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Part 9. Criminal Investigation

Chapter 4. Investigative Techniques

Section 1. Investigation Initiation

9.4.1  Investigation Initiation

9.4.1.1  (07-28-2003)
Overview

  1. This section describes the authorized techniques for each of Criminal Investigation’s (CI) types of information collecting activities.

9.4.1.2  (12-21-2005)
Authorization to Gather Information

  1. Treasury Order 150–10 delegates the authority to administer and enforce the Internal Revenue laws to the Commissioner of the IRS. Since compliance with the Internal Revenue laws cannot be determined by relying solely upon the information contained on returns and documents filed with the IRS, the IRS will obtain information from other sources. However, only the information necessary for the enforcement and administration of the tax laws which the IRS is authorized and directed to enforce will be sought. (Policy Statement P–1–1.)

  2. In order to protect the public from unnecessary intrusion into their private and financial affairs, the IRS has authorized the use of a wide variety of investigative activities and techniques. The circumstances of each investigation will determine which investigative activities or techniques shall be employed.

9.4.1.3  (04-04-2005)
Activities Not Requiring Authorized Investigations

  1. The following actions may be undertaken to identify an individual or entity without initiating an investigation:

    1. clip news articles

    2. access IRS databases

    3. maintain liaison with other law enforcement agencies

    4. view tax information via command code RTVUE and BRTVU through Integrated Data Retrieval System (IDRS)

    5. interview informants

    6. identify individuals through vehicle license checks

    7. visually inspect a home, office, real estate, or personal property to identify an individual

    8. record the results of any activity in items a through g

    Note:

    Special agents working alone or with a multi-agency task force to evaluate financial information for potential money laundering, currency or other non-tax crimes may scrutinize tax return information only after an ex parte order is obtained or a related statute determination is made by the Special Agent in Charge (SAC).

  2. As soon as an individual or entity is identified as one who requires further evaluation for potential criminal activity, a primary investigation (PI) must be initiated.

9.4.1.4  (12-21-2005)
General Investigations

  1. A general investigation (GI) is a study, survey, canvassing, or coordination activity related to a group, an activity, or a CI program/sub-program to identify possible noncompliance with the laws enforced by the IRS. General investigations are also used to track special agent time in regard to specific specialized activities and investigative imprest funds.

  2. A GI normally involves areas of non-compliance for a specific occupation, industry or CI program/sub-program. When the focus shifts from the group to the potential criminal activity of an identified individual or entity, a PI will be opened. As additional information is developed which indicates prosecution potential exists, a subject criminal investigation (SCI) will be opened.

  3. If a PI is generated from information developed in a GI, the PI must be linked to the GI under which it was developed by entering the GI number in Section 1, Item D on Form 4930, Criminal Investigation General/Primary/Subject Investigation Report. The GI number does not need to be entered on a SCI because it will automatically be linked through the PI.

  4. If a PI is developed independently of the GI, it should not be linked to the GI, even though it may pertain to the same instance(s) of non-compliance being addressed by the GI.

  5. A PI should never be linked to an imprest fund GI or other Specialized GI.

9.4.1.4.1  (07-28-2003)
Ownership of a General Investigation

  1. General Investigation ownership will always be in the office initiating the investigation. Ownership can never be transferred or changed.

9.4.1.4.2  (12-21-2005)
Initiating a General Investigation

  1. A special agent will initiate a GI based on one of the following:

    1. Investigation of alleged non-compliance within a specific category of individuals. The purpose of investigative GIs is to determine if the allegation warrants investigation of specific individuals and to develop investigative leads to determine which individuals should be investigated.

    2. Coordination is often required in a specific program, sub-program, or enforcement activity. Examples might include Questionable Refund Program/Return Preparer Program (QRP/RPP), Joint Terrorism Task Forces (JTTF), High Intensity Drug Trafficking Area (HIDTA), High Intensity Financial Crimes Area (HIFCA), etc.

    3. Investigative imprest funds. Examples include undercover agent maintenance activities, cover agent maintenance activities, and special use vehicles such as surveillance vans.

  2. The special agent will prepare Form 4930, to initiate a GI. He/she should describe the purpose and scope of the GI in Section IV, Item 12, Allegations of Non-Compliance. See IRM 9.9, Criminal Investigation Management Investigation System, for additional information needed to complete Form 4930.

9.4.1.4.2.1  (12-21-2005)
Purpose of the General Investigation

  1. The purpose of establishing the GI should be stated clearly and should include allegations and indications of non-compliance, e.g., informant communications, previous SCIs, referrals from other divisions, etc.

9.4.1.4.2.2  (12-21-2005)
Effective Management of General Investigations

  1. Field offices need to ensure PIs resulting from GIs are appropriately linked in the Criminal Investigation Management Information System (CIMIS).

