How Criminal Tax Enforcement Works

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Recent debates about the Internal Revenue Service (IRS) have raised questions about whether the agency could be weaponized to target political opponents or party donors. This analysis explores the controls that are in place to protect taxpayers.

About Enforcement

Two Agencies, Two Roles

The IRS investigates. The Department of Justice prosecutes. This separation creates a critical check on power.

Criminal tax investigations are conducted by IRS Criminal Investigation (IRS-CI), staffed by sworn federal special agents. If agents believe a case has merit, they prepare a Special Agent’s Report recommending prosecution.

The IRS cannot bring criminal charges. Cases must be referred to the DOJ’s Tax Division, which is staffed by career federal prosecutors. The Tax Division independently reviews the entire case file to determine if evidence is sufficient to prove a crime beyond a reasonable doubt and if prosecution serves justice.

This centralized review policy aims to achieve “uniform, broad, and balanced criminal tax enforcement” and ensure prosecution decisions are made consistently across the country, regardless of who is involved. The DOJ has final authority to authorize or decline prosecution.

Any politically motivated investigation flagged by the IRS would have to pass the high legal and evidentiary standards of independent career prosecutors in a separate federal department.

The Willfulness Standard

The legal bar for convicting someone of a serious tax crime is high. The government must prove criminal intent, not just an error.

The most common felony tax charge is tax evasion under 26 U.S.C. § 7201. To convict, the government must prove three elements beyond a reasonable doubt:

• an additional tax was due and owing,
• the taxpayer took an affirmative step to evade or defeat the tax, and
• the taxpayer acted “willfully.”

The Supreme Court defines willfulness as the “voluntary, intentional violation of a known legal duty.” A prosecutor cannot simply show that a tax return was incorrect. They must produce concrete evidence that the taxpayer knew what the law required and deliberately chose to violate it.

Mistakes, carelessness, or even gross negligence are not sufficient for criminal conviction. This high standard for intent forces prosecution to focus on financial actions, not beliefs or affiliations.

To prosecute a political donor, the government could not use their donation as evidence of tax evasion. Instead, prosecutors would need specific evidence—hidden bank accounts, falsified business records, or deceptive statements to investigators—proving the individual intentionally and knowingly violated tax law.

The Post-Watergate Firewall

During the Watergate era, President Richard Nixon attempted to use the IRS to investigate his “enemies list.”

Congress responded by enacting criminal firewalls to prevent such interference. The key provision, “Prohibition on Executive Branch Influence over Taxpayer Audits and Investigations,” is codified at 26 U.S.C. § 7217.

The statute makes it a felony for the President, Vice President, any employee of the Executive Office of the President, and cabinet-level officials (except the Attorney General) to directly or indirectly request that the IRS “conduct or terminate an audit or other investigation of any particular taxpayer.”

This is not policy guidance. It is criminal law. Any high-level political official attempting to order the IRS to investigate a political donor would be committing a felony. For such abuse to occur would require a criminal conspiracy involving multiple officials willing to risk their careers and freedom.

Taxpayer Rights and Protections

The Taxpayer Bill of Rights

In 2014, the IRS adopted a Taxpayer Bill of Rights that groups existing legal protections into ten principles governing all agency interactions with the public:

• The Right to Be Informed
• The Right to Quality Service
• The Right to Pay No More than the Correct Amount of Tax
• The Right to Challenge the IRS’s Position and Be Heard
• The Right to Appeal an IRS Decision in an Independent Forum
• The Right to Finality
• The Right to Privacy
• The Right to Confidentiality
• The Right to Retain Representation
• The Right to a Fair and Just Tax System

A politically targeted individual could use these rights at every stage of an audit or investigation. The Right to Challenge the IRS’s Position and Be Heard ensures taxpayers can raise objections and provide additional documentation. The Right to Appeal guarantees access to the IRS’s independent Office of Appeals, which must be separate from the office that initially reviewed the case.

This mandated due process creates a paper trail and introduces multiple layers of review, making it harder for an illegitimate or unfounded investigation to proceed quickly or quietly.

Fourth Amendment Constraints

The Fourth Amendment protects against unreasonable searches and seizures. This applies to IRS investigations like any other law enforcement activity.

In a criminal tax case, the IRS generally cannot search a person’s home or office or seize private records without first obtaining a search warrant from a federal judge. To get a warrant, the agency must submit a sworn affidavit demonstrating “probable cause” to believe that a specific tax crime has been committed and that evidence will be found in the place to be searched.

A person’s status as a political donor does not constitute probable cause of tax evasion. This requirement for judicial oversight prevents fishing expeditions into the lives of political opponents based on political status alone.

While the IRS has broad authority to issue administrative summonses to compel production of records, these are not search warrants. A summons must still meet a standard of reasonableness. One that is excessively broad or indefinite can be challenged in court as an unreasonable search.

The Supreme Court has consistently rejected a broad “tax exception” to the Fourth Amendment’s warrant requirement, affirming that tax enforcement does not give the government license to intrude into a citizen’s private life without proper legal justification.

Selective Prosecution Claims

Targeting someone for prosecution based on political beliefs is unconstitutional. The legal principle is “selective prosecution,” grounded in the equal protection component of the Fifth Amendment’s Due Process Clause.

Proving a selective prosecution claim is exceptionally difficult. In United States v. Armstrong, the Supreme Court established a rigorous two-part test. The defendant must provide clear evidence of:

• Discriminatory Effect: Similarly situated individuals of a different group (such as donors to another political party) who committed the same offense were not prosecuted.
• Discriminatory Purpose: The government’s decision to prosecute was motivated by an impermissible factor, such as political affiliation.

