The prosecution of legal source income program investigations is essential to promoting voluntary compliance with the tax laws. Criminal Investigation’s primary resource commitment is to develop and investigate legal source income investigations. Legal source income investigations involve legal industries and legal occupations, and more specifically, legally earned income. The primary motive or purpose of the illegal activity is the violation of tax statutes. Criminal Investigation is solely responsible for investigating these violations. The legal source income program includes those investigations that threaten the tax system, such as the QRP, unscrupulous RPP and frivolous filers/non-filers investigations. Excise tax and employment tax investigations are also important components of the legal source income program. The legal source income program addresses tax investigations involving:
Legal occupations and industries
Title 26 violations
Title 18 USC §286, 18 USC §287, and 18 USC §371 (Klein conspiracy) violations
Within the legal source income program are the following initiatives, which are all part of the overall IRS Strategic and Program Plan or an ongoing commitment by the IRS:
Income Tax — investigations relating to income from businesses, investments, or other legal activities and industries
Employment Tax — investigations relating to unreported, underreported, unpaid, or underpaid employment tax obligations
Excise Tax – investigations involving violations of the excise tax laws
Abusive Tax Schemes – investigations involving abusive and/or fraudulent schemes to evade taxes which encompass violations of Title 26 and related statutes where multiple flow-through entities are used as an integral part of the schemes. Such schemes are characterized by the use of trusts, LLCs, LLPs, IBCs, foreign financial accounts, offshore credit/debit cards, and other similar instruments
Gaming — investigations relating to the income generated from the legal gaming industry