Criminal Investigation BureauDecember 2021 Tax News

FTB's Criminal Investigation Bureau (CIB)

While you may be familiar with the Franchise Tax Board (FTB) and their Audit and Legal program areas, you may not know about FTB's Criminal Investigation Bureau (CIB). Their mission is to serve the people of the State of California through investigation of violations of the California Revenue and Taxation Code in a manner that maintains the public's trust, and encourages compliance. CIB investigates state income tax evasion, state income tax fraud, asset concealment, and many other crimes.

To enforce the criminal provisions of the California Revenue and Taxation Code, CIB has fully sworn peace officers (special agents) who conduct criminal investigations of the most egregious cases of tax evasion, tax fraud, refund fraud and preparer fraud. As part of their investigations, special agents may also uncover other financial crimes such as money laundering, embezzlement and theft. Through the investigation process, special agents write and execute search and arrest warrants, interview witnesses and subjects, complete investigative reports with recommendations for criminal felony charges, and testify as expert witnesses in criminal proceedings.

CIB also employ non-sworn staff positions that support criminal investigations by analyzing bank records, preparing tax computations, processing payments, monitoring probation, and collecting on court ordered restitution.

Once an investigation is complete, special agents will continue to work collaboratively with prosecutors from the local District Attorneys (DA's) Office or the Attorney General's (AG's) Office as needed.

Cases are referred to CIB from a variety of sources. These sources include referrals from other areas within FTB such as: Collections, Audit, and Fraud and Discovery Section, and externally from informants, DA's Offices, the AG's Office, other state agencies, and local law enforcement agencies.

“Intent” can often be the key factor to differentiate a criminal case from a civil audit or collection case. CIB will consider and review a number of questions to determine whether an investigation should be initiated. Here are a few of the questions that may be considered;

• Did the individual intentionally under-report their income, or over-report their deductions?
• If a return was not filed, was the intent to evade tax?
• If a tax liability exists, is the individual working actively to pay off the debt?

These are just some of the factors considered. Stay tuned for future Criminal Corner articles in Tax News for relevant case studies, trends, tips and more!