Mitigating the Effect of Organized Crime on the U.S. Tax System

Scott Karem

This paper has been written and prepared for financial crime investigators and representatives of financial institutions tasked with monitoring and mitigating money laundering activities. The objective of the paper is to educate the reader on the nature of tax fraud, explore the criminal act itself, and portray those who perpetrate it against the United States government. Ongoing efforts by the government to curtail money laundering and other criminal acts through tax activity are also examined.

Sadly, it is the nature of some people to attempt to exploit gaps in our financial system to benefit themselves. Even the United States tax system is not immune to these criminals who seek to manipulate the system to their own benefit. When you consider that in 2016 alone, the IRS issued $263 billion dollars in federal refunds, you begin to see why both petty criminal and transnational crime syndicates alike make a point of focusing their efforts on manipulating the U.S. tax system.

As noted in a recent report issued by the U.S. Treasury Inspector General for Tax Administration (TIGTA), it is believed that the United States Treasury suffered a loss of more than 21 billion dollars from 2012-2017 because of stolen identity refund fraud (SIRF), which is just one of many types of tax fraud discussed in this paper.

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