IRS Criminal Investigators in Texas: Special Agents Investigating Federal Financial Felony Crimes

Posted on June 17, 2024 by Michael Lowe.

Within the Internal Revenue Service is a special department dedicated to investigating crimes independently of other federal agencies, such as the Federal Bureau of Investigation (FBI) or the Department of Homeland Security (DHS). It’s been around since 1919, having been initially known as the IRS’s Intelligence Unit and later becoming today’s IRS Criminal Investigation Department.

Thank Al Capone for the IRS Criminal Investigation Department

The story begins within the Treasury Department long ago, when Elmer Lincoln Irey built his team to go after Al Capone – purportedly at the directive of President Herbert Hoover to “Get Capone!” (History differs on whether or not this cry for action began Irey’s work. Records show his efforts had begun long before the President’s fury, with Hoover angered by the infamous St. Valentine’s Day Massacre in Chicago.)

Irey’s team worked to find evidence of illegalities in finances, such as money laundering and tax evasion. Meanwhile, the more famous Eliot Ness with his group of agents from the Bureau of Prohibition Investigation worked to find evidence of illegal acts involving alcohol in violation of federal prohibition laws. Their combined efforts have been depicted in several films, albeit without much of a hat tip to Elmer Irey, including the acclaimed movie “The Untouchables,” where Kevin Costner portrayed FBI agent Elliot Ness in the takedown of Al Capone.

For details, read: “Elliot Ness,” published by the United States Department of Alcohol, Tobacco, & Firearms; “During Prohibition, Mob Bosses Tripped Up By Tax Laws,” written and published by The Mob Museum; and Folsom, Robert G. The Money Trail: How Elmer Irey and His T-Men Brought Down America’s Criminal Elite. Potomac Books, Inc., 2010.

Today, the IRS Criminal Investigation Department has offices around the world, not just here in Texas and around the country, as part of the Joint Chiefs of Global Tax Enforcement (“the J5”). Thousands are employed as investigators working every day within this agency division exclusively on exploring, investigating, and building cases for the arrest of both individuals and business entities on federal financial felonies.

Powers and Duties of IRS Criminal Investigation Special Agents

These people have lots of power. Today’s IRS Criminal Investigators, also known as “Special Agents,” are authorized to investigate not only for tax crimes like tax fraud or tax evasion but various federal financial crimes.

The IRS Special Agent can look into all sorts of things because they are authorized to investigate under the rationale that their efforts are “…fostering confidence in the tax system and compliance with the law.”

The Criminal Investigation Division has the jurisdiction to investigate potential criminal activity involving things that include tax-related crimes (like tax fraud, tax schemes, tax evasion) as well as federal fraud involving bankruptcy filings; bank fraud; drug trafficking; bribery; and health care fraud.

And while some of their efforts or authority may overlap with other federal agencies, the IRS Special Agents are the “…the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code.”

And, right now the IRS is hiring. According to the IRS Job Site, a Special Agent in the IRS Criminal Investigation Department “…plans and conducts investigations relative to criminal statutes of tax administration, financial crimes, and other related offenses, which vary in levels of complexity and scope.”

These federal criminal investigators are entrusted with job duties that include:

Indirect accounting methods to establish evidence
Precedent setting legal or investigative questions
Highly complex or unusual accounting problems
Information obtained from diversified sources gathered over a wide section of the country
Interrelationship of facts and evidence that are difficult to identify because of numerous holding companies, entities, etc.
A mixture of legal and illegal activities
Performs other investigative and enforcement duties such as:
Testifying as a Government witness
Assisting the U.S. Attorney during the preparation of case for trial
Conducting collateral inquiries
Providing protection to persons and property
Obtains, evaluates, integrates, and recommends actions on information items to identify larger areas of noncompliance (e.g., major profession, occupation, industry, or wide geographic area).
May serve as a team leader and/or expert consultant in the information gathering function.
Conducts or participates in surveillance, armed escorts, dignitary protection, undercover operations, execution of search and arrest warrants, seizures, etc.
Protects the government’s interest in enforcement activities.
Maintains good physical condition in order to conduct criminal investigations, surveillance, protective assignments, undercover assignments, etc.

The IRS Criminal Investigators: Special Agent Expertise and Focus

These IRS Special Agents have the ability to investigate matters all on their own, or to join together with other federal agencies or local law enforcement (as well as foreign agents in J5 matters). They are educated professionals, trained by the agency as well as from their prior educational and private sector experience.

At all times, their focus remains upon financial crimes. As the Chief of the IRS Criminal Investigation Department, Jim Lee, shared in latest annual report:

Financial crime continues to evolve at a rate that challenges law enforcement daily. We will never investigate our way out of any one particular type of crime, so where we spend our time and resources must be methodical in an effort to protect the integrity of the financial system. Our relevance within the enterprise is significant, and the deterrent effect provided by showing the consequences for being willfully noncompliant is real and impactful.

Read IRS-Criminal Investigation (IRS-CI) Fiscal Year 2023 Annual Report (Publication 3583) (Rev.1-2024) (“Annual Report”), page 3.

Most of their work involves “[t]ax and tax-related crimes,” because they have the unique ability to “…investigate and recommend violations involving federal income tax crimes.” Id.

These investigators have proficiencies in complex matters, such as an understanding of cryptocurrency and its benefits for criminal enterprises.

