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This section provides an overview of fraud and defines the elements of fraud.

This handbook is a comprehensive guide for IRS employees service-wide in the recognition and development of potential fraud issues, referrals for criminal fraud, duties and responsibilities in joint investigations, civil fraud cases and other related fraud issues.

The primary objective of the fraud program is to foster voluntary compliance through the recommendation of criminal prosecutions and/or civil penalties against taxpayers who evade the assessment and/or payment of taxes known to be due and owing.

The discovery and development of fraud is the result of effective investigative techniques. Techniques employed by compliance employees should be designed to disclose not only errors in accounting and application of tax law, but also irregularities that indicate the possibility of fraud.

Generally, for fraud to be considered the compliance employee must show:

The fraud technical advisor (FTA) plays a vital role in the development of a potential fraud case. The FTA will be consulted in all cases involving potential criminal fraud, as well as those cases that have potential for a civil fraud penalty. The FTA serves as a resource person and liaison to compliance employees in all operating divisions. The FTA is available to assist in fraud investigations and offer advice on matters concerning tax fraud to all operating divisions. When a compliance employee suspects a potentially fraudulent situation, the employee will discuss the case at the earliest possible opportunity with his/her manager. If the group manager concurs, the FTA will immediately be contacted and both the group manager and FTA will provide guidance to the compliance employee on how to proceed. Managers will encourage the early involvement of the FTA in all potential fraud cases.