commissioner of Internal Revenue, and other officials against lawsuits testing the validity of federal tax regulations and rulings. Civil trial attorneys also bring suits to collect unpaid assessments, to foreclose federal tax liens or to determine the priority of such liens, to obtain judgments against delinquent taxpayers, to enforce IRS administrative summonses, and to establish tax claims in bankruptcy, receivership and probate proceedings.
The Civil Trial Sections also represent other federal departments and agencies in cases involving the immunity of the Federal Government from state and local taxation.
These cases present a variety of legal issues involving federal tax law, bankruptcy law, constitutional law, commercial law and state property law, as well as a panoply of evidentiary, procedural, and jurisdictional issues.
The Tax Division's civil trial attorneys are responsible for every phase of their assigned cases from initial pleadings through discovery and trial, including briefing and arguing motions and conducting jury and non-jury trials.
The monetary impact of the Tax Division's affirmative litigation efforts is far-reaching in scope. During fiscal year 2010, Tax Division attorneys successfully defended lawsuits against the United States representing claims of over $714 million, and, through affirmative litigation, collected $566 million. The Division is currently defending refund suits that involve over $10 billion.
In addition to the money collected and retained as a result of the Division's cases, the judicial rulings in the cases handled by the Tax Division impact other cases and serve to deter potential violators of the tax laws. Individual cases therefore often have tremendous significance beyond the amount directly at stake in the case.
Court of Federal Claims Section
One of the Tax Division's Civil Trial Sections, the Court of Federal Claims Section, defends all tax suits filed in the United States Court of Federal Claims, a court with nationwide jurisdiction over most types of suits for monetary claims against the government.
Approximately one-fourth of the Court's docket consists of tax cases, which traditionally have included some of the nation's most complex, precedent-setting tax cases. The largest of these cases involve well-known corporations with tens or even hundreds of millions of tax dollars directly at issue. Because these cases establish nationwide precedent, the total fiscal impact of an opinion can reach into the billions. Recently, many of the Section's cases involve tax shelter schemes engaged in by large corporations or extremely wealthy individuals. For example, a team of Court of Federal Claims attorneys recently successfully defended against a sale in/lease out (SILO) tax shelter transaction in Wells Fargo & Co. & Subsidiaries v. United States, involving $51 million.
Most of the Section's docket are tax refund suits. In addition, and especially with respect to tax shelter cases, attorneys also defend TEFRA suits, which are challenges by a partnership to IRS adjustments on its return that will affect the partners' tax liabilities. Other types of cases handled by Section attorneys include declaratory judgment actions regarding an organization's tax-exempt status. Unlike the federal district courts, the Court of Federal Claims does not handle bankruptcy matters, or any affirmative suits against taxpayers. All Court of Federal Claims cases are decided by the court, sitting without a jury.
Small and mid-sized cases are handled by a single trial attorney who is responsible for everything from answering initial pleadings, taking discovery, writing and arguing motions and briefs, working with witnesses (including experts), and conducting trial. Large cases are often handled by a team of from 2-5 attorneys at varying seniority levels. Even the most junior attorney receives substantial responsibility, such as conducting depositions and examining witnesses at trial.
The Court of Federal Claims is located in Washington, DC, so Section attorneys benefit from being able to make local court appearances and to observe their colleagues in Court. Due to the Court's nationwide jurisdiction, Section attorneys also have the opportunity to travel throughout the country for discovery and trials. The Court of Federal Claims Section works closely with the regional civil trial sections where similar issues are at stake to promote consistent enforcement of the tax laws.
The Appellate Section is responsible for handling appeals in all civil tax cases. Appellate Section attorneys prepare briefs and present oral arguments in the United States Courts of Appeals and the various state appellate courts when an appeal is taken from a decision of the Court of Federal Claims, a state trial court, a United States district court, or the United States Tax Court; assist the Office of the Solicitor General in preparing briefs in the United States Supreme Court; and prepare recommendations to the Solicitor General about whether to file appeals.
When the United States is not a party in cases that may affect the interests of the United States on tax-related issues, Appellate Section attorneys prepare amicus curiae (friend of the court) briefs setting forth the Government's position on those issues.
The Tax Division has established an impressive record in the appellate courts. During fiscal year 2010, Tax Division appellate lawyers won, in whole or in part, over 95% of taxpayer appeals and 60% of the appeals filed by the Government.
Office of Review
The Office of Review evaluates settlement offers in light of litigating potential and policy considerations, furnishes advice and assistance to the trial sections in complex cases, takes final action on settlements within its authority, and advises the Assistant Attorney General on settlements that require final action at a higher level. The Office of Review also assists in resolving disagreements between the litigating sections and the IRS, so that the positions of the Division and the IRS remain consistent.
The Office of Review includes the Financial Litigation Unit, a centralized unit which collects on judgments in favor of the United States and monitors post-settlement debts owed to the United States.
Criminal Enforcement Sections
The Tax Division is responsible for handling or supervising most federal criminal tax prosecutions. Attorneys assigned to the Tax Division's three regional Criminal Enforcement Sections investigate and prosecute individuals and corporations that attempt to evade taxes, willfully fail to file returns, submit false tax forms, and otherwise attempt to defraud taxpayers. The Criminal Enforcement Sections are staffed with prosecutors who are particularly skilled at investigating, prosecuting and evaluating complex financial crime cases. Prosecutors conduct criminal tax investigations with the assistance of the IRS Criminal Investigation and the Treasury Inspector General for Tax Administration.