In fact, IRS Special Agents have a growing focus upon crypto-related crimes with the perspective that “… digital assets pose a risk of facilitating money laundering, cybercrime and ransomware, narcotics, human trafficking, terrorism, proliferation financing, and tax crimes. Chain-hopping and token swapping have become common digital assets techniques used to make following the digital money trail more difficult, but not impossible.” Annual Report, page 3.

Why? They report that digital payments play a big part in almost every IRS CI investigation. This encompasses any use of the internet by any potential suspect, target, or person of interest; as well as computer devices themselves (including smartphones) and of course, making payments over the web instead of using cash money.

Their expertise here cannot be underestimated. Special Agents are experienced in online and digital investigations not only in tax-related criminal matters but also in IRS cases or joint task force efforts involving “…narcotics trafficking, money laundering, terrorism financing, and more.” Annual Report, page 7.

For more on cyber-crimes and cryptocurrency, read our earlier discussion in: Cryptocurrency And Money Laundering: Digital Money Felony Arrests.

Furthermore, IRS Criminal Investigators are adept in analyzing “big data” particularly in crimes involving tax crimes and Bank Secrecy Act data. This includes the ability to use “…systems and partners with business units at IRS to identify emerging trends and quality investigative leads….” Annual Report, page 8.

They are well-prepared, too. The agency makes sure that these Criminal Investigators have all the tools and equipment they need, such as badges and credentials, radios, body armor, and real estate.” (Yes, real estate.) Annual Report, page 9.

Texas IRS Criminal Investigations: Field Offices in Dallas and Houston

Here in Texas, there are not just one but two IRS Criminal Investigation Field Offices, and they are responsible for a large amount of territory.

IRS CI Dallas Field Office

The Dallas Field Office is huge. It is responsible for investigations not only within Northern and Eastern Texas but also Arkansas and Oklahoma. Think Amarillo, Beaumont, Dallas, Farmers Branch, Fort Worth, Irving, Lubbock, and Tyler as well as two entire states.

They are busy. Special Agents in this IRS location not only handle IRS matters but they are known participants in “…several priority task forces, including OCDETF, HIDTA, FCTF, and JTTF.” Annual Report, page 56.

IRS CI Houston Field Office

The Houston field office covers a wide distance, including Austin, Brownsville, Corpus Christi, El Paso, Houston, Laredo, McAllen, San Antonio, and Waco. Its geographical jurisdiction is not as big as the Dallas field office, but its efforts are just as intense.

It is known to handle not only internal investigations into financial crimes but to participate in “…federal task forces including South Texas money laundering, JTTF, OCDETF, HIDTA, public corruption, human trafficking, Paycheck Protection Program, and healthcare fraud.” Annual Report, page 58.

Joint Task Force Involvement

Both field offices acknowledge their ongoing participation in well-financed and highly organized federal task forces. These endeavors target federal crimes outside of the tax crimes but exemplify how IRS Criminal Investigators are involved in federal felony investigations that cover all sorts of serious felony charges.

What are these joint task forces?

In February 2024, an IRS news release noted that IRS Special Agents in Texas, working with their coordinated AUSAs, “…put tax criminals and other white-collar criminals in prison for an average of 58 months in 2023.” Specifically, 144 IRS Criminal Investigation cases resulted in criminal convictions and sentencing in 2023, resulting not only in prison time but approximately $43,000,000 in restitution and another $2,000,000 in fines.

Criminal Defense After Contact by IRS Special Agent

Anyone who is contacted by someone representing the IRS Criminal Investigations Department should consider this as a potentially life-altering event where they are entering into the federal criminal justice system.

Communication from an IRS CI Special Agent hints that the IRS and/or a federal joint task force may be suspicious of your activities and undertaking an investigation into your personal activities or that of your business operations. You are the suspect, target, or person of interest.

For more, read: Federal Investigations: Target Letters, Proffers, and Plea Deals.

Perhaps you are not in the bull’s eye. There will also be communications from Special Agents who are trying to track down documents, data, or witness statements that provide pieces of evidence as they build a case. You have information that they think may help them to get their job done. You are a potential witness.

Either way, ignoring this contact may be argued as a crime in and of itself. It is wise to have the assistance and support of experienced federal criminal defense attorneys at the earliest possible time: even if you suspect you may be contacted by an IRS Special Agent, having defense counsel on board may be a savvy thing to do.

How does this happen? There may be a surprise encounter: you’re leaving your office and two IRS CI Special Agents pop up next to your car. Maybe they come to your side as you are leaving the gym or coffee shop or local steakhouse.

Or maybe you get a Summons. This is akin to a court subpoena, where the form includes an identification that the IRS CI is involved. For more, read our discussion in IRS Summons Form 2039: Federal Criminal Defense in IRS Criminal Investigations.

IRS Criminal Investigation Special Agents here in Texas are to be respected as the detail-oriented, well-funded, educated, persistent professionals that they are – and any communication from them must be made a priority. Understanding the nuances and implications of that contact is best undertaken with the assistance of someone who can provide an experienced criminal defense perspective. This is particularly true here in Texas, where so much law enforcement zeal involves matters that overlap into money laundering, trafficking, and health care fraud.

For more, read:

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For more information, check out our web resources, read Michael Lowe’s Case Results, and read his in-depth articles, “Pre-Arrest Criminal Investigations” and “WHITE COLLAR CRIME: INDICTMENTS OF TEXAS PROFESSIONALS.”

Posted on June 17, 2024 by Michael Lowe , on Arrest and Indictment, Federal Government Watch, InDepth Articles, Tax Crimes

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