  2. Effective management of GIs is vital to field office efficiency. Non productive GIs drain valuable resources. Field offices should periodically review and evaluate the results and effectiveness of GIs during the investigation review process and close non-productive GIs to free resources for more productive activities.

  3. In evaluating the effectiveness of GIs the following factors should be considered:

    1. Are the activities commensurate and appropriate with the amount of time being charged?

    2. Were the investigative development activities successful?

    3. Were the objectives of the GI articulated in the opening memorandum achieved?

    4. Are the special agent(s) familiar with the GI’s activity?

    5. Is the GI properly coded? (Are appropriate investigations correctly coded with Fraud Scheme Code 900-Legal Income General Investigation).

    6. Are PIs resulting from the GI initiated in a timely manner after the subject has been identified?

    7. Are PIs developed through the GI linked with the GI on CIMIS?

    8. Does the GI duplicate the activities or objectives of other GIs?

    9. Is there still a need for the GI or should it be closed?

  4. Form 6083, SSA's Investigation Progress Report is the primary mechanism for documenting activities conducted under a GI. This form should be utilized to track the progress of and timely evaluation all GIs.

9.4.1.4.2.3  (12-21-2005)
Scope of the General Investigation

  1. The scope of the GI should include the following:

    1. type of contacts anticipated outside the IRS as authorized for a GI

    2. type of information to be gathered

    3. availability of the information/records to be gathered

9.4.1.4.3  (04-04-2005)
Approving a General Investigation

  1. The SAC will approve GIs that relate exclusively to his/her field office and involve investigative or coordination activities.

  2. The Director, Field Operations must approve specialized GIs for imprest funds.

  3. The Director, Operations Policy and Support (CI:OPS) will approve any GI that is national in scope.

9.4.1.4.4  (07-28-2003)
Expansion of an Approved General Investigation

  1. If the original purpose or scope of an approved GI is expanded, the expansion must be in writing and signed by the approving official.

9.4.1.4.5  (04-04-2005)
Authorized General Investigation Techniques

  1. In making investigative inquiries, authorized under a GI, a special agent is allowed to disclose the name of an individual associated with a particular group for identification purposes, to the extent necessary to secure information that is relevant and necessary to the investigation. Investigative inquiries are limited.

9.4.1.4.5.1  (12-21-2005)
Techniques Relating to General Investigations

  1. Additional techniques permitted for investigative GIs include:

    1. Searches within existing IRS records and databases.

    2. Inquiries of Federal, state, and local governmental agencies, including state and local tax authorities.

    3. Contact with the original informant and other informants who are believed to possess pertinent information.

    4. Contact with foreign (tax treaty and other nations) government bodies similar to (b) above. These contacts must be coordinated through Headquarters (HQ) with the Director, International (CI:OPS:I).

    5. Surveillance

    6. Consensual Monitoring

    7. Undercover

    8. Contacts with sources outside the government as long as there is no disclosure of a specific individual or entity and the inquiry is relevant to the investigation.

    9. Form letters, pattern letters, or letters to third parties (formerly circular letters), to persons outside the IRS for information on individuals or entities as long as no individual or entity name is disclosed. (The letters, if requesting identical information about a group of unnamed individuals, may require administrative clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1980.)

9.4.1.4.5.2  (04-04-2005)
Additional Techniques Permitted in Liaison and Sub-Program General Investigations

  1. In addition to the techniques listed above for investigative GIs, certain other techniques are allowed in specific liaison and sub-program GIs. Those techniques are discussed below.

9.4.1.4.5.2.1  (12-21-2005)
Additional Techniques Relating to Pure Money Laundering General Investigations

  1. Pure money laundering GIs will most likely relate to HIFCA task forces and Suspicious Activity Report (SAR) Review Teams, but may also relate to other Financial Investigative Task forces. IRM 9.4.13, Financial Investigative Task Force has more information regarding SAR-Review Teams.

  2. Special agents may contact the participants and institutions identified in a currency report to identify the source, disposition, and nature of the currency transaction.

  3. If a subpoena is used, the subpoena is limited to documents and records relating to the scope of the transactions that generated the Currency Transaction Record (CTR) or SAR. A subpoena should not be used as a means to examine financial transactions beyond the scope of the reported suspicious activity. To subpoena information or records outside the scope of the transaction (i.e., entire account records), the special agent must elevate the investigation to SCI status.

    Note:

    Special agents working alone or with a multi-agency task force to evaluate financial information for potential money laundering, structuring or other non-tax crimes may scrutinize tax return information only after an ex parte order is obtained or a related statute determination is made by the SAC.

