The problem occurs when prosecutors have insufficient evidence to prove that the assets in an offshore bank account are untaxed income, Wroblewski wrote. In those cases, the tax loss in the case, which sets the sentencing guideline offense level, is determined only by the income earned off that offshore account.

In a letter Thursday to the U.S. Sentencing Commission, Jonathan Wroblewski, director of the DOJ's Office of Policy and Legislation, argues that upward departures from sentencing guidelines in certain tax cases would deter other wrongdoers and ultimately enhance the nation's tax enforcement program.

The U.S. Justice Department is recommending changes to the federal sentencing laws, including lengthening prison sentences for tax crimes involving hidden offshore bank accounts, revising punishment schemes for immigration violations and reducing the nation's prison population.

That income can be low even when the balance is high, because tax havens charge low interest and high rates in exchange for their banking secrecy. "In such a case, the tax loss table … may produce an offense level that substantially understates the seriousness of the offense. If so, an upward departure may be warranted," Wroblewski wrote.

On immigration, the Justice Department said it welcomes revision of sentencing guidelines for immigration crimes that would come with the passage of any comprehensive immigration reform. Those bills are now working their way through Congress.

The current immigration guidelines are "a major part of the most vexing application issue in federal sentencing," which is whether certain prior convictions trigger higher statutory and guideline sentences, Wroblewksi wrote.

"Few statutory and guideline sentencing issues lead to as much litigation as determining whether a prior offense is categorically a 'crime of violence,' an 'aggravated felony,' or a 'drug trafficking offense,'" the DOJ letter states. "The litigation burden is particularly onerous on courts, U.S. Attorneys' offices, and defenders with significant immigration dockets."

The Justice Department also warned of looming consequences stemming from the combination of growing prison populations and the budget constraints from this year's sequestration, when Congress cut $1.5 billion from the agency.

As prison and detention spending had increased, other criminal justice spending has decreased, including aid to state and local enforcement and prevention and intervention programs, Wroblewski wrote

"If the current spending trajectory continues and we do not reduce the prison population and prison spending, there will continue to be fewer and fewer prosecutors to bring charges, fewer agents to investigate federal crimes, less support to state and local criminal justice partners, less support to treatment, prevention and intervention programs, and cuts along a range of other criminal justice priorities," the letter states.