ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, April 21, 1996 TAG: 9604220046
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: JAN VERTEFEUILLE STAFF WRITER
THE U.S. JUSTICE DEPARTMENT says Roanoke's Internal Revenue Service office is one of the most aggressive in the country. But IRS officials say the data aren't quite right.
Carpet layer Kevin Wilson told his tax preparer last month that he was estranged from his girlfriend and provided little if any child support for his daughter.
But the tax preparer listed him as "head of household," he said, and claimed that his daughter lived with him for 12 months last year.
That made Wilson eligible for the earned income tax credit, and qualified him for a tax refund of $2,259 from the IRS.
If he had been listed as single and claimed only himself, he would have owed $133.
With that information in hand, Wilson - actually an IRS special agent - helped the Roanoke IRS office get a search warrant for the tax preparation service's office in Henry County.
All but two of 957 returns the business prepared this year showed refunds, the IRS found - an unusually high rate. This month, the IRS seized the business's computer files, records, client lists and other tax information.
Such undercover work has made the IRS office in the Western District of Virginia, which encompasses most of the state west of Richmond, one of the country's most aggressive, according to the U.S. Justice Department.
In this part of the state, taxpayers - and tax dodgers - have a higher chance of being referred for criminal prosecution on tax fraud charges than in any of 89 other federal judicial districts across the country included in the data, according to Justice Department data.
When all types of charges are taken into account - money laundering, evading currency regulations and other tax violations - the Roanoke-based district referred taxpayers for criminal prosecution at the sixth-highest rate per capita in the country, the department's data show.
Yet the Western District offices have one of the lowest number of criminal investigators per capita.
Researchers at Syracuse University's Transactional Records Access Clearinghouse compiled the Justice Department data. They say the variation between districts raises questions about the allocation of IRS resources and whether taxpayers are treated equally across the country.
But when they put their information on-line recently, folk at the IRS raised questions about the data.
The Justice Department doesn't compile figures the same way the IRS does, and the numbers don't add up.
And because the IRS doesn't gather comparison data for its district offices, it has no way to verify that one office is referring more cases for prosecution than another, IRS officials say.
For example, the data compiled at Syracuse show that the IRS in the Western District of Virginia referred 83 cases to the Justice Department for prosecution in fiscal 1994. But the IRS says it referred only 37.
What may account for part of the discrepancy is the way each agency counts: The Justice Department counts everything, including personnel problems that aren't prosecuted but are dealt with internally, Thorn McDaniel says. That still leaves a wide disparity, which he says shows the data from the Justice Department are inaccurate.
McDaniel, chief of IRS investigations for Virginia and West Virginia, said 34 of the 37 cases the Western District referred to the Justice Department's tax division that year were accepted for prosecution. All but one of the prosecutions resulted in convictions.
"That's a good use of taxpayers' money," he said.
Mark Kroczynski, who has been head criminal investigator in Roanoke since November, said the office is actually down a position, but that the investigators it does have are all senior agents. He said the "excellent" relationship his office has with the U.S. attorney's office, which prosecutes the cases, also helps.
U.S. Attorney Bob Crouch said his office doesn't place a higher priority on tax cases than on other prosecutions, but does treat tax cases as seriously as other crimes. Last year, for instance, the office prosecuted 23 tax cases and got 22 convictions, he said.
The Syracuse data show Justice Department records only for fiscal year 1994, which may not give a full picture of IRS work here - or around the country. For example, that year the local office was working on the case of a Bland Correctional Center prisoner who was running a tax-refund scam that involved inmates filing false tax returns, Crouch said. That one investigation resulted in 14 people being indicted, a large number that could have made the Roanoke office's numbers look high for that year.
Still, Kroczynski said the office's numbers for the past three year have stayed about the same, although the 1994 numbers are "a little higher than normal" for the office.
"Whether we're No.1, rankings are something that don't interest me," Kroczynski said.
And according to the Syracuse clearinghouse, a taxpayer's chances of being recommended for prosecution anywhere in the country are "extraordinarily remote" - only 17 per million.
Syracuse University's Transactional Records Access Clearinghouse, which lists IRS enforcement data for every district in the country, can be reached on-line at http://trac.syr.edu/tracirs
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