Abstract

This Note explores the comprehensive approach the IRS takes in investigating and taxing drug traffickers. It first addresses the statutory framework that allocates responsibility between the IRS and the taxpayer in tax investigations. This includes procedural tools that help the IRS expedite tax collection. Additionally, the IRS increases the drug trafficker's tax liability with penalties and additions to tax. This section provides a background to the structure in which the IRS operates.

Next, this Note explores income reconstruction. This section examines burden of proof issues, including presumptions and burden-shifting between the taxpayer and the government. The section also explains reconstruction techniques, such as the net worth, cash expenditures, specific item, and bank deposits methods. The analysis focuses on each method's importance and usefulness in drug investigations.

Lastly, this Note presents an example of the financial impact of a tax investigation upon the drug trafficker. This is important because, although the IRS works in the background of drug investigations, its ability to employ such investigative techniques provides the federal government with a significant source of funds. The results of this work are far-reaching: taxes from drug profits can be reinvested in government programs that help stem illegal use of drugs in the United States.

How to Cite