The Department of Justice announced that the Criminal Division’s Tax Section will now fall under the newly created National Fraud Enforcement Division. This is the second recent move for the Tax Section and comes amid heavy staffing losses.
The change, shared in an April 7 memorandum from Acting Attorney General Todd Blanche, is “effective immediately.” It follows President Trump’s March executive order calling for a task force to eliminate fraud.
Focus on Misuse of Federal Funds
The new task force is chaired by Vice President Vance, and includes representatives from Treasury, the Department of Justice, and several other agencies. Its directive is to develop “a comprehensive national strategy to stop fraud, waste, and abuse within Federal benefit programs, including programs administered jointly with State, local, tribal, and territorial partners.”
The focus of the executive order is on misuse of taxpayer funds. Likewise, Blanche’s memo announcing the Tax Section move emphasizes that the “core mission” of the new National Fraud Enforcement Division is “to zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.” The memo also calls for realignment of other “criminal prosecutorial resources” into the National Fraud Enforcement Division.
However, some are worried that the change means a narrowed mission for the Criminal Division’s Tax Section. “Moving DOJ’s Tax Section to the National Fraud Enforcement Division sends the unfortunate signal that the acting Attorney General is interested in limiting the scope of DOJ’s tax enforcement to those who steal or fraudulently misuse taxpayer dollars” said Dave Hubbert, senior fellow at NYU’s Tax Law Center and the former head of the DOJ Tax Division.
Hubbert is concerned that the move “could allow corporations and wealthy individuals to cheat on their taxes and go unpunished.”
Not all fraud directly involves the misuse of taxpayer dollars, according to the Tax Law Center. It cites recently prosecuted cases involving tax shelter schemes. While these are “clearly fraud,” they are “not clearly related to fraud of a government program,” the Tax Law Center explains.
Tax prosecutions were already down in 2025, per a recent Reuters investigation. For the period of January 1 to November 1, 2025, the number of people federal prosecutors charged with violating tax laws was 27% less than the same period in 2024, Reuters found.
Move Follows Tax Division Disbandment, Staffing Losses
The move also comes just months after the DOJ Tax Division was disbanded — with civil tax functions moved to the DOJ’s Civil Division, and criminal tax functions moved to the DOJ’s Criminal Division.
“The reasons for abolishing the Tax Division and moving its criminal enforcement sections to the Criminal Division and now to the National Fraud Enforcement Division were never clearly articulated,” said Hubbert. He stressed that “the danger” is that “prosecutors will be pulled off necessary tax enforcement.”
And that could be compounded by recent Tax Section staffing losses. Francesca Ugolini, who served as chief of the Tax Division’s Appellate Section from 2019-2025, said about 30% of staff left during last year’s reorganization.
Valerie Makarewicz, a shareholder at Carlton Fields and former assistant U.S. attorney in the U.S. Attorney’s Office Major Frauds Section, noted that “with the amount of institutional knowledge that has left the department, its goal-focusing is so different” than in prior administrations.
Also negatively impacting tax enforcement is the diversion of IRS investigators over the last year. “You’re utilizing folks in a way that is not their strongest,” said Makarewicz of the reassignments. “It underutilizes folks in a way that is detrimental,” she added.
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