The IRS Criminal Investigation (CI) unit is shifting its focus. While its resources and staffing grew significantly between 2019, thanks in part to a $201 million budget increase, its investigative focus has shifted.

According to a recent Treasury Inspector General for Tax Administration (TIGTA) report, traditional tax fraud cases have declined slightly in proportion, even as overall investigations have grown. 

From full-year 2019 to full-year 2023, investigations tied to general fraud, including pandemic-era relief fraud, rose by 32 percent, while tax law violation cases dropped from 60 percent of CI’s total to 53 percent. Despite a federal push for accountability, sentencing related to refund fraud has plummeted. TIGTA found that sentencing under the Questionable Refund Program fell by 68 percent, and by 13 percent under the Return Preparer Program.

CI attributes the drop to a pivot: fewer “lower-impact” cases, more complex ones. In FY 2023, CI used roughly $31 million of Inflation Reduction Act funding on investigative tech and training. That number jumped to $176 million in FY 2024, even as Congress clawed back IRS funding from $79.4 billion to $37.6 billion. 

The report notes, “The increase in staffing and available funding for CI enforcement activities appear to have led to an increase in overall investigations…However, other unfavorable trends were observed,” including declines in international investigations and sentencing activity. 

CI officials have stated that these changes reflect a deliberate move toward higher-impact enforcement.