(Bloomberg) The Internal Revenue Service opened 19 percent fewer criminal investigations in fiscal 2014 than in the previous year, reflecting a decrease in budget and staffing, according to the agency.
IRS agents initiated 4,297 investigations in 2014 compared to 5,314 in fiscal 2013, according to an annual report by the Criminal Investigation Division released Tuesday. The agency builds cases involving tax fraud, identity theft, questionable refunds, money laundering and other crimes.
Republicans in Congress have cut the IRS budget since taking control of the House of Representatives in 2011, even as the agency has assumed more responsibilities. The cutbacks were made partly to meet broader fiscal aims and in part to rein in the agency. The IRS said in 2013 that it gave extra scrutiny to Tea Party groups seeking nonprofit status.
“There is no doubt we have had to be creative to overcome some of the budget challenges this year,” Richard Weber, chief of the division, said in the report. “In the past five years, CI’s staff has been reduced approximately 11 percent, bringing staffing to 1970s levels. This trend cannot continue.”
The agency recommended 3,478 prosecutions, a decrease of 20 percent, and secured 3,110 convictions, down 6 percent, in the year that ended Sept. 30.
The 2015 IRS budget is $10.9 billion, more than $1 billion below the 2010 peak. In response, the IRS implemented a hiring freeze and reduced the number of audits it conducts each year.
As of Sept. 30, the IRS had 2,465 criminal agents, a 3 percent decrease from the previous year. By February, that number fell to 2,402.
New investigations declined across several areas of crime. Identity-theft cases fell from 1,492 to 1,063. They also fell in cases involving questionable refunds, money laundering and the Bank Secrecy Act.
The report touted the agency’s biggest cases last year, including the guilty plea by Credit Suisse Group AG’s main bank subsidiary, which paid a $2.6 billion penalty.
The IRS also took part in the investigation leading to the arrest of Ross Ulbricht, who was convicted in February of running the Silk Road online drug bazaar using the name “Dread Pirate Roberts.”
—With assistance from Bob Van Voris in federal court in Manhattan
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