IRS Criminal Investigation reduced tax preparer probes

The Internal Revenue Service’s Criminal Investigation unit has been experiencing ups and downs in recent years due to budget boosts and cuts from Congress.

A report released Monday by the Treasury Inspector General for Tax Administration found that from fiscal years 2019 to 2023, CI’s resources grew a great deal. Its budget increased by $201 million (35%), rising from $578 million to $779 million. Staffing levels also increased, resulting in more investigations being opened. As of March 20, 2025, CI’s special agent staffing has been minimally affected by recent government-wide cost-cutting measures. 

The IRS initially received $79.4 billion from the Inflation Reduction Act of 2022, but by March 2025, Congress had reduced that amount to $37.6 billion. Of that total, CI used approximately $31 million in FY 2023 for investigative technology and over $500,000 for training. 

In FY 2024, CI spent approximately $176 million in IRA funds on investigative technology and labor. As of March 20, 2025, CI special agent staffing has been minimally impacted by the government-wide cost cutting efforts in 2025. 

Investigating tax law violations has remained CI’s top priority, but these investigations made up a smaller share of total investigations, declining from 60% in FY 2019 to 53% in FY 2023.

Investigations into general fraud increased by 32% from FY 2019 to FY 2023, largely due to cases involving false claims related to pandemic relief legislation.

TIGTA found a decline in sentencing for refund fraud. Sentencings under the IRS’s Questionable Refund Program and the Return Preparer Program dropped by 68% and 13%, respectively.

“The increases in staffing and available funding for CI enforcement activities appear to have led to an increase in overall investigations initiated from FY 2019 through FY 2023,” said the report. “However, other unfavorable trends were observed, including declines in CI’s international investigations and in subjects sentenced for violations found through the IRS’s QRP and RPP programs.”

According to CI, the lower numbers of sentencings and prosecution recommendations for the QRP and the RPP in FY 2023 can be attributed to the shift away from large-volume, lower-impact investigations toward those that are generally more complex.