IRS Loses Hundreds of Criminal Agents as Tax Cheats Take Heart

Tax cheats can breathe a little easier. The gun-toting Internal Revenue Service investigators who send felons to prison are retiring in droves and there’s no one to replace them.
IRS Criminal Investigation agents are the elite special forces in the never-ending war on tax evasion.

They are feared among criminals for their unmatched ability to follow the money, assess net worth and find fraud in corporate books. They have been at the center of major tax and money-laundering cases involving Swiss banks, FIFA soccer officials, and the Costa Rican digital currency company, Liberty Reserve.

Despite those victories, these are dark days for CI agents. Scandals and budget wars between the Obama administration and House Republicans are thinning out the ranks of the IRS’s 84,000 employees.

By the end of next year, the number of criminal agents is projected to fall by 21 percent since 2011.
Congressional Republicans investigated and berated the IRS after it said in 2013 that it gave extra scrutiny to Tea Party groups seeking nonprofit status. And Senator Ted Cruz, a Republican seeking the White House, has gone on record saying he wants to abolish the IRS.

“It’s hard to continue to work in an environment when your agency is constantly bashed, and your funding is slashed,” said Toni Weirauch, 52, who retired as a top CI manager in May. “I loved my career but I was exhausted by the end.”

Brain Drain

Weirauch has lots of company. Since 2010, when Republicans won control of the House, the IRS budget has been cut $1.2 billion to this year’s $10.9 billion. One consequence of those cuts is that many of CI’s best investigators are retiring at the first chance they get.

As they head for the exits, the bright minds that have researched and built complex cases for decades are no longer available to mentor replacements, should they ever get hired. The number of investigators fell to 2,316 this year from 2,739 in 2011 and are projected to hit 2,166 next year. Since 2013, only 45 new agents have been hired, and the IRS has said it doesn’t expect to add any more in 2016.

This brain drain translates to fewer resources to fight tax evasion and corporate frauds, even as CI tackles the vexing variations and growing complexity of identity theft and cybercrimes. New investigations fell 27 percent to 3,853 this year compared with 2013. Tax investigations fell by 32 percent, according to a CI annual report released Wednesday.

“As an agent, your job is to find those facts and put criminals in jail,” says Claire Rossini, one of 10 former IRS agents who spoke to Bloomberg News about the staff cuts. “If you know that somebody is getting away with something because you don’t have the manpower, that’s very disheartening.”

CI agents help federal prosecutors build corruption, narcotics and money-laundering cases. Agent attaches are stationed in 10 foreign countries. They work undercover, use wiretaps and rely on informants. They are the only ones authorized to investigate federal tax crimes, including evasion and failing to file returns.