(Bloomberg) -- A report from the Internal Revenue Service released Wednesday shows the number of special agents in its criminal investigations unit is at its lowest in almost 50 years, pushing the agency to rely more on data analytics to root out tax fraud and crimes.
Following retirements and lack of hiring over the past five years, the agency has about 2,000 special agents who are pursuing tax-related crimes, according to its annual report for 2018.
Data analytics alone often don't notice certain types of tax fraud. For example, the IRS for years didn't pursue a multiyear tax fraud by Paul Manafort, former campaign chairman for President Donald Trump. Manafort pleaded guilty to conspiring against the U.S. in September, after being convicted on bank- and tax-fraud charges at an earlier trial.
The number of investigations the IRS's criminal investigations unit initiated for its 2018 fiscal year dropped to 2,886 from 3,019 the prior year, and 3,395 the year before that, according to the IRS's report.
Overall, the number of white-collar crime prosecutions are on pace to be the lowest ever, Don Fort, the agency's top criminal investigation official, said in the report, citing studies from earlier this year.
“This statistic is especially troubling because financial crime has proliferated over the past few years,” Fort said.
Still, the report highlighted how the criminal investigations division has caught $9.7 billion in tax fraud in 2018 -- almost four times more than a year earlier -- thanks to its use of data analytics. The team also found $10.4 billion in other financial crimes, up from the $1.1 billion identified in fiscal year 2017. The unit's overall conviction rate was 91.7 percent.
--With assistance from Sony Kassam.
To contact the reporter on this story: Lynnley Browning in New York at lbrowning4@bloomberg.net
To contact the editor responsible for this story: Alexis Leondis at aleondis@bloomberg.net
©2018 Bloomberg L.P.
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