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IRS Criminal Division Seeking Non-Compliant US Citizens

January 11, 2018

IRS Criminal Division Now Seeking Non-Compliant US Citizens & Green Card Holders

The IRS Criminal Investigation (“CI”) Division is abruptly and drastically expanding its activities to locate and prosecute non-compliant US taxpayers.


International Tax Enforcement Group

Don Fort, the newly appointed IRS Chief of Criminal Investigation is forming an “International Tax Enforcement Group” (ITEG), in addition to a new “Nationally Coordinated Investigations Unit” (NCIU) He has stated that the IRS has a huge volume of data about US taxpayers, and their foreign financial assets, which has been obtained from numerous sources, including various IRS amnesty programs, investigative leaks, Interpol, the Terrorist Finance Working Group (TFWG), the Financial Action Task Force (FATF), foreign Governments, the Organization for Economic Cooperation and Development (OECD), and, of course, especially, the Foreign Account Tax Compliance Act (FATCA).

Effect of the Foreign Account Tax Compliance Act (FATCA)

FATCA was enacted 2010 by the US Congress, but has only recently begun taking effect directly with respect to individual US taxpayers. FATCA requires Foreign Financial Institutions (FFIs), such as, banks, brokerage firms, and certain other types of financial entities throughout the globe, to:

  • Determine if each of their clients is a US person (citizen, green card holder, or other tax resident) and, if so, to report financial information on the individual to the IRS, or otherwise
  • Collect and remit to the IRS, a 30% US withholding tax on certain financial transactions attributable to that US person.

FFIs and governments around the globe have, for the most part, been complying with the requirement to identify their US taxpayer clients, and report the information to the IRS, rather than collect the 30% tax.

The IRS provided a delay, and a phase-in, of the extent of investigation required by financial institutions to identify whether each of their clients is a US person, and also a phase-in of the extent of the financial information about the US citizen required to be reported to the IRS. Thus, in many cases, US taxpayers with non-US financial accounts will not be aware until 2018 or 2019 that FATCA has finally gone into effect, and information about their account has already been reported to the IRS.

The IRS is forwarding the FATCA data it receives to its CI Division for relevant follow-up.

Other Efforts

To assist its efforts in uncovering noncompliance, CI has strategically stationed international criminal investigators in 10 foreign countries (Canada, Mexico, Colombia, Panama, Barbados, The Netherlands – Europol, England, Germany, China, and Australia).

In 2017, CI hosted international delegations from Japan, South Korea, Croatia, Singapore, and New Zealand to build closer investigative relationships and share information.

CI is also working closely with the OECD on international tax crime. It has also recently begun training at the International Academy for Tax Crime Investigation sponsored by the OECD.

Separately, beginning early 2018, the IRS is sending so-called “nudge” letters to individuals who signed waivers with Swiss banks allowing the banks to send information on them to the US government.


Fortunately, the IRS currently has tentative amnesty programs in effect, which can result in zero, or reduced, penalties for individuals who are non-compliant with US tax laws (including the FBAR). But, the programs must be acted upon by the individual before the individual is contacted by CI, or other IRS division.

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