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25.2.3.1
(04-27-1999)
Overview: General
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This section explains the guidelines for reimbursing State/Local Law
Enforcement Agencies for services provided during a federal tax investigation.
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IRC 7624 gives the Service discretion to reimburse a State or local
law enforcement agency for expenses incurred in an investigation where information
furnished by the agency to the Service substantially contributes to the recovery
of Federal taxes with respect to illegal drug or related money laundering
activities.
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If information provided by a State or local law enforcement agency results
in the collection of at least $50,000 in additional taxes and civil penalties
with respect to illegal drug or related money laundering activities, the Service
may provide reimbursement for reasonable investigative expenses, not otherwise
reimbursed, up to a maximum of 10 percent of the taxes recovered.
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The reimbursement allowable under this provision is limited to 10 percent
of the amount recovered for Federal taxes, including additions to tax and
civil penalties, but not interest or criminal fines.
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No reimbursement is allowable with respect to expenses that have been
or will be reimbursed from other sources, such as a Federal or State forfeiture
program.
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This law applies to State law enforcement agencies, including the District
of Columbia, and local law enforcement agencies within the States and the
District of Columbia for information first provided after February 16, 1989.
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A special fund/account has been established to receive and expend these
funds.
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