9.4.1.4.5.2.2  (12-21-2005)
Additional Techniques Relating to Questionable Refund Program and Return Preparer Program General Investigations

  1. Each field office maintains a GI related to questionable refund and return preparer schemes (QRP/RPP). The QRP coordinator will be the primary person who charges time to the GI; however, other special agents may also conduct activities relating to the GI.

  2. The Fraud Detection Center (FDC) reviews returns to detect fraudulent refund schemes.

    1. Special agents may respond to a request for assistance from a FDC. In the interests of providing expeditious aid to the FDCs in identifying fraudulent refund schemes, special agents may:

      1) Verify suspicious refund addresses through the use of drive-bys or visual inspection of a potential subject’s home, office, place of employment, post office box, etc.
      2) Determine the validity of the earnings and withholdings reported on the potentially fraudulent returns by contacting the employer.
      3) Contact the US Postal Service to intercept fraudulent refund checks.

  3. The FDC will initiate refund scheme PIs when the scheme warrants additional investigation. The FDC will prepare the Form 4930 and input it into CIMIS. A copy of the Form 4930 will be retained in the scheme file in the FDC. CIMIS will place the PI in an appropriate field office QRP or RPP case pool. These schemes must be evaluated within 90 days.

  4. In addition to the activities noted in paragraph 2, the field office will charge time to the QRP/RPP GIs for the following:

    1. Participation in any activity that fosters voluntary compliance in the QRP/RPP area and encourages return preparers, transmitters or others to contact CI to report a potentially fraudulent scheme. For example, a special agent may attend meetings with preparers/EROs to educate them on how to identify suspicious returns.

    2. Meetings with other operating divisions to discuss and coordinate the QRP/RPP programs.

    3. Special agents may interview informants and accept information relating to fraudulent schemes:

      1) This includes interviewing reputable return preparers or electronic return originators (EROs) who call about an individual(s) trying to file or transmit a questionable return.
      2) If, after speaking with the preparer/ERO, the special agent has no firm indication the individual is participating in a scheme, the special agent may seek additional information necessary to determine whether a refund scheme actually exists.
      3) If, after speaking with the preparer or with the individual who attempted to file the false return, the special agent believes there may be a scheme, the special agent should immediately seek approval to number a PI and follow the guidelines set out below for contacts under a PI.

  5. As noted above, under a GI, special agents may make limited third party inquiries about potential QRP/RPP schemes; however, the inquires may only be made to determine criminal potential and to identify persons responsible for the scheme. As soon as these determinations are made, third party contacts must cease until a SCI is initiated.

9.4.1.4.5.2.3  (12-21-2005)
Techniques Relating to Organized Crime and Drug Enforcement Task Force General Investigations

  1. The Department of Justice (DOJ) reimburses CI for the time spent and for certain expenditures incurred as a result of participation in the Organized Crime and Drug Enforcement Task Force (OCDETF). As a result, special agents should carefully monitor and record all time spent conducting general OCDETF activities. All GI time needs to be included on the Criminal Investigation Monthly Activity Report (Form 5043A). Examples of activities chargeable to the GI include:

    1. Assisting with open OCDETF investigations and/or prosecutions when CI does not have an open investigation.

    2. Evaluation and information gathering related to an open non-CI OCDETF investigation being considered as a PI or an SCI.

    3. Evaluation and information gathering prior to the numbering of a PI or SCI OCDETF investigation by the Core City Task Force Coordinators. This time is limited, however, to only 1 month for narcotics trafficking organizations and 3 months for money laundering organizations. All remaining time used for development of these investigations should be charged to the High Level Drug Leader (HLDL) GI.

    4. Task Force Coordinator’s time spent on general OCDETF duties.

9.4.1.4.5.2.4  (04-04-2005)
Techniques and Activities Relating to High Level Drug Leader General Investigations

  1. The HLDL program allows IRS to review DEA files related to Class I and II violators. The SAC determines which files will be evaluated for criminal potential by CI and which files will be forwarded to the other operating divisions for examination. A special agent may charge the time spent evaluating the files to the HLDL GI.

9.4.1.4.5.2.5  (04-04-2005)
Techniques and Activities Relating to High Intensity Drug Trafficking Area General Investigations

  1. The SAC may appoint a coordinator to act as a liaison to the local HIDTA or may assign special agents and/or a Supervisory Special Agent (SSA) to work in a HIDTA initiative. The following activities may be charged to the HIDTA GI:

    1. liaison activities which ensure appropriate levels of cooperation between CI and the other agencies in the local HIDTA

    2. assisting with open HIDTA investigations and/or prosecutions when CI does not have an open investigation

    3. evaluation and information gathering related to an open non-CI HIDTA investigation being considered as a PI or an SCI

    4. coordinators time spent on general HIDTA duties

9.4.1.4.5.2.6  (04-04-2005)
Techniques and Activities Relating to Strike Force General Investigations

  1. Field offices where the US Attorney’s Office is active in the Strike Force/Racketeer program will initiate GIs to track time spent in this area. The program looks for individuals who derive substantial income from illegal activities, and special agents will use the same techniques authorized for an investigative GI.

