The IRS' Criminal Investigation division has between 2,000 and 2,100 special agents but struggles with maintaining those ranks due to an attrition rate of about 140 agents per year, IRS CI Chief James Lee said during a session of the UCLA Tax Controversy Institute. A major priority for the division will be to continue hiring new agents to feed into the pipeline, Lee said.
In fiscal year 2021, the division will be able to hire 288 special agents, who will be onboarded in 12 classes with 24 people per class, he said. The division plans to push for another 10 to 12 more classes of special agents in fiscal year 2022 and beyond, according to Lee.
The IRS had planned on hiring as many as 240 special agents for fiscal year 2020, but the actual number of hires was much lower due to delays in the onboarding process because of the spread of the coronavirus, Lee said. Special agents have to undergo a lot of practicing testing, but the testing was delayed because some sites were closed due to the virus, he said. Many medical clinics were also shut down due to the pandemic, which made it difficult for special agents to complete the rigorous medical screening before being hired, according to Lee.
Lee, who became chief of the division Oct. 1, said his highest priority is enforcing the country's tax laws, which he plans to do by focusing on data analytics and technology so Criminal Investigation is more efficient in its selection of cases. The IRS has been increasingly using collected data to catch and punish tax crimes that often go undetected on a smaller scale.
"A huge challenge … now revolves around processing all this data that we collect and legally have access to, so we can use it," he said.
For example, in February, the U.S. Department of Justice announced the arrest of an Ohio resident who was accused of operating a cryptocurrency laundering service called Helix that laundered more than 350,000 bitcoins worth about $311 million. Then in August, federal law enforcement agencies busted three online terrorism financing campaigns that included cryptocurrency fundraising.
Lee said his vision for the division is that the model used in these and other cases can later be replicated by every special agent across the country. In addition, Lee said the division plans to work closely with the IRS' Office of Fraud Enforcement, which was launched earlier in 2020. The office is tasked with referring civil and criminal tax fraud cases.
Criminal Investigation's relationship with the Office of Fraud Enforcement is crucial because these referrals can help in many enforcement areas such as high-income global wealth, promoter investigations, foreign tax partnerships, virtual tax currency, high-income nonfilers and nonfilers in general, Lee said.
"I believe our most significant investigations should come from our civil counterparts, so therefore we want trial referrals — you know, our leads — in all of those areas," he said. "And we're working really good with the Office of Fraud Enforcement."
--Additional reporting by Eli Flesch, Joseph Boris, Dylan Moroses and David van den Berg. Editing by Neil Cohen.
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