The Internal Revenue Service’s Criminal Investigation Division is cutting the number of investigators to the lowest level in forty years. This division investigates all sorts of financial crimes involving such activities as tax fraud, money laundering, identity theft, narcotics and counter-terrorism.

Recent investigations involved probes into tax evasion by Credit Swisse Group and sanctions violations by BNP Paribus resulting in settlements of $ 2.5 billion and $ 9 billion, respectively.

The number of special agents employed by the agency at its peak in 1995 totaled 3,358. As a result of budget pressures, the number is expected to drop to 2,130 by 2016. IRS Commissioner John Koskinen says the lack of resources means fewer investigations are being initiated.

Last year the IRS budget was cut by about $ 600 million as a result of sequester when Congress failed to reach agreement on the budget. Most other federal agencies saw their budgets returned to pre-sequester levels, but not the IRS.

Koskinen estimates the IRS, through criminal investigations, as well as audits, collection and other efforts, brings about $ 50 billion to $ 60 billion a year into the federal coffers. This translates to 5 to 6 times the IRS annual budget of about $ 11 billion. Last month the U.S. House of Representatives voted to cut the IRS enforcement budget for 2015 by over $ 1 billion. Koskinen estimates this latest cut will reduce revenues by $ 3 billion to $ 5 billion.

It seems to me we are stepping over dollars to pick up pennies