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SANDRA BROWN Quoted in Article on Rotating Fraud Technical Advisors

2018 TNT 159-3 ROTATING FRAUD TECHNICAL ADVISERS SEEN AS
PROMISING IDEA (Doc 2018-32998)
Tax Notes Today
AUGUST 16, 2018, THURSDAY
Copyright © 2018 Tax Analysts

 

Cite: 2018 TNT 159-3
Department: News, Commentary, and Analysis; News Stories
Length: 1213 words
Byline: Tax Analysts; Richman, Nathan J.
Geographic: United States
Published by Tax Analysts(R)

The conversion of the fraud technical adviser role into a rotating position as part of the October overhaul of the IRS’s National Fraud Program could produce several benefits if the IRS carefully monitors the program.

According to practitioners, the June description (2018 TNT 121-4) of the coming changes to the National Fraud Program not only alleviated fears of a drastic  iminution of the program but may also present a way for the IRS to more effectively and efficiently deploy the resources it has aimed at detecting taxpayer fraud.

At a conference in June, Mary Beth Murphy, commissioner of the IRS Small Business/Self-Employed Division, said that the National Fraud Program will be getting its first update in 17 years in October.

She said that the IRS will begin rotating employees through the fraud technical adviser position in three-to-five-year stints. Some of the current fraud technical advisers have been in that role for much longer under the current system,
she said.

Murphy added that the fraud program will move away from a “geographically based footprint.” Further, the four groups in the program will be realigned to focus on providing technical expertise to the other IRS divisions, she
said.

Barbara T. Kaplan of Greenberg Traurig LLP, who was interviewing Murphy when the SB/SE commissioner described the upcoming changes to the National Fraud Program, recently told Tax Notes that the changes make
sense given the IRS’s current resource and staffing problems.

Sound Reasons

Mark E. Matthews of Caplin & Drysdale Chtd. said that there are sound reasons for any enforcement bureaucracy to rotate its employees through a variety of experiences. While the effects of the changes should be tracked going
forward, it is a promising idea, he said.

Sandra R. Brown of Hochman, Salkin, Rettig, Toscher & Perez PC said that rotating people through the fraud technical adviser position will provide benefits by both reallocating experienced personnel and bringing a fresh
perspective to National Fraud Program personnel.

The change will bring “people with different experience looking through fresh lenses rather than ‘this is what I have been doing for the past 15 years,'” she said. One of the reasons for creating the fraud technical adviser position in
the first place was to avoid that sort of personalized standard, she said.

Tax Notes in May reported (2018 TNT 89-3) on a notice the IRS sent to the National Treasury Employees Union describing the reassignment of more than 60 fraud technical advisers to field roles in the SB/SE.

Before Murphy’s June announcement, practitioners noted (2018 TNT 119-2) the pros and cons of converting the current fraud technical advisers to field examiners and changing the “geographic footprint” of the program; among
their concerns was that the then-unexplained changes could have been a mere reduction in the National Fraud Program caused by budgetary concerns.

Force Multiplier

Kaplan said that there might be a “higher and better use” for the current, experienced fraud technical advisers in the
field.

“Not that fraud isn’t an important and significant component of the work that they do, but they might be able to produce more results if they were integrated into other areas and can help out, and then the IRS moves other people into fraud as time goes by,” she said.

Matthews, who was IRS Criminal Investigation division chief during the development and creation of the fraud technical adviser position, said that making the fraud technical adviser a rotating-type position will, over time,
increase the number of people within the IRS who have experience evaluating fraud cases.

“Compare 50 people who are doing it toward the end of their careers and for the rest of their careers versus a rotating position where you might have 200 people who have been in that job at any given time,” he said. “I would
think of that as a force multiplier if it works well.”

The three-to-five-year rotation sounds like the right amount of time for people to gain enough experience and do valuable work as fraud technical advisers, while allowing the IRS to get regular fresh faces in the position, Matthews
said.

A stint as a fraud technical adviser could be a useful training experience for a junior IRS employee, Kaplan said.

The IRS is facing wave after wave of senior employee retirements, and rotating people through the fraud technical adviser position could be a way to manage their resources, she said.

Brown, recently the acting U.S. attorney for the Central District of California and chief of its tax division before that, said that prosecutors appreciate cases that have had fraud technical adviser input, both for case selection and for
protection against possible issues with the boundary between civil and criminal investigations. There is value to having a case reviewed by someone other than the examiner’s direct superior, she said.

“By having a centralized group of people whose focus is not on closing the case but on determining whether or not the badges of fraud are there takes some of the burden off the revenue agents’ shoulders,” Brown said.

Bringing fresh blood to the fraud technical adviser position and sending the former advisers into the field with their
accumulated experience should be a “plus-plus” for the IRS and eventually the Justice Department, Brown said.

Keep a Lookout

Matthews said the IRS should monitor the National Fraud Program after the changes to be able to compare the resulting fraud referrals under the old model with those under the new model. “You will want some metrics around
this eventually,” he said.

The IRS also needs to monitor the fraud technical advisers to be sure that they do not step over the line between civil and criminal investigative functions as required by United States v. Tweel, 550 F.2d 297 (5th Cir. 1977), Matthews said. The IRS needs to keep the rotating advisers reined in lest they see themselves as junior CI investigators and lull taxpayers into thinking a case is still civil after there has been an institutional decision to refer it for criminal investigation, he said.

In Tweel, the appellate court found bad faith when a criminal investigation was conducted under the guise of a civil audit. The Fifth Circuit reversed the defendant’s conviction and held that evidence the defendant gave during a civil
audit should have been suppressed because an IRS revenue agent used a “sneaky” but literally true statement to conceal a criminal investigatory purpose of the audit.

Brown said the Tweel concern has eased since the case came out because the last 10 years have seen much more openness to civil and criminal cases proceeding in parallel, rather than sequentially. But the IRS needs to maintain the gatekeeper function of the fraud technical advisers aside from the focus on Tweel alone, she said.

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