Contents

• [9.1] 1.1 Overview

• [9.1] 1.2 Criminal Investigation Mission

• [9.1] 1.3 Criminal Investigation Strategies
  • [9.1] 1.3.1 Tax Gap Strategy
    • [9.1] 1.3.1.1 Tax Gap Defined
    • [9.1] 1.3.1.2 CI Operational Definition--Tax Gap
  • [9.1] 1.3.2 Money Laundering Strategy
  • [9.1] 1.3.3 CI Operational Definition--Money Laundering
  • [9.1] 1.3.4 International Strategy

• [9.1] 1.4 Criminal Investigation Programs
  • [9.1] 1.4.1 Fraud Program
  • [9.1] 1.4.2 Narcotics Program

• [9.1] 1.5 Criminal Investigation Organization
  • [9.1] 1.5.1 Headquarters
  • [9.1] 1.5.2 District
  • [9.1] 1.5.3 IRS Strategic Management Process
  • [9.1] 1.5.4 IRS Established Goals (Compliance Plan Goals)
  • [9.1] 1.5.5 National Priorities for CI
  • [9.1] 1.5.6 Emerging Issues
  • [9.1] 1.5.7 Other CI Established Objectives

[9.1] 1.1  (04-07-1999)
Overview

1. This chapter provides the following information
   • The mission of Criminal Investigation (CI).
   • The operational strategies employed to carry out this mission.
   • A brief overview of investigative program areas.
   • A brief summary of the CI functional organization.
   • The Internal Revenue Service (IRS) Strategic Management Process.
   • Compliance Plan Goals for Criminal Investigation (CI) established by IRS.
   • National Priorities for CI.
   • Emerging Issues.
   • Other CI Established Objectives.

[9.1] 1.2  (04-07-1999)
Criminal Investigation Mission

1. The mission of CI is to enforce the criminal statutes relative to tax administration and related financial crimes, in order to encourage and achieve, directly or indirectly, voluntary compliance with the Internal Revenue laws. (Document 7345).

[9.1] 1.3  (04-07-1999)
Criminal Investigation Strategies

1. In order to support CI's mission, CI developed three operational strategies.
   1. Tax Gap Strategy
   2. Money Laundering Strategy
   3. International Strategy.
2. These strategies guide the direction and framework of the function's investigative efforts in CI's two programs; i.e., Fraud and Narcotics.

[9.1] 1.3.1  (04-07-1999)
Tax Gap Strategy

1. The tax gap strategy is designed to identify those investigations which have the most impact on voluntary tax compliance. It includes building a system that supports, promotes, and facilitates tax investigations.

[9.1] 1.3.1.1  (04-07-1999)
Tax Gap Defined

1. The Internal Revenue Service (IRS) defines tax gap as the total true tax liability less tax paid voluntarily.

[9.1] 1.3.1.2  (04-07-1999)
CI Operational Definition--Tax Gap

1. Tax gap investigations involve only legal industries. This definition includes money laundering investigations only when tax charges are the primary charge, and excludes illegal income investigations such as narcotics.

[9.1] 1.3.2  (04-07-1999)
Money Laundering Strategy

1. The money laundering strategy is to identify and prosecute the most significant tax, currency, and money laundering offenders, and to pursue the assets of those offenders both domestically and internationally. This strategy is designed to use the broad authority of the statutes (criminal, tax, and forfeiture) within CI's investigative jurisdiction.

[9.1] 1.3.3  (04-07-1999)
CI Operational Definition--Money Laundering

1. Money Laundering for CI's Criminal Investigation Management Information System (CIMIS) tracking purposes include the following statutes:
   1. 18 USC 1956.
   2. 18 USC 1957.
   3. 18 USC 371 T.
   4. 18 USC 371 M.
   5. All Title 31 Statutes.

[9.1] 1.3.4  (04-07-1999)
International Strategy

1. The international strategy calls for assignment of special agents to strategic foreign posts in order to facilitate the development and use of information obtained in host foreign nations. This information is then used to support investigations of financial crimes over which CI has enforcement responsibilities.

[9.1] 1.4  (04-07-1999)
Criminal Investigation Programs

1. CI has two program areas, Fraud and Narcotics.

[9.1] 1.4.1  (04-07-1999)
Fraud Program

1. The CI fraud program encompasses a broad range of illegal activity, primarily within legal industries (exclusive of those investigations meeting the criteria of the narcotics program). All statutes under CI's jurisdiction may be utilized in this program area.
2. Within the fraud program there are sub-programs as follows:
   1. Bankruptcy--Investigations where bankruptcy fraud is an intrinsic part of a tax evasion scheme.
   2. Excise Tax--Investigations involving violations of the excise tax laws.
   3. Financial Institution--Investigations wherein income is generated as a result of fraud against or related to a bank, credit union, savings and loan, check cashing businesses, thrift, stockbroker, or related regulatory agency, possibly even placing the solvency of the institution at risk.
   4. Foreign and Domestic Trusts--Investigations involving fraudulent trusts used either to evade taxes or evade the payment of taxes.
   5. Gaming--Investigations relating to the income generated from the gaming industry (either legal and illegal forms of gaming).
   6. General Fraud--Investigations relating to income that does not fall within any of the other program areas.
   7. Health Care--Investigations relating to income generated from health care fraud. All investigations of insurance fraud involving health care will be included in this program.
   8. Insurance--Investigations involving income generated from or by the insurance industry that is not related to health care insurance.
   9. Public Corruption--Investigations of income wherein there is a violation of the public trust of or by a government official or employee.
   10. Questionable Refunds (QRP)--Investigations involving fraudulent tax refund schemes. All investigations involving Electronic Refund Originators should initially be classified as QRP investigations until the true nature of the scheme can be determined. (See CI Handbook 9.5 Chapter 4, Refund Fraud)
   11. Return Preparer--Investigations involving preparers of false and/or fraudulent tax returns.
   12. Telemarketing--Investigations of income wherein telephonic or wire communications are a major element used to promote, solicit, or market products or services.
3. For additional information concerning these sub-programs, see CI Handbook 9.9, Criminal Investigation Management Information System (CIMIS) Chapter 6 or current National Operations Annual Report.

