Covid-19 has impacted several domestic and international enforcement efforts in the U.S. This piece discusses detention battles, the work of the IRS, and the Department of Justice, the latter in trying to stop the incidence of Covid-19 fraud
- DETENTION BATTLES
As a result of the coronavirus, there is much litigation concerning pre-trial detention. In this regard, on March 19, 2020, U.S. Magistrate Judge Thomas S. Hixson, U.S. District Court N.D. Ca. issued a 4-page opinion, ordering the release of Alejandro Toledo Manrique, saying he was persuaded that the 74-year old former head of state was in serious risk of death or serious injury unless released. Peru has requested his extradition on corruption-related offenses. Toledo was detained in the San Mateo County jail. Magistrate Judge Hixson observed the absence of testing kits at the jail. Hixson imposed various conditions to mitigate the potential that Toledo may try to flee.
On April 3, 2020, the Attorney General, issued a “Increasing Use of Home Confinement at Institutions Most Affected by COVID-19”.
On March 26, 2020, the Attorney General, issued a memo “Prioritization of Home Confinement As Appropriate in Response to COVID-19 Pandemic”.
2. INTERNAL REVENUE SERVICE (IRS)
On April 3, 2020, due to the coronavirus pandemic, the IRS issued an evacuation notice directing that nearly all of its employees work from home on mandatory telework starting Monday, March 30. Only employees performing “mission-critical duties” will be permitted to come into the office. Access to IRS offices will be restricted, with employees allowed only to pick up work files and mail. Affected employees were instructed to take home whatever they needed to work remotely for the foreseeable future.
This may present a problem for tax confidentiality. Due to confidentiality, most IRS officials refuse to allow communication by email.
The IRS has not communicated about whether call centers would continue to be staffed, or whether mail sent to service centers would be opened and processed. Clearly communication with the IRS, already difficult even for practitioners, will become more challenging.
The IRS has already extended the filing deadline for income tax returns from April 15 to July 15.
The IRS is in charge of distributing economic impact payments. On March 30, the IRS announced it will start in the next three weeks and will be distributed automatically, with no action required for most individuals. However, some seniors and others who do not file returns will need to submit a simple tax return to receive the stimulus payment.
On March 23, The United States Tax Court issued a press release announcing that more trial sessions have been cancelled in light of the COVID-19 pandemic. The Court has cancelled all trial sessions through the end of June 2020.
The IRS will have difficulty making progress in its audits and enforcement cases. It already suffered due to the federal shutdown in January and now because of the need to prioritize its resources in sending economic impact payments.
3. DEPARTMENT OF JUSTICE
The DOJ has issued an alert about criminals trying to exploit COVID-19 worldwide through a variety of scams. There have been reports of:
“• Individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud.
- Phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention.
- Malicious websites and apps that appear to share virus-related information to gain and lock access to your devices until payment is received.
- Seeking donations fraudulently for illegitimate or non-existent charitable organizations.
Criminals will likely continue to use new methods to exploit COVID-19 worldwide.” https://www.justice.gov/coronavirus
AML experts are warning banks and financial institutions to exercise due diligence to not process suspicious payments that may reflect scams. Financial institutions must exercise more due diligence during the pandemic.