The Internal Revenue Service has given a longtime agent who led high-profile investigations of tax crimes by wealthy Americans and corporations a May 29 deadline to respond to allegations that he violated agency ethics by underreporting income on his personal tax return.
The IRS had notified the agent, Brian J. Visalli, that it intended to dismiss him as soon as this week. Visalli’s supervisors said his dismissal was warranted because he allegedly failed to file accurate and timely returns over three years, and acted with a “lack of candor” for not properly characterizing income earned by his wife.
But in records reviewed by Bloomberg Tax, an IRS supervisor told the agent and his lawyer they could have a two-week extension to file their response to the accusations.
Visalli, who has spent nearly 25 years in the IRS Criminal Investigation division, has denied any intent to cheat the government. A letter Visalli wrote to fellow current and former agents asserts his firing is retaliation for his decade-long pattern of filing complaints about agency mismanagement and enforcement failures.
In the wake of one of Visalli’s whistleblower complaints, the agency’s inspector general released a report raising questions about the ethical conduct of hundreds of IRS personnel moving between the agency and accounting firms and large corporations—ostensibly the agency’s targets during audits and enforcement.
An IRS Criminal Investigation spokesperson declined to comment about Visalli, saying the agency is prohibited by law from discussing personnel matters. The agent and his lawyer also declined comment.
Visalli’s prospective ouster comes at a moment of tax enforcement upheaval and uncertainty. Headcount at the IRS is down roughly 25%, and billions of dollars designated for enforcement have been clawed back since President Donald Trump returned to the White House.
The actions against him also potentially throws into doubt ongoing criminal investigations examining hundreds of US taxpayers sheltering billions of dollars of income and assets offshore. Visalli had lead roles in probes of tax-avoidance schemes highlighted as IRS enforcement priorities: high-net-worth taxpayers relocating to Puerto Rico and those placing their accumulated assets in Malta pension arrangements.
The IRS spokesperson declined to address the impact on ongoing cases, but said the agency “remains focused” on these compliance problems.
Congressional Democrats who have grilled IRS officials over their lagging enforcement efforts said they would seek more details on Visalli’s firing.
“If the agent leading these investigations is now being fired in retaliation for blowing the whistle on IRS management, just months before his 25-year anniversary at the agency, it is a stunning act of sabotage against federal law enforcement and a gift to bad actors,” Rep. Nydia M. Velázquez (D-N.Y.), a frequent critic of IRS enforcement, said in a statement. “Whistleblowers are supposed to be protected, not punished.”
A ‘Hard-Charging’ Agent
From the agency’s Chicago field office, Visalli consistently worked on the largest and most complex tax abuse cases, said Guy Ficco, who retired as chief of the IRS Criminal Investigation division last month.
“I have known Brian for two decades and consider him a hard-charging, aggressive agent,” Ficco said.
His cases included an ongoing probe of wealthy Americans stashing billions in Maltese retirement accounts to evade US capital gains taxes by exploiting ambiguous language in a tax treaty with the tiny Mediterranean island nation. Wealth advisers have said a single Maltese trust company was holding $1.5 billion of income unreported to the IRS on behalf of US taxpayers, translating into a federal tax loss of roughly $360 million.
Visalli was also leading the IRS’s probe of hundreds of wealthy Americans claiming residency in Puerto Rico to take advantage of Act 60, an economic incentive statute that lures wealthy investors to the island with promises of tax exemptions on their income, dividends, interest, and capital gains. The investigation recently focused on legal opinions supporting these arrangements by attorneys from two global law firms, Baker McKenzie, and Winston & Strawn.
As he sought to expose tax abuses, Visalli also scrutinized what he saw as flaws within the IRS. For more than a decade, he used both internal and external channels to complain about the agency’s strategies for holding the nation’s largest taxpayers accountable for patterns of abuse.
Visalli’s whistleblowing mirrored an August 2023 report by the Treasury Inspector General of Tax Administration (TIGTA) highlighting conflicts of interest in audits and investigations of large multinational corporations.
The report identified 496 senior IRS officials who received income from accounting firms and large corporations either before, during or after their service. The report recommended a series of ethical and case management reforms to reduce conflicts of interest caused by the “revolving door.” It is unclear whether the IRS ever acted on the recommendations.
TIGTA released a second report in August 2024 — responding to what it said was a whistleblower complaint — detailing the IRS’s failures to police corporations that use profit-shifting strategies to segregate profits in foreign low- and no-tax jurisdictions. The report examined 23 large multinationals and highlighted the IRS’s failure to use its statutory authorities under the economic substance doctrine, a principle of enforcement that denies tax benefits for transactions featuring no true business purpose or economic effect beyond tax reduction.
