What is an IRS Criminal Investigation?

An Internal Revenue Service (IRS) criminal investigation is any search into the possible criminal violations of the United States Internal Revenue Code. The general purpose is to prevent financial crimes against the government and retain confidence within the tax system. The IRS is not alone in investigating matters of financial criminality; however, the organization has strict control over the probe and prosecution of possible violations.

The Commissioner of Internal Revenue created the first group of criminal investigators to inquire into the activities of certain individuals with allegations of tax fraud. The IRS criminal investigation unit, known simply as the “Intelligence Unit,” was first organized on 1 July, 1919, with six employees of the U.S. Post Office Inspectors. The six men formed the backbone of the organization, helping to establish training programs and performance guidelines. Eventually, the organization's name was changed to the IRS Criminal Investigation Unit (IRS CID)

Some of the early IRS criminal investigations most notable to the history of the organization were very high profile. The IRS was essential to bringing the tax evasion case against Al Capone, which ultimately brought the public enemy number one to justice. It also was pivotal in helping solve the Lindbergh kidnapping. As the organization expanded, it became the main force investigating criminals, businesses, citizens and government officials in all matters relating to finances.

The IRS conducts a criminal investigation through a strict procedure that attempts to maintain fairness and offer integrity to the U.S. tax system. Following the submission of tax forms by an individual or business, the documents are audited, essential a routine analysis, to ensure that all the important aspects of a person's finances are legitimate. If some sort of questions arise, the IRS contacts the person directly or attempts to conduct an undercover IRS criminal investigation of the subject's accounts and property. Using this assessment, criminal investigators can determine if a court case is warranted. According to the IRS itself, the federal conviction rate for tax crimes has remained above 90 percent since the organization's inception.

The IRS CID has faced a number of controversies over the years, stemming from its actions in certain cases. According to witnesses testifying before the Senate Finance Committee in the 1990s and early 21st century, the IRS has committed a number of abuses in its behavior in certain cases. In response to these allegations, the U.S. Congress passed the third Taxpayer Bill of Rights on 22 July, 1998. This shifted the burden of proof in an IRS criminal investigation from the taxpayer to the IRS itself.