The federal criminal tax enforcement program preserves the integrity of our self-assessment tax system through the vigorous enforcement of the internal revenue laws. Vigorous enforcement punishes violators, deters future violations, and reassures honest taxpayers that they will not bear an undue share of the federal tax burden.
Attorneys in the Northern, Southern and Western Criminal Enforcement Sections evaluate requests by the Internal Revenue Service or United States Attorneys to initiate grand jury investigations or prosecutions of tax crimes. Some criminal tax grand jury investigations and prosecutions are actively handled by Tax Division prosecutors. Many cases are delegated to Assistant U.S. Attorneys for grand jury investigation and prosecution. Because of their unique resources and specialized expertise, Tax Division attorneys frequently join with Assistant U.S. Attorneys in prosecuting tax cases. In other cases, they provide legal advice.
Many tax prosecutions involve criminal violations of the internal revenue code by people who earned income from legal sources but who committed crimes to evade payment of taxes. Other cases involve tax violations related to other criminal activity, including corporate fraud, financial institution fraud, health care fraud, public corruption, organized crime and narcotics trafficking.
Tax Division prosecutors pursue international crime, including the illegal use of offshore trusts and foreign bank accounts to evade taxes. They also play an important role in the nationwide Organized Crime and Drug Enforcement Task Force (OCDETF) program and the war on terrorism.
Criminal Appeals and Tax Enforcement Policy Section
The Criminal Appeals and Tax Enforcement Policy Section (CATEPS) plays an important role in promoting the fair, correct and uniform enforcement of criminal tax laws. CATEPS attorneys handle appeals in criminal tax cases tried by Criminal Enforcement Section attorneys, and supervise appeals in cases prosecuted by U.S. Attorneys' Offices. CATEPS attorneys also review adverse decisions of United States District Courts and United States Courts of Appeals in all criminal tax cases and prepare recommendations to the Solicitor General about whether to appeal or seek other review.
In addition to its criminal appellate responsibilities, CATEPS helps to formulate criminal tax enforcement policy. Working with the IRS and the U.S. Attorneys' Offices, CATEPS attorneys develop policies that govern the investigation and prosecution of tax crimes.
Office of Legislation and Policy
The Office of Legislation and Policy works on legislative and policy initiatives to facilitate the Division's litigation and promote efficient tax administration.
Office of Management and Administration
The Tax Division's Office of Management and Administration (OMA) provides support in the areas of general administration, fiscal/budgetary controls, human resource management, automated information systems, and management and planning. OMA is led by an Executive Officer and is divided into four major components: (1) The Office of Administration, which is responsible for emergency preparedness, transit subsidy, expert witness, procurement and contracting, facilities, property management and records management, physical security and telecommunications; (2) The Human Resources Office, which administers, coordinates and oversees employee hiring, benefits, personnel security, performance management, discipline, labor relations, awards, worker's compensation, leave programs, time and attendance and employee separation; (3)The Office of the Comptroller, which is responsible for accounting and budget services, budget formulation and execution, travel, and the Fund for Expert Witnesses; (4) The Office of Information Technology and Management, which is responsible for office automation systems development and programming, the network infrastructure, user support and operations, strategic planning (providing statistical analysis, case management, and internal controls), automated litigation support, web management, security program management, and special projects.
Office of Training
The Tax Division oversees training and professional development for all Tax Division employees. New attorneys receive extensive orientation training on practical courtroom skills as well as in relevant substantive areas of the law. In addition, the Tax Division regularly presents sessions focusing on discovery techniques, evidentiary problems, courtroom skills, the art of advocacy, effective cross-examination, substantive tax issues, and other areas germane to the Division's work. The Division also provides training and professional development programs for administrative staff and in support of the Division’s commitment to diversity and inclusion.
Division staff are eligible to attend classes offered by the Justice Department's Office of Legal Education at the National Advocacy Center (NAC) in Columbia South Carolina. Live course include litigation skills including both civil and criminal trial advocacy, evidence and pretrial practice. The NAC also offers a variety of courses for legal support and administrative staff including writing and trial support skills. Many NAC programs are also broadcast to the Division. Additionally, video-on-demand training programs are available at each employee’s desktop, allowing them to obtain training on topics as the need arises. Division employees also have access to other on-line training programs that address a wide range of professional development topics.
History of the Tax Division
On June 10, 1933, President Franklin D. Roosevelt issued an executive order consolidating within the Department of Justice the control of all federal tax litigation. In October 1933, Attorney General Homer Cummings created the Tax Division, effective as of January 1, 1934, and charged it with primary responsibility for supervising all federal litigation involving internal revenue.
An earlier proposal to consolidate federal tax enforcement was made in 1829, when President Andrew Jackson considered assigning the Attorney General to handle all "treasury litigation." Senator Daniel Webster successfully opposed the plan and offered an alternative. Under the Webster Act, which controlled tax enforcement for more than a century, several government agencies shared responsibility for tax litigation. As the complexity of the tax laws increased after World War I, however, the system of divided responsibility for tax litigation grew increasingly inefficient.
Since 1934, the Tax Division has been charged with maintaining uniformity by handling most litigation arising under the internal revenue laws. The Division's authority is codified at 28 C.F.R. § 0.70. This centralized control of tax litigation better enables the government to take consistent positions on tax issues and thereby promote the fair and uniform enforcement of the tax laws.