This standard is challenging because it requires a defendant to obtain evidence about cases the government chose not to bring. The legal system operates under a presumption that prosecutors exercise their discretion properly and in good faith.

While this makes the legal remedy difficult to achieve, the existence of the defense confirms the underlying principle: politically motivated prosecution is unconstitutional and illegal. The high bar reflects the institutional expectation and legal requirement for uniform, non-discriminatory enforcement.

The 2013 IRS Controversy

What Happened

The 2013 controversy centered on the IRS’s Exempt Organizations unit, which reviews applications from groups seeking tax-exempt status. Between 2010 and 2012, this unit used inappropriate criteria to select applications for heightened scrutiny, particularly those from groups applying for 501(c)(4) “social welfare” status.

IRS screeners in the Cincinnati office developed “Be On the Look Out” lists with keywords to flag applications. These lists included terms associated with conservative groups, such as “Tea Party” and “Patriots,” as well as terms associated with liberal groups, such as “Progressive” and “Occupy.”

While both categories appeared on BOLO lists, investigations found conservative groups faced more extensive scrutiny and longer processing delays. This targeting resulted in significant delays in processing applications and sometimes led to burdensome and unnecessary requests for information, such as detailed donor lists.

The issue was entirely administrative. It concerned the processing of applications for a specific tax status. It did not involve criminal investigation or prosecution of any individuals for tax evasion or other crimes.

Official Findings

The controversy triggered multiple investigations by the Treasury Inspector General for Tax Administration, the Department of Justice, and Congress. The findings consistently pointed to bureaucratic failure rather than a politically directed criminal conspiracy.

The DOJ declined to reopen its investigation in 2017. The IRS settled civil lawsuits brought by affected conservative groups, issuing an apology for subjecting them to “heightened scrutiny and inordinate delays.”

Why This Differs from Criminal Prosecution

The 2013 controversy was a failure of a low-level administrative process within a single IRS division responsible for handling a high volume of applications. The “targeting” involved flagging paperwork for more review—an action that, while improper and burdensome, differs fundamentally from a criminal investigation aimed at securing a federal indictment and imprisonment.

The processes are governed by entirely different rules. Application processing is administrative. Criminal prosecution is a law enforcement function governed by criminal statutes, Federal Rules of Criminal Procedure, DOJ policies, and constitutional due process, all requiring proof of a crime beyond a reasonable doubt.

The personnel are different—determination specialists versus career special agents and federal prosecutors. The potential outcomes are vastly different—application delays versus felony conviction and prison.

The 2013 scandal demonstrates the agency’s vulnerability to mismanagement and administrative bias. It does not provide a roadmap or legal precedent for the politically motivated criminal prosecution of individuals.

Recent High-Profile Prosecutions Illustrate the Breadth of Criminal Tax Enforcement

Criminal tax enforcement in the United States is not limited to routine cases involving underreported income or unpaid payroll taxes. Federal prosecutors and IRS Criminal Investigation (IRS-CI) have pursued both large institutional actors and high-profile individuals, reflecting the wide range of conduct that can lead to criminal tax charges. These prosecutions also demonstrate how tax enforcement intersects with issues of political sensitivity, international finance, and complex legal structures.

Credit Suisse Case: International Enforcement and Institutional Accountability

In May 2025, Credit Suisse Services AG, a Swiss banking unit, pleaded guilty to conspiring with wealthy U.S. clients to hide more than $4 billion in offshore accounts to evade federal taxes. The bank admitted to falsifying records, helping clients avoid reporting requirements, and obstructing the IRS’s ability to trace taxable income. The settlement included more than $500 million in penalties and marked one of the largest offshore tax enforcement actions in recent years.
This case underscores how criminal tax prosecutions can extend well beyond individual taxpayers to include institutions that facilitate or enable tax evasion. It also highlights the growing emphasis on cross-border cooperation between U.S. and foreign authorities, especially in cases involving offshore accounts, banking secrecy, or complex international structures. Prosecutors used long-standing conspiracy statutes and evidence of willfulness to secure the plea—illustrating how the government builds large, resource-intensive cases against well-resourced defendants.

Hunter Biden Case: High-Profile Individual Prosecution and Equal Application of Tax Law

Another high-profile example of criminal tax enforcement is the Hunter Biden case. In December 2023, a federal grand jury indicted Biden on nine tax-related charges, including three felonies and six misdemeanors, alleging he failed to pay more than $1.4 million in federal income taxes from 2016 through 2019. The charges include willful failure to file and pay taxes and filing false tax returns. The case, brought by the Department of Justice’s Special Counsel’s Office, remains closely watched due to its political sensitivities and the defendant’s public profile.
This prosecution demonstrates that the same statutory and evidentiary standards apply regardless of a taxpayer’s political position or personal prominence. It also shows how tax cases involving public figures can raise questions about prosecutorial discretion, selective enforcement claims, and institutional safeguards designed to keep investigations separate from political influence.

Bridging the Two: From Individuals to Institutions

Taken together, these cases reveal the breadth and flexibility of the federal tax enforcement system. Prosecutors can—and do—target both individual taxpayers and powerful financial intermediaries when evidence supports a willful violation of tax law. High-profile prosecutions also serve a signaling function: they reinforce the government’s authority to pursue complex financial misconduct and emphasize that no taxpayer is categorically beyond the reach of enforcement. At the same time, they highlight the importance of procedural safeguards, oversight, and evidentiary rigor in politically sensitive or resource-intensive cases.

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