9.4.1.4.5.2.7  (12-21-2005)
Lead Development Center

  1. In support of the overall IRS Mission and the Mission of the CI, Lead Development Centers (LDCs) will prioritize their work to:

    1. Identify and develop leads that fall within the parameters of the Strategy and Program Plan, as well as the Annual Compliance Program.

    2. Provide analytical support to field offices on ongoing, high impact investigations (see subsection (5), below).

    3. Assist field offices in identifying and assembling information on individuals and entities involved in significant criminal non-compliance with the Internal Revenue Code and other related statutes (see IRM 9.4.11, Investigative Services).

    4. Coordinate local, national, and international projects/leads initiated to identify specific areas/industries of non-compliance.

    5. Facilitate coordinated research initiatives with the operating divisions.

  2. Each of the five LDCs is responsible for GI investigation development of a national program area of fraud based on the priorities outlined in the Annual Compliance Program Guidance (ACG). The LDC assigned a particular national program is generally responsible for all GI investigation development requests on a nationwide basis. Depending on the size of such requests, multiple LDCs may assume joint responsibility.

    Note:

    The LDCs are also delegated the authority to number money laundering and Back Secrecy Act (BSA) investigations.

    1. Philadelphia/Baltimore LDC has primary responsibility for abusive tax scheme lead development.

    2. Garden City LDC is primarily dedicated to case development and field support for counterterrorism investigations.

    3. Denver/Portland LDC has primary responsibility for frivolous filer and non-filer lead developments, prime lead processing, and information item processing.

    4. Tampa LDC has primary responsibility for the BSA program (e.g., SARs, wire remitters, and Small Business/Self Employed (SBSE) anti-money laundering (AML) program coordination.

    5. Indianapolis LDC has responsibility for employment tax, bankruptcy fraud and offers in compromise (OIC) lead development.

  3. The organizational structure of the LDCs consists of:

    1. GS-1811-14, Supervisory Special Agent (SSA)

    2. GS-1801-12, Supervisory Investigative Analyst (SIA)

    3. GS-1801-11, Investigative Analysts (IA)

    4. GS-6, Compliance Support Assistant (CSA)

  4. The Director, Lead Development Centers, is responsible for managing the LDCs and reports to the Director, Operations Policy & Support (CI:OPS).

  5. Listed below are procedures for field offices requesting assistance from the LDC for analytical support of an investigation or case development initiative. The most efficient use of the LDC resources entails analytical support for initiatives with national or international implications concerning a non-compliance issue. Frequently these initiatives are of such magnitude that they are coordinated nationally through a Headquarters Section. Every effort is made to partner the field office and the LDC with a civil operating division to ensure a concerted Service wide effort to address the non-compliance.

    1. When a field office has an investigation or investigation development initiative of national or international scope requiring analytical support concerning a non-compliance issue, they may request assistance from a LDC.

    2. These requests should be forwarded to the Director, Lead Development Centers, for review and assignment. The Director, LDC will determine the viability of a request and will make the determination as to which LDC receives the assignment.

    3. When there are competing requests for assignment, the Director, LDC in concert with the appropriate Headquarters Section Director, will determine the priority for assignment.

    4. Each request for assistance must contain a detailed narrative, which sufficiently describes the allegations, potential violations, the scope of the requested LDC assistance, and the required information needed in the investigation or investigation development.

    5. The request must include a copy of the completed and processed Form 4930 reflecting the subject, primary, or general investigation number. Additional related associates must be documented via Form 4930A, Criminal Investigation Associate Identity Report.

    6. The request must clearly state whether this is an administrative or grand jury investigative effort, and specifically state grand jury restrictions, Mutual Legal Assistance Treaties (MLAT) restrictions, covert restrictions, or any other concerns or restrictions, in conducting the research, contact with Web sites, or sharing with the civil operating divisions.

    7. The request must state the cooperative agreement the field office has made to partner with a civil operating division to ensure a concerted service-wide effort to address the non-compliance.

    8. Each field office request assigned to a LDC for support will have a lead investigative analyst (IA) assigned.

    9. Before any action is taken by the LDC, the SSA of the field office and the LDC, along with the Supervisory Investigative Analyst (SIA), the lead investigating special agent, and the lead IA, will hold a documented meeting, either through a conference call or in person, to discuss the investigation or investigation development initiative to ensure there is a mutual understanding of the investigative effort, investigative direction, contact or sharing restrictions for information, the LDC assistance requested, and LDC capabilities.

