Tuesday, June 23, 2009


Court and federal prosecutor data differ substantially from the information IRS publishes on federal criminal enforcement. Significant differences were found not only in the counts, but in the general patterns of prosecution, conviction and prison sentencing rates, as well as in recorded trends overtime.

TRAC's study covered the period of 1981 through 1995. Similar to the findings in the 1980 study, it found that in every year the IRS recorded sending to federal prosecutors fewer criminal referrals than the prosecutors say they received. Once the matter reached court, however, especially in recent years, the IRS has claimed credit for more work than the prosecutors said they achieved. In 1995, for example, the IRS data claims almost 50% more prosecutions than the Justice Department, and over twice the numbers of individuals sentenced to prison. IRS also recorded the completion of two times more tax prosecutions than the U.S. courts said the courts had handled from all federal investigative agencies. (The IRS is not the only agency that refers tax cases.) The discrepancies between the data from the IRS and that data from the prosecutors and the courts have grown steadily more serious during the last decade.

Prison sentences appear to be even more inflated in IRS tracking system than prosecutions. In 1995 IRS says that its Criminal Investigation Program sent 2,229 individuals to prison. During the same period federal prosecutors reported that IRS referrals resulted in 947 individuals being sentenced to prison terms. Focusing only on criminal prosecutions where tax fraud was the lead charge, IRS systems recorded 733 of these had a tax offense (Title 26) as the lead charge. The federal courts and federal prosecutors each recorded less than half that number (337 and 318, respectively) as sentenced to prison from all sources for tax fraud.

In addition, IRS has withheld the information that TRAC requested which might allow TRAC to carry out a systematic referral-by-referral examination of these discrepancies. Finally, IRS has taken a very insular stance stating that it was satisfied with its data and saw no need to compare it with other sources to check its reliability -- this despite studies spanning a twenty year period finding this IRS data system seriously flawed.

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