Bob Burgess for www.theiindianalawyer.com
A total of 26 people were sentenced for criminal federal tax violations in Indiana in 2017, according to the Internal Revenue Service Criminal Investigation Division.
In late December, IRS-CI released the 2017 annual report highlighting significant investigations and programs. The IRS announced Thursday that special agents spent 72.5 percent of their time in 2017 investigating criminal tax violations that identified $2.5 billion in tax fraud, with a conviction rate of 91.5 percent.
The average federal prison sentence handed down to defendants in the state was 19 months, with 24 months of supervised release following incarceration, according to a statement Thursday. These defendants were also ordered to pay more than $14 million in restitution to U.S. taxpayers.
Federal tax fraud schemes include: individual tax evasion, employment tax evasion, tax refund fraud, identity theft, data compromise and abusive tax schemes.
“IRS is constantly monitoring and looking for trends to identify fraud,” said Scott Brown, an IRS special agent and public information officer in Indianapolis. “They send that out to our field office, and then we start looking at it here locally to determine whether or not there’s fraud occurring.”
One of the categories reported for the state was tax preparer fraud. Brown said this involves subjects altering client tax returns and, in some cases, pocketing fraudulent refunds. “A lot of times they’ll keep it for themselves and not share that information with the client,” he said.
Brown said his office relies on contact with the public to help highlight abuses.
“Sometimes the taxpayer for whatever reason calls the IRS to check on their tax return,” he said. “They discover there’s a discrepancy between what they thought was being filed and what was actually filed.”
Another type of fraud involves false fuel tax credits. The federal government taxes gasoline, diesel fuel, kerosene, alternative fuels and certain other types of fuel. Certain commercial uses of these fuels are nontaxable. Improper claims for the fuel tax credit generally come in two forms: An individual or business may make an erroneous claim on their otherwise legitimate tax return, or an identity thief may claim the credit in a broader fraudulent scheme.