    10. This meeting, or a follow-up meeting, will include appropriate individuals from the affected civil operating division to ensure agreement with the field office and the LDC to execute a service-wide initiative aimed at the non-compliance to include civil injunctions, examinations, and collection activity.

    11. The lead IA will develop a plan with the lead investigating special agent to ensure a cohesive and coordinated effort to the analytical support. Additionally, the special agent should forward or notify the lead IA of any research already conducted.

    12. The lead IA and the lead investigating special agent must continuously communicate to share and obtain any additional information which impacts the analytical support or the direction of the initiative.

    13. The special agent must provide sufficient communication to the lead IA to ensure that unnecessary work is not performed and that all pertinent leads are pursued. When additional leads or potential subjects are identified, the special agent will be notified of this information by the lead IA for further investigative planning.

    14. In these large scope ongoing field office investigative initiatives, information will be continuously shared between the lead IA and the lead special agent. This should be an ongoing process and not delayed until the entire initiative is complete.

9.4.1.5  (04-04-2005)
Primary Investigations

  1. A PI is an evaluation of an allegation that an individual or entity is in noncompliance with the laws enforced by IRS and may have prosecution potential.

  2. A PI may also relate to a group of individuals involved in a coordinated scheme whereby the individuals are alleged to be in noncompliance with the laws enforced by the IRS.

  3. A PI can be the parent of more than one SCI. It can also be closed without ever generating an SCI.

9.4.1.5.1  (03-03-1999)
Sources of Primary Investigations

  1. Primary investigations come from many sources. Some are described below.

9.4.1.5.1.1  (12-21-2005)
Information Items

  1. Information which comes to the attention of a CI employee in the field office is typically recorded on a Form 3949, Criminal Investigation Information Item. See other subsections in IRM 9.4, Investigative Techniques, IRM 9.5, The Investigative Process, and IRM 9.8, Criminal Investigation Fraud Detection Center, for more information concerning information items.

  2. Information items which have a Form 211, Application for Reward for Original Information, associated with it should be upgraded to an SCI or closed within 60 days. See IRM 25.2.2, Informant Rewards.

  3. Information items will be monitored by the Denver LDC. Denver LDC will be responsible for ensuring information items are forwarded to the appropriate field office or functions within other operating divisions. Information items received from the other operating divisions will be forwarded to the Denver LDC. Information items received by field offices will be forwarded to the Denver LDC.

  4. If the field office retains an information item for further development that is not received from the Denver LDC, the field office will provide the Denver LDC with a copy of the Form 3949, Criminal Investigation Information Item for tracking purposes. If the item does not result in a criminal investigation, the information item will be forwarded to the Denver LDC. The Denver LDC will be responsible for forwarding the information item for consideration to the appropriate function within the other operating division.

9.4.1.5.1.2  (04-04-2005)
Fraud Detection Center Initiated Primaries

  1. The Resident Agent in Charge (RAC) initiates a PI when the FDC identifies a scheme relating to QRP or RPP. The PI will be placed in the appropriate field office’s QRP/RPP case pool. The field office must decide within 90 days of receiving a QRP scheme or a RPP scheme whether to upgrade the PI to an SCI or return the scheme to the FDC.

  2. If the FDC places controls on accounts related to the identified scheme, the individuals and/or entities are to be entered into the CIMIS system as associate identities on Form 4930A. Subsequent to placing the investigation into the field office’s QRP/RPP pool, the field office is responsible for inputting any associate identities into the CIMIS system.

  3. Closed QRP information items or investigations are sent to the field office’s FDC. Closed RPP investigations (both primary and subject) will be forwarded simultaneously to the FDC and the Small Business and Self Employed (SB/SE) Return Preparer Coordinator.

9.4.1.5.1.3  (12-21-2005)
Criminal Fraud Referrals

  1. Criminal fraud referrals from other operating divisions will be sent to the field office through the fraud technical advisors.

  2. The field office will number criminal fraud referrals as PIs upon receipt from the other operating divisions.

  3. The field office will set up a conference, with the referring operating division employees, the fraud technical advisor, and others as needed to discuss the merits of the referral within 10 workdays of the receipt of the referral in the field office.

  4. The field office must decide within thirty workdays of receiving the referral whether to upgrade the PI to an SCI or return the referral to the other operating division. The field office can request an extension of the evaluation time requirements. The reasons for delay in making a determination will be documented in the administrative file. The due date must be updated in CIMIS.

  5. Any further extensions must be granted by written agreement of the appropriate field territory manager. The agreement should specify the reason for the request (such as a delay in receiving signed tax returns or an opinion from Counsel) and the date the referring office may expect a final determination.

