IRS Expands Armed Division to Record Levels

The Internal Revenue Service Criminal Investigation (IRS-CI) division, the law enforcement arm of the IRS, has expanded its workforce to the highest level in nearly a decade. This development follows an 11% increase in staffing during fiscal year 2024 and a push for intensified enforcement against financial crimes.

The IRS-CI division, authorized to carry firearms and use lethal force, focuses on uncovering and prosecuting tax-related criminal activities. According to the division’s latest annual report, released on December 5, its workforce grew by 146 employees, bringing the total to 3,474. The division’s hiring surge is the largest in nearly ten years and part of a broader IRS effort to strengthen enforcement capabilities.

IRS-CI Chief Guy Ficco outlined the division’s ongoing challenges, stating that as financial criminals adapt and adopt new technologies, the need for a robust workforce has grown. The division’s response includes not only hiring but also leveraging advanced investigative techniques to tackle emerging threats such as cryptocurrency fraud and syndicated conservation easement schemes.

Among the division’s key achievements in 2024 were:

• The first cryptocurrency tax fraud indictment.
• A record-setting financial settlement with Binance, the world’s largest cryptocurrency exchange, for anti-money laundering violations.
• A 90% conviction rate, an improvement from 88.4% in fiscal year 2023.

The IRS-CI initiated 2,667 criminal investigations in 2024, leading to 1,571 convictions. The division also uncovered $9.1 billion in fraudulent activities and seized $1.2 billion in criminal assets.

The expansion reverses a decade-long decline in IRS-CI staffing. Between 2010 and 2020, the division’s workforce fell from 4,017 to 2,858 employees, resulting in reduced capacity to handle the growing complexity of financial crimes.

The turnaround in hiring is largely attributed to the 2022 Inflation Reduction Act, which provided the IRS with an $80 billion funding boost. While approximately $20 billion of this was later clawed back, the funding allocated for enforcement—around $46 billion—has allowed the IRS-CI to ramp up operations.

However, the funding has been contentious. Critics, including some Republican lawmakers, have voiced concerns that increased resources could lead to more tax audits targeting lower- and middle-income Americans. The IRS has sought to reassure the public that its focus remains on high-income individuals and corporations engaged in significant tax evasion schemes.

In addition to increasing its domestic workforce, the IRS-CI has expanded its international footprint. In 2024, the division launched a new attaché office in Nassau, Bahamas, and a cyber attaché post in Singapore. These initiatives aim to address the globalized nature of financial crimes, particularly those involving digital assets and offshore accounts.

The division’s growing expertise in cybercrime investigations underscores its commitment to keeping pace with technological advancements. Ficco noted in the report that such capabilities are essential to maintaining the integrity of the U.S. tax system and combating sophisticated financial schemes.

The IRS-CI is unique within the IRS as its agents are armed and authorized to use deadly force when necessary. The presence of armed agents has fueled debates about the role of the IRS in law enforcement.

Proponents argue that the division’s ability to confront violent criminal networks, such as those involved in drug trafficking and money laundering, justifies the need for armed agents. Critics, however, question whether such measures are necessary for tax enforcement and worry about potential overreach.

Despite these concerns, IRS-CI’s conviction rate and ability to recover significant sums from fraudulent activities highlight its effectiveness. In 2024, the division obtained $1.7 billion in court-ordered restitution, emphasizing its role in holding financial criminals accountable.

As the division enters fiscal year 2025, its focus will remain on leveraging its expanded resources to combat financial crimes. Ficco emphasized that the division is committed to protecting the U.S. tax system’s integrity while adapting to evolving criminal tactics.

The IRS-CI’s success in recovering billions of dollars in fraudulent assets and maintaining a high conviction rate demonstrates its critical role in enforcing tax laws. However, balancing enforcement with public trust will be key to the division’s continued effectiveness.

The expansion of the IRS-CI reflects a broader effort by the federal government to crack down on tax fraud and financial crimes. While most taxpayers are unlikely to encounter the IRS-CI directly, its growing presence signals increased scrutiny for those engaging in fraudulent activities.

For the general public, the division’s efforts to recover assets and prosecute criminals serve as a reminder of the consequences of evading tax laws. At the same time, the division’s focus on international crime and digital assets highlights the evolving nature of financial enforcement in the modern era.

As the IRS-CI continues to grow, its effectiveness will depend on balancing its enforcement capabilities with transparency and fairness, ensuring that its actions align with public expectations and the principles of justice.