programs Criminal Investigation Division

Tax-related Investigations

The Criminal Investigation Division (CID) investigates crimes defined in statutes other than the Tax Code when the offense is related to the Comptroller's office. The most common of these cases are tax-related investigations of Penal Code violations, including:

• forgeries involving counterfeit checks that appear to be issued by the state through the Comptroller of Public Accounts; and
• cases involving tampering with governmental records, usually falsified documents that must be filed with the Comptroller's office.

Using Non-Tax Laws

In some cases, CID pursues Penal Code charges when the Tax Code specifically allows the state to prosecute criminal conduct under other law (e.g., Tax Code Section 151.7101). A charge of misapplication of fiduciary property, an offense under Penal Code Section 32.45, may be filed instead of failure to pay taxes collected, a crime under Tax Code Section 151.7032.

A Federal Case

If the facts indicate that a federal crime may have been committed, CID may contact the federal law enforcement agency having jurisdiction over a potential case. The case may continue to be investigated jointly or solely by the federal agency.

At the conclusion of the investigation, if there is probable cause to believe a federal crime has been committed, the federal agency sponsors the case for prosecution with the U.S. Attorney’s Office having jurisdiction.

Punishing Sales Tax Cheats as Thieves

When consumers pay sales taxes, they trust merchants to forward their payments to the state. Both consumers and the state are victimized when unscrupulous merchants break that trust by intentionally failing to remit tax money — whether keeping, investing or spending it.

In passing Senate Bill 934 (SB 934) in 2011, the Texas Legislature markedly raised the stakes for criminals caught defrauding taxpayers in this way.

Learn more about SB 934.

SB 934: Punishing Sales Tax Cheats as Thieves

Enacted in 2011 by the 82nd Legislature, SB 934 amended the Tax Code to treat tax cheats more like thieves under the law. Now, anyone who collects and intentionally does not remit sales taxes could face felony charges, depending on the amount involved.

Felony penalties, including possible prison time, may be assessed for sales tax fraud if as little as $1,500 is pocketed, a sizable reduction from the minimum threshold of $10,000 in the previous statute. Stiffer penalties have been authorized up the scale to a first-degree felony for failing to remit $200,000 or more, punishable by five to 99 years or life in prison. Sales tax thieves who steal amounts ranging from $50 up to $1,500 can face county jail time.

SB 934 also amended the Penal Code to allow investigators to:

• Use state organized crime laws to pursue groups of three or more persons who conspire to commit tax felonies, enhancing the severity of the charges by one degree;
• Pursue sales tax cheats using state money laundering statutes when the route of the criminal proceeds (unremitted sales taxes) is known; and
• Charge retailers that intentionally fail to produce legally required records of taxable retail sales of alcohol and tobacco products for the Comptroller, basing punishment on the amount of tax avoided when the goods are purchased wholesale.

Sales tax fraud harms all Texans. Thanks to SB 934, the criminal justice system can punish these scammers in new and tougher ways. Felony cases may be pursued much more vigorously and prosecuted as money laundering and/or organized crime when deemed appropriate.