15 Sep 23

The IRS Criminal Investigation Division (CID) Explained

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Last Updated on: 19th September 2023, 05:49 pm

The IRS Criminal Investigation Division (CID) Explained

The IRS Criminal Investigation Division—also known as IRS-CI or just CI—is like the FBI but for financial crimes. They investigate and build cases against people who commit tax fraud, money laundering, and other financial crimes. Let’s break down exactly what CI does and how they operate—because this division of the IRS is shrouded in mystery for most people.

What is the mission of IRS-CI?

The main goal of CI is to enforce tax laws—they want to catch the bad guys who are deliberately breaking tax laws and cheating the system. Their motto is: “Investigate, Prosecute, Incarcerate.” So you can see they mean business!

Specifically, CI targets financial crimes like:

  • Tax evasion (not paying taxes you owe)
  • Filing false returns (lying about income, expenses, etc. on your tax return)
  • Identity theft (using someone else’s identity to file tax returns and collect refunds)
  • Money laundering (disguising the source of illegally obtained money)
  • Terrorist financing
  • Public corruption (bribery of public officials)

They also investigate other financial crimes if they relate to tax administration in some way—like wire fraud, bankruptcy fraud, and securities fraud.

Why is CI part of the IRS?

IRS-CI is the only federal agency that can investigate potential criminal violations of the tax code. They have special legal authority to obtain tax information and financial records that other agencies don’t have access to. This gives them a huge advantage in building tax crime cases.

Being part of the IRS also means they have tax experts on staff who understand complex financial transactions that may be used to evade taxes. And they can tap into the full resources of the IRS during investigations.

What types of agents work for CI?

CI agents are called special agents. They go through extensive training at the Federal Law Enforcement Training Centers in Georgia. The training includes:

  • 10 weeks of criminal investigation training covering federal criminal procedures and prosecution
  • 8 weeks of tax law, accounting, financial analysis, ethics, undercover techniques, and informant development
  • Exams in accounting, tax, and legal topics
  • Firearms, defensive tactics, and arrest authority training

Unlike typical IRS employees, CI special agents carry firearms, make arrests, and execute search warrants. They are essentially financial investigators with police powers!

How does CI conduct investigations?

CI uses both reactive and proactive investigative techniques to build cases.

Reactive investigations

Reactive cases start from external leads like:

  • Tips reported through the IRS tip line
  • Suspicious activity identified by IRS civil divisions
  • Information from other law enforcement agencies

CI thoroughly vets all leads to determine if a full investigation is warranted. They prioritize cases with the highest tax loss and most egregious violations.

Proactive investigations

CI also conducts proactive investigations aimed at particular types of crimes:

  • Narcotics-related financial crimes – CI targets drug trafficking groups and investigates how they hide and launder their money.
  • Counter-terrorism – CI investigates groups and individuals that use tax-exempt entities to finance terrorism.
  • Public corruption – CI investigates bribery of public officials and fraudulent activities by government employees.
  • Organized crime – CI investigates organized crime groups involved in tax and money laundering crimes.

For proactive cases, CI analyzes data to identify patterns of suspicious activity. They also receive tips from informants.

What investigative tools does CI use?

CI has a wide range of lawful investigative techniques available:

  • Surveillance – Physical and electronic surveillance to gather evidence.
  • Undercover operations – CI agents go undercover to infiltrate criminal groups.
  • Informants – CI develops informants within criminal networks.
  • Interviews – CI interrogates suspects and witnesses.
  • Search warrants – CI seizes evidence by raiding property.
  • Email/phone records – CI obtains communication records with subpoenas.
  • Financial records – CI uses subpoenas, summons, and search warrants to obtain financial documents.
  • Trash searches – CI legally searches a target’s trash for evidence.

CI uses these techniques to gather documents, records, communications, and physical evidence. The evidence is used to “connect the dots” and prove tax crimes.

When does CI bring in prosecutors?

For criminal prosecutions, CI partners with the Tax Division of the Department of Justice. CI brings them into complex investigations early on to provide guidance.

Later in an investigation, CI will present the case to prosecutors who decide whether to pursue criminal charges. CI continues assisting prosecutors until a case goes to trial. They help prep witnesses, provide testimony, and serve as financial experts during trial.

Prosecutors rely heavily on CI’s expertise to explain complex financial evidence and transactions to the jury. CI agents are often the backbone of the prosecution’s case.

What happens after a conviction?

After a successful conviction, CI special agents play a role in the sentencing phase as well.

CI provides a sentencing report to the court detailing the nature and extent of the crimes. This report is used to calculate penalties, restitution, and prison sentences.

CI also assists with forfeiture proceedings to seize assets and property obtained from illegal activity. They help identify and trace assets that can be seized.

How does CI interact with taxpayers under investigation?

Dealing with CI is very different from a routine IRS audit. Here are some key things to know:

  • CI only investigates potential criminal violations—not civil tax issues.
  • You may be unaware you are under criminal investigation at first.
  • CI can show up unannounced at your home or business with a search warrant.
  • CI can monitor your communications and activity without advanced notice.
  • CI interrogations feel like police interrogations—you have the right to an attorney.
  • CI builds cases methodically over months or years—their goal is prosecution.

If you find out you’re under CI investigation, it’s critical to hire an experienced tax defense attorney immediately. The early stages of a CI probe are when defense lawyers can be most effective.

A skilled tax attorney knows how to assert your rights, protect your interests, and start mounting a defense early on. Don’t try going it alone against CI’s experienced special agents—they conviction rate is over 90% for a reason.

What are some key CI statistics and facts?

  • CI has over 2,600 special agents across the U.S.
  • In 2021, CI initiated over 2,500 cases and recommended prosecution in over 1,700 cases.
  • The conviction rate for CI investigations is over 90%.
  • CI investigations in 2021 identified over $10 billion in tax fraud and led to seizures of over $3.5 billion in assets.
  • The average prison sentence in CI cases is over 2 years.

As you can see, CI is aggressively pursuing tax cheats and financial criminals. If you’re ever contacted by them, tread carefully and seek professional legal help immediately. CI should not be taken lightly!

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