  6. Under certain circumstances, the referring operating division may request an appeal of a declined fraud referral as outlined in IRM 25.1.3.5 (2). Criminal Investigation must be able to justify and clearly articulate the reasons for a referral’s declination.

  7. A unique number will be assigned to each referral and will be listed in the upper right hand corner on Form 2797, Referral Report of Potential Criminal Fraud Cases. The eight digit number is comprised of the originating fraud technical advisor group number (1 to 5), two digits representing the fiscal year; a sequential number (001 will represent the first referral submitted to CI at the start of each fiscal year); and a two digit number representing the civil operating division making the referral.

  8. CIMIS source codes (Form 4930, item number 18) have been interpreted differently. Only items received through the Fraud Technical Advisor via Form 2797 should be coded as a fraud referral.Whoever is assigned responsibility for numbering the referral must carefully review the document to ensure the correct operating division has been selected. The fraud referral control number will aid in determining the proper source as the last two digits are operating division specific.

  9. The following items are not referrals:

    1. Armed escorts information received informally from an IRS employee.

    2. Cases under audit at the time CI independently initiates an investigation based on information from another source. These audits will be placed in suspense, but do not qualify as referrals.

  10. The National Fraud Program Office (NFPO) has already implemented this numbering process. Effective immediately, referrals received without a control number should be returned to the Fraud Technical Advisor Manager. See the SBSE Web page for names and locations of fraud referral specialist managers (http://sbse.web.irs.gov/FR/Fraud/personnel.htm).

  11. To assist in properly tracking referrals, the fraud program manager has agreed that only one fraud referral, with one control number, will be forwarded to CI, even when there is a common set of facts involving two or more individuals or entities (such as a husband and wife or corporate officer and employees). Criminal Investigation will, in turn, number one primary investigation for each Form 2797 regardless of the number of entities discussed in the referral. (An exception will be certain national schemes involving LMSB taxpayers, where multiple referrals on the same business entity can occur.)

  12. After the fraud referral has been evaluated, a copy of the Form 2797 must be returned to the Fraud Referral Specialist with the primary number noted in Box 14d.

  13. In order to facilitate consistency, each field office will designate an employee to be responsible for receipt and tracking of fraud referrals. This employee will be responsible for:
    •maintaining a record of fraud referrals received by the field office, including current status
    • ensuring primary numbers are obtained timely and that the fraud referral control number is properly entered into CIMIS
    • assisting the SAC in tracking due dates and extensions
    • ensuring subject numbers are obtained timely for accepted referrals
    • maintaining the field office TIMS folders for documents relating to the Fraud Referral program including all Forms 2797, Referral Declination Memorandums and Requests for Extensions
    • tracking fraud awareness presentations

9.4.1.5.1.4  (07-28-2003)
General Investigations

  1. Primary investigations related to individuals or entities may emerge, at any time, during the GI evaluation process. A PI should always be numbered when it appears that an identified individual or entity may have prosecution potential.

9.4.1.5.1.5  (04-04-2005)
Grand Jury Evaluation Requests

  1. Requests from the US Attorney’s Office for IRS participation in grand jury investigations will be numbered as PIs.

9.4.1.5.1.6  (04-04-2005)
Direct Referrals- Prime Leads

  1. An information item or group of information items received in CI that lack criminal potential may be referred to the other operating divisions. When there is a firm indication of substantial civil tax potential, the field office will recommend a direct referral to the other operating divisions in the form of a prime lead. The completed and approved prime lead will be sent from the field office to the Denver LDC as a prime lead. Only items that have previously been numbered as a primary will be sent as a prime lead. Criminal Investigation will send all the information used to evaluate the referral after redacting any grand jury information, Suspicious Activity Reports (SARs), records of Criminal History, or other restricted material. The Denver LDC will do additional case building when necessary and forward the entire package to the appropriate operating division.

    Note:

    Primary investigations on return preparers should not be designated as prime leads and should be sent to the area return preparer coordinator through the FDC.

9.4.1.5.2  (04-04-2005)
Ownership of a Primary Investigation

  1. Primary investigation ownership will always be the field office that initiated the investigation. Ownership can never be transferred.

9.4.1.5.3  (04-04-2005)
Initiating a Primary Investigation

  1. Form 4930 will be used to authorize all PI’s. IRM 9.9, Criminal Investigation Management Information System (CIMIS) should be consulted to complete the form.

  2. If the subject of the PI resides in another field office’s territory, concurrence of the SAC for the territory in which the subject resides is necessary before the PI can be initiated.

