Summary: Pursuant to a congressional request, GAO provided an overview of the functions and operations of the Internal Revenue Service's (IRS) Criminal Investigation Division (CID), focusing on CID: (1) investigations into money laundering operations and offshore transactions; (2) participation in organized crime strike force operations; and (3) coordination with other law enforcement agencies.
GAO found that: (1) CID is responsible for investigating violations of federal tax laws and related offenses, identifying areas of noncompliance and methods used to circumvent tax laws, and preparing criminal cases for prosecution; (2) in 1985, CID had an operating budget of $213.8 million and a staff of about 4,500; and (3) in 1984, CID completed 5,925 cases, of which about 50 percent were recommended for prosecution. GAO also found that: (1) while the timeliness of the IRS legal case review process has improved since a previous GAO report, many CID agents stated that they felt the process should be further improved; (2) CID has changed its strategy from generating the largest possible number of cases to generating cases that are more likely to be successfully prosecuted and more likely to have a high deterrent effect; and (3) since CID changed its strategy, the total number of convictions has increased 26 percent. In addition, GAO found that: (1) CID has successfully participated in a number of interagency task forces aimed at drug trafficking, money laundering by drug traffickers, and organized crime; (2) some CID officials believe that interagency coordination could be greatly improved if CID agents assigned to task forces were colocated with agents from other agencies; (3) many CID agents believe that they could more successfully deter money laundering if certain practices that are currently legal under the Bank Secrecy Act were made illegal; and (4) CID has established a project to identify U.S. taxpayers using tax haven countries to evade federal tax laws.
