Work with the Office of Fraud Enforcement and CI to enhance Internal Revenue Manual (IRM) procedures and develop annual refresher training to the FERDI staff that can be used to develop potential fraud referrals.
Revise IRM 5.19.18 to refer employees to the Fraud Handbook for fraud and/or willfulness procedures as soon as indications of fraud are present in any FERDI nonfiler case.
Conduct an annual analysis on open FERDI cases that have multiple nonfiling years and determine the next course of action dependent upon this analysis and recommendations from the Office of Fraud Enforcement. Cases that are deemed to have indicators of willfulness and/or fraud should be referred to CI.
Work with the DOJ to develop referral criteria for Federal employee nonfilers with multiple years of unfiled tax returns, including standalone nonfiler cases that can be investigated and prosecuted where warranted.
Share this report and recommendation with the Treasury Department Office of Tax Policy to consider a legislative proposal to amend I.R.C. § 7203 by replacing “misdemeanor” with “felony,” and additionally, by replacing the time for potential imprisonment from “one year” to “two years,” thereby making willful nonfiling a felony.