9.4.1.5.4  (12-21-2005)
Approving a Primary Investigation

  1. The SAC has approval authority within his/her field office to initiate all PIs by signing Form 4930. The authority to approve the initiation of PIs within field offices, except for PIs involving violations of 18 USC §1956, §1957, §1960, §371M (associated with a Title 18 violation), §371T (associated with a Title 31 violation) and/or any Title 31 investigations may be delegated within the field office through local delegation orders to the ASAC or SSA level.

  2. The RAC signs all Forms 4930 to initiate PIs on QRP/RRP schemes identified in the FDC.

  3. The Supervisory Special Agent (SSA) of the LDC signs all Forms 4930 to initiate PIs in the LDC. The LDC SSA has the authority to approve PIs involving Title 26, 18 USC §1956, §1957, §1960, §371T and/or any Title 31 investigations.

  4. Investigations of banks and brokers or dealers in securities referenced in 31 CFR 103.46(a)(1) through 103.46(a)(6) for possible criminal violations of 31 CFR Part 103 (except 31 CFR 103.23 and 103.48) must be authorized by the Chief, CI. See IRM 1.2.2, Delegation Order 143.

9.4.1.5.5  (12-21-2005)
Associate Identities

  1. An associate identity to a PI is an individual or entity that has a nexus to the scheme of alleged non-compliance identified in the PI, but whose role in the scheme has yet to be fully determined. If controls are placed on an individual and/or entity identified as an associate entity, the associate identity must be entered into CIMIS via Form 4930A.

  2. All associated individuals and/or entities will be associated with the PI by completing a Form 4930A.

  3. The associated entity screen will enable each field office to identify if an individual or entity is tied to an investigation anywhere in the country. It will also assist in Freedom of Information Act (FOIA) requests and immunity clearance requests from the attorney for the government.

  4. The associated entity screen in CIMIS will also alert the special agent when closing a grand jury investigation to notify DOJ of the disposition of all related entities for which grand jury investigative authority was sought but were not numbered as a PI or SCI.

  5. Witnesses are not to be entered as associate identities. Per Department of the Treasury Directive 55-01, a witness is defined as a person who has information or evidence concerning a crime and provides such information or evidence to a law enforcement agency. Where the witness is a minor, the term witness includes an appropriate family member or legal guardian. The term witness does not include defense witnesses or those individuals involved in the crime as perpetrators or accomplices. The term witness does not include confidential informants.

  6. If an individual is entered in CIMIS as an associate identity, but is later determined to be a witness, the associate identity record for the individual will be removed from CIMIS.

9.4.1.5.6  (12-21-2005)
Authorized Primary Investigative Techniques

  1. The following additional techniques and activities are approved for PIs:

    1. Assist other agencies in the execution of a search warrant, including interviewing subject and related individuals during the execution of the warrant. (However, CI cannot interview third parties and/or the subjects after the execution of another agency's warrants without an SCI.) If CI is the affiant, a SCI must have been initiated.

    2. Consensual monitoring.

    3. Mail covers.

    4. Discussions with the referring IRS officer.

    5. Contact with foreign (tax treaty and other nations) government bodies, including local tax authorities. These must be coordinated through the Director, International in CI HQ Operations Policy & Support (CI:OPS).

    6. Contact with the taxpayers by mail to verify their filing record using Letter 1509 (DO). This form letter will not be used to solicit an admission if there is good cause to believe that a taxpayer has willfully failed to file. Use of this form should be approved by the SAC.

    7. Access to original tax return.

  2. In addition to the above activities, the following activities are permitted in QRP/RPP PIs:

    1. Contact employers and other filers of information return documents to verify data shown on the information returns, e.g., Forms W-2, W-4, 1099, 8300, 4789, etc.

    2. Contact with employers of potentially fictitious persons is permitted but limited to determining the validity of the employee’s earnings and withholding.

    3. Limited third party inquiries are also allowed to determine the true identity of a filer of false or fraudulent claims being evaluated by the applicable campus questionable refund detection team. This includes verification of addresses used by individuals responsible for filing the fraudulent return.

  3. Special agents may disclose the name of the subject of a PI for identification purposes in an effort to secure information that is relevant and necessary to the investigation.

  4. In a Financial Investigative Task Force, or in a Title 31 or SAR investigation, CI personnel may serve subpoenas authorized by the US Attorney’s Office.

9.4.1.6  (12-21-2005)
Subject Criminal Investigations

  1. A SCI is an individual or entity alleged to be in non-compliance with the laws enforced by the IRS and having criminal prosecution potential.

  2. The object of a SCI is to gather pertinent evidence to prove or disprove the existence of a violation of the laws enforced by the IRS.

  3. A SCI will always be initiated after a PI. A PI and a SCI can be initiated simultaneously in those instances when the investigation has criminal prosecution potential.

