IRS Leader Shake-Up Bleeds Criminal, Civil Enforcement Oversight

The line between tax auditors policing mere civil infractions versus serious tax crimes is blurring in the latest reorganization at the top of the IRS.

Jarod Koopman, a longtime and respected criminal investigator, took over the top job for compliance at the IRS in October. Under the shake-up announced Tuesday, he’ll also oversee the IRS’s criminal investigation unit.

The reshuffling at the top of the IRS tightens CEO Frank Bisignano’s grip on the agency with more leaders reporting directly to him. Bisignano, who also will co-lead the compliance office with Koopman, is also the commissioner of the Social Security Administration, and now oversees more than 120,000 federal workers.

Bisignano joined the agency late last year in a newly created CEO role after President Donald Trump’s first pick, Billy Long, lasted just months.

Anxiety over whether civil cases will be worked from a criminal perspective could be heightened with the new leadership announcement, tax professionals said. Still, the IRS over the span of decades has developed procedures on the flow of information between civil and criminal divisions.

“The thing that you hope doesn’t happen is that the sensibility of somebody who deals with criminal tax will bleed into their point of view when they are managing the bulk of their enforcement, which is civil,” said Rochelle Hodes, a principal at Crowe LLP.

Tax issues can rise to the level of criminal scrutiny when the taxpayer intentionally evaded taxes. Civil enforcement actions, such as audits, generally result in penalties.

The IRS didn’t immediately respond to a request for comment.

Longstanding Respect

The IRS still likely will remain cautious and continue the “longstanding respect” and lines between civil and criminal, said Carolyn Schenck, a Caplin & Drysdale member and former IRS fraud counsel.

Koopman in dual roles also may give the IRS a well-rounded enforcement and resource-need perspective, she said. He will take over for the current criminal division head Guy Ficco, who is retiring with his last day sometime before March 31.

The chief compliance officer typically has a wide remit, overseeing units in charge of large business and international, small business and self-employed, tax-exempt and government entities, criminal, professional responsibility, return preparers, and whistleblowers.

As CI chief, Koopman will directly oversee 3,200 employees, including many who investigate thousands of financial crimes.

Mark Everson, Alliant vice chairman and former IRS commissioner, said the decision for the suite of new and existing leaders to directly report to Bisignano will allow him to personally get a “better feel” for what’s going on at the agency.

“I like what he’s done here,” Everson said.