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The information now being provided the public by the
Internal Revenue Service about its criminal
enforcement activities is substantially misleading
and inaccurate, according to an investigation by
TRAC.
The evidence for this conclusion is based on a
detailed comparison of the IRS data with data
produced by two independent institutions -- the
federal prosecutors and the federal courts -- that
track the same events in the criminal justice
process, and the separate discovery of numerous
internal inconsistencies in the IRS's own
statistics. (See IRS Criminal
Enforcement Data Systems.)
The IRS data problems regarding the work of one of
its most important components -- the Office of
Criminal Investigation -- are not new. In fact, the
problems were publicly identified more than fifteen
years ago by two expert studies supported by the
federal government. One study was completed in 1978
by a panel of the National Academy of Public
Administration. The second study, commissioned by
the Justice Department in 1980, was written by one
of TRAC's co-directors. (Click for full references.)
TRAC's current investigation, however, shows that
the critical discrepancies plaguing the IRS in the
late 1970s and early 1980s have not been resolved.
If anything, TRAC's on-going research shows that
the problems have grown worse over time.
The IRS, of course, demands a high level of data
accuracy from all taxpayers. Most of the misleading
and inaccurate information now being provided the
public by the IRS can be found in its annual
official report, the Internal Revenue Service Data
Book. Here are some examples:
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In every year from 1981 to 1996, the IRS has
claimed it sent federal prosecutors fewer
criminal referrals than the prosecutors said they
have received from the IRS. This same problem was
identified by the Justice Department's 1980
study.
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Once the matters reach the courts, however,
especially in recent years, the IRS has claimed
credit for more work than the prosecutors
said the IRS actually had achieved. In 1996, for
example, the IRS asserts it was responsible for
almost 50% more prosecutions than are recorded by
the Justice Department and more than twice the
number of individuals sentenced to prison.
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Focusing only on those 1996 criminal prosecutions
that resulted in prison when tax fraud was the
lead charge, the IRS recorded 720 matters
involving such cases. The federal prosecutors and
the federal courts, on the other hand, each
recorded from all sources less than half that
claimed by the IRS -- 277 and 296, respectively.
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Even within the IRS the numbers sometimes have
not added up. According to the 1978 study done by
the panel of the National Academy of Public
Administration, for example, the size of the tax
deficiencies recorded by the IRS Criminal
Investigation Division was three times the same
deficiencies recorded by the IRS Examination
Division. The 1980 study discovered that the
IRS's Chief Counsel's Office had reported the
Criminal Division was referring considerable more
matters to it than the IRS Criminal Division
recorded sending.
In response to letters to IRS Commissioner Charles O.
Rossotti, former Commissioner Margaret Milner
Richardson and Attorney General Janet Reno, and
followup correspondence with their staffs, both
agencies refused to discuss the possible explanations
for the misleading and inaccurate information about
an important aspect of the government's national
enforcement effort. In addition, the IRS refused to
provide public information that might have answered
some of the outstanding data questions. TRAC's
written requests for such meetings -- and the
government's numerous refusals -- are attached.
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