9.4.1.6.1  (04-04-2005)
Ownership of a Subject Criminal Investigation

  1. Ownership of a SCI may or may not be in the field office that initiated the SCI. Ownership can only be changed by transferring the SCI from the responsible field office to another field office. This may not be done until the transfer has been approved by the SACs of the two field offices involved. A SCI and the PI to which it is associated may or may not have the same owner. The Criminal Investigation Management Information System hotline must be contacted to perform the transfer of the investigation.

9.4.1.6.2  (12-21-2005)
Initiating a Subject Criminal Investigation

  1. Form 4930 will be used to authorize all SCIs. IRM 9.9, Criminal Investigation Management Information System should be consulted to complete the form.

  2. If the subject of the investigation resides in another field office’s territory, concurrence of the SAC for the territory in which the subject resides is necessary before the SCI can be initiated.

  3. If the investigation does not fall within the CI compliance strategy, a deviation memorandum must be prepared for the SAC’s approval and retained in the investigation's administrative file.

9.4.1.6.3  (04-04-2005)
Approving a Subject Criminal Investigation

  1. Non-sensitive Title 26 SCIs may be approved by the SAC. (The authority to approve the initiation of SCIs, except for 18 USC §1956, §1957, §1960, §371T and/or any Title 31 investigations, can be delegated through local delegation orders to the ASAC.) All sensitive Title 18, 26, and 31 SCIs must be approved by the Director, Field Operations.

  2. A sensitive investigation is defined as one involving:

    • currently serving elected Federal officials

    • currently serving Article 3 Judges

    • currently serving high-level Executive Branch Officials

    • currently serving elected statewide officials

    • currently serving members of the highest court of the states

    • mayors currently serving populations of 250,000 or more

    • perjury in the US Tax Court

    • exempt organizations

  3. Investigations of banks and brokers or dealers in securities referenced in 31 CFR 103.46(a)(1) through 103.46(a)(6) for possible criminal violations of 31 CFR Part 103 (except 31 CFR 103.23 and 103.48) must be authorized by the Chief, CI. See IRM 1.2.2, Delegation Order 143.

9.4.1.6.4  (12-21-2005)
Subject Criminal Investigative Techniques

  1. A SCI is considered a full-scale criminal investigation and, therefore, can use the broad spectrum of investigative techniques available to the special agent.

  2. A SCI is required for the execution of a search warrant when CI is the affiant. Special agents can still assist other agencies in the execution of a search warrant, including interviewing subjects and related individuals during the execution of the warrant. In order to do this however, CI must have either a GI or PI number. CI cannot interview third parties and/or subjects after the execution of another agency's warrant without a numbered SCI.

9.4.1.7  (12-21-2005)
Subject Seizure Investigation

  1. In order to capture time on criminal or civil seizure actions (18 USC §981, 18 USC §982, 18 USC §984, 26 USC §7301, 26 USC §7302 and 26 USC §881), a separate subject seizure investigation (SSI) will be initiated apart from existing SCIs. Only one SSI is numbered for a specific target. Do not number a SSI for each location or for each asset relating to the specific target.

9.4.1.7.1  (12-21-2005)
Ownership of a Subject Seizure Investigation

  1. Subject seizure investigation ownership may or may not reside with the field office that initiated the investigation. Subject seizure investigation ownership can only be changed by transferring the investigation from one or the initiating field office to another field office. This may not be done without the prior approval of the SACs of the two field offices involved. A SSI and the PI to which it is associated may or may not have the same owner. The CIMIS hotline must be contacted in order to perform the transfer of SSI investigations from one field office to another.

9.4.1.7.2  (04-04-2005)
Initiating a Subject Seizure Investigation

  1. Form 4930 will be used to authorize all SSIs. If no PI exists, a PI and a SSI must be initiated at the same time. IRM 9.9, Criminal Investigation Management Information System should be consulted to complete the form.

9.4.1.7.3  (04-04-2005)
Approving a Subject Seizure Investigation

  1. The authority to approve the initiation of all non-sensitive SSIs rests with the SAC. All sensitive Title 18, 26, and 31 SSIs must be approved by the Director, Field Operations. See IRM 9.4.1.6.3(2) which provides a definition of sensitive investigations. This approval authority can not be redelegated.

9.4.1.7.4  (03-03-1999)
Subject Seizure Investigative Techniques and Procedures

  1. A SSI must always be associated with a PI. A SSI can be closed only when one of the following actions occurs:

    1. All the assets seized have been disposed.

    2. No assets were seized and no further action will be taken.

    3. The SSI was initiated to charge time assisting another agency’s seizure investigation and no more time will be charged to the investigation.

  2. Additional information relating to seizure investigations and forfeitures can be found in IRM 9.7, Asset Seizure and Forfeiture.


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