TIGTA recommended IRS review its internal procedures to improve audits of the large, complex businesses.
Visalli cited his whistleblowing to TIGTA in a 6,000-word essay published last fall in Tax Notes, a tax industry publication. He criticized the IRS’s unwillingness to use enforcement authorities under the economic substance doctrine, codified under a section of the Affordable Care Act in 2010.
“The roadmap exists. The legal tools are available. The evidence waits to be gathered,” Visalli wrote. “What’s needed is IRS leadership willing to investigate, prosecutors willing to litigate despite the David vs. Goliath odds, and policymakers willing to support institutional reform.”
Mistakes and an Overpayment
The documents summarizing the allegations against Visalli and the letter he wrote to fellow agents suggest the issues involving his personal tax return began after he married his wife, a physician, in 2021 and the couple began filing joint returns. The tax filing duties were initially entrusted to an accountant familiar with his wife’s more complicated revenue streams as a physician, the agent claimed.
The returns showed a series of mistakes, including a $133 shortfall linked to an investment by Visalli’s wife, and the couple’s receipt of an erroneous $3,000 Advanced Child Tax Credit during the pandemic.
The disciplinary letter outlining the firing process faulted Visalli for violating the Principles of Ethical Conduct for agents—specifically the failure to timely and accurately file personal income tax returns without penalties or interest.
The letter, signed by acting deputy director Carissa Messick, emphasized that as a special agent Visalli must be “held to the highest standards of conduct, particularly regarding compliance with Federal tax obligations.”
Messick wrote that the misconduct was “egregious” and warranted Visalli’s dismissal from the agency.
In his letter to fellow agents, Visalli wrote that he assumed responsibility for filing the couple’s tax returns in 2023 and he took steps to correct the prior mistakes. He said the amended returns revealed overpayments to the government due to unclaimed losses attributed to his wife’s investments. After the amendment process, the government was never “shorted a single penny,” he wrote.
“In fact, the corrective actions I’ve personally taken to ensure accuracy have resulted in net refunds of over $2000, demonstrating that we actually overpaid on our tax obligations,” the agent wrote.
IRS staffers supporting Visalli said the mistakes were minor and unintentional. Four current and former agents interviewed by Bloomberg Tax — three of whom asked for anonymity to avoid repercussions in their jobs — said they were surprised that the mistakes led to disciplinary action.
“The fact pattern doesn’t fit anything that would warrant a firing. This is completely unusual,” said one, retired IRS agent Michael Welu, who worked closely with Visalli over roughly 20 years.
Investigations ‘Kneecapped’
One current criminal investigations agent predicted the Malta and Puerto Rico tax fraud probes would be “severely kneecapped” if Visalli is removed.
“These cases were already under-resourced, and without Brian the effectiveness of the team is down to 25%. He was the lead agent. He knew all the details off the top of his head,” said the agent, who spoke on the condition of anonymity to discuss an ongoing case.
Another agent, Anthony Bondi, declined to discuss discipline pending against Visalli, but said the loss of a lead agent often sinks complex investigations.
“When someone like that leaves the agency and has a skill set to work through the obstacle course of big cases, it’s very challenging to just say ‘next person,’ ” said Bondi.
The IRS spokesperson said its investigations of tax sheltering in Puerto Rico and Malta would continue and added, “while we cannot comment on specific cases or the status of ongoing investigations, IRS-CI remains focused on ensuring compliance with the law and holding violators accountable.”
Senate Finance Committee ranking member Ron Wyden (D-Ore.), a frequent critic of IRS enforcement failures in the Puerto Rico and Malta probes, said committee staff were looking into the reports of Visalli’s firing.
“I am alarmed by allegations of retaliation against all federal whistleblowers, especially against experienced agents cracking down on abusive tax shelters used by wealthy and well-connected taxpayers,” Wyden said in a statement.
What happens next for Visalli is unclear. Final termination decisions can be appealed to the federal Merit Systems Protection Board, where an agent can seek reinstatement or some other remedy.
A spokesman for the Federal Law Enforcement Officers Association, an association of agents across all federal agencies, said Visalli was a member in good standing, but declined to comment on his situation.
The association, however, pointed to an inherent tension between the tax administration and criminal investigation functions within IRS. It has consistently advocated for a realignment that would move the Criminal Investigation division out of the agency.
“The IRS likes the idea of having a federal law enforcement agency, but doesn’t want the risk or responsibilities that come with it,” the association said in a statement.