[9.1] 1.4.2  (04-07-1999)
Narcotics Program

1. The CI narcotics program involves investigations of members of high-level drug trafficking organizations; and investigations that involve the financial activities of significant individuals who transport, distribute illegal drugs, or launder drug proceeds.
2. Within the narcotics program there are four sub-programs as follows:
   1. OCDETF--Investigations which involve members of high-level drug trafficking organizations and are authorized by the Regional multi-agency OCDETF Committee.
   2. NARCOTICS-OTHER--Investigations involving financial activities of significant individuals or entities who transport, distribute, or finance illegal drugs or launder illegal drug proceeds.
   3. HIDTA--Co-located multi-agency task force investigations which involve organizations or individuals involved in narcotic trafficking or narcotics money laundering which are worked through the High Intensity Drug Trafficking Area program, through the Office of National Drug Policy (ONDCP).
   4. HIDTA/OCDETF--Investigations worked jointly through the OCDETF program and HIDTA which involve narcotics or narcotic money laundering organizations worked in a multi-agency task force setting.
3. For additional information concerning these sub-programs, see the CIMIS Handbook.

[9.1] 1.5  (04-07-1999)
Criminal Investigation Organization

1. CI's organizational structure is slightly different than the rest of IRS. IRS has three levels of responsibility, i.e., Headquarters, Region and District. CI is broken into only two levels, Headquarters and District.

[9.1] 1.5.1  (04-07-1999)
Headquarters

1. The Assistant Commissioner, CI, as the head of one of the Operation functions, reports to the Chief Operations Officer.
2. The Deputy Assistant Commissioner, CI reports to the Assistant Commissioner CI.
3. The Deputy Assistant Commissioner, CI oversees the four Directors of Investigations whose sphere of responsibility correspond to the four IRS regional areas. He also oversees, the National Director of Refund Fraud. In addition, the Headquarters Division Directors report to the Deputy Assistant Commissioner, CI.
4. The five Division Directors are responsible for the following areas:
   • Operations
   • Finance
   • Training
   • Policy and Information
   • Review and Evaluation

[9.1] 1.5.2  (04-07-1999)
District

1. The District Director is responsible for all aspects of the District Organization including CI, but the Chief, CI, is responsible for the operational aspects of CI. In that capacity, there is a direct line of functional responsibility from the Chief, CI, to the Director of Investigations to the Assistant Commissioner, CI. The District Director is responsible for all other district operational and administrative functions. It is because of this unique relationship between the District and the CI functions that the Assistant Commissioner, CI, is the selecting official for the District Chief, CI, position. The District Director evaluates the Chief's annual performance plan.
2. The positions in a district in descending line authority under the Chief, CI, are:
   1. Branch Chief.
   2. Group Manager.
   3. Special Agent.
3. Part I of the Internal Revenue Manual provides a more in-depth description of IRS and CI organization and responsibilities.

[9.1] 1.5.3  (04-07-1999)
IRS Strategic Management Process

1. The Agency's Strategic Management Process starts with the Mission and Business Vision of Internal Revenue Service.
2. CI's Annual Performance Plan is a part of Internal Revenue Service's (IRS) overall Strategic Management Process. This process is described in Part I of the Internal Revenue Manual. This section will provide a brief explanation of the Strategic Management Process and how CI's plan fits into that process.
3. The Strategic Plan of IRS is organizationally comprised of the following:
   1. The IRS Mission.
   2. Strategic Objectives.
   3. The Business Vision.
   4. The Business Review Process.
4. The Strategic Plan has identified a mission effectiveness goal of 83% to be accomplished by the end of FY 2001. This overall goal is comprised of various "sub goals" in the three Service Objectives to:
   • Increase Compliance.
   • Improve Customer Service.
   • Increase Productivity.

[9.1] 1.5.4  (04-07-1999)
IRS Established Goals (Compliance Plan Goals)

1. Each of the IRS's six Chief Area Offices prepares an Annual Performance Plan (APP) that will help accomplish this goal in annual increments. CI, as part of the Operations area, works with the other Operations functions to develop the Operations APP which becomes a part of the Service's APP.
2. The APP provides national and regional performance indicators and targets for the fiscal year. Districts and service centers develop their targets through coordination with the Regional Commissioners and Executive Officer for Service Center Operations. The APP reflects measures by areas such as Operations and functions such as CI.

[9.1] 1.5.5  (04-07-1999)
National Priorities for CI

1. National Priorities are selected areas of noncompliance where CI focuses its enforcement efforts in order to enhance voluntary compliance. The CI Executive Committee identifies national priorities based on the recommendations of the Directors of Investigations and the Director of National Operations. The Directors present their recommendations to the Executive Committee using pre-established formats which consider district initiatives; assessment of current year emerging issues and national priorities; trends identified by CI Review Division; intelligence provided by NORA/DORA; and financial analysis provided by the CI Finance Division.

[9.1] 1.5.6  (04-07-1999)
Emerging Issues

1. Emerging Issues are significant areas of noncompliance which have been brought about by changing economic, political, or social conditions. These areas of noncompliance, which warrant CI investigative efforts and assessment on a national basis, are identified through field input, administration or Congressional concerns, and from initiatives of other IRS functions

[9.1] 1.5.7  (04-07-1999)
Other CI Established Objectives

1. CI may set additional objectives as needed.