Applying the “foregone conclusion” exception to the Fifth Amendment privilege against self-incrimination, the Ninth Circuit held on January 8, 2013, that the IRS could force a taxpayer’s criminal defense attorney to turn over the client-taxpayer’s records to IRS Criminal Investigation in response to a summons. The case’s citation is United States v. Sideman & Bancroft LLP; No. 11-15930 (9th Cir. 2013).
In the course of a tax evasion investigation, the IRS executed a search warrant on the taxpayer’s home, business, and car, looking for tax records. Agents were unable to find the records and eventually interviewed the taxpayer’s tax return preparer. The return preparer described the records in detail and told the agents that she had given them to the taxpayer’s criminal defense attorney. The IRS then served the attorney with a summons for the records. When the attorney refused to turn over the records, the IRS and the U.S. Department of Justice Tax Division went to court to enforce the summons.
Both the District Court and the Ninth Circuit agreed that the “foregone conclusion” exception to the Fifth Amendment applied and required the attorney to turn over the records to the IRS in response to the summons. This is because the government, using the tax return preparer’s detailed knowledge and description of the records, could identify and authenticate the records in court without relying on the taxpayer’s act of production of the records (through her attorney). Since the existence, authenticity, and possession of the records were foregone conclusions, the summons did not violate the taxpayer’s Fifth Amendment privilege against self-incrimination.
“The testimony that was obtained and the known existence and specificity of the documents sought would tend to lean in the government’s favor, as the case demonstrated,” said Jim Mastracchio, Co-Chair of BakerHostetler’s Tax Controversy Practice. Jay Nanavati, a former DOJ Tax Division Assistant Chief added, “this case re-affirms the principle that the Fifth Amendment privilege against self-incrimination is not bullet proof, especially when documents are at issue. Whether using the “foregone conclusion” exception, as in this case, or the “required records” doctrine in offshore tax evasion cases, the government has the legal means to force people to turn over the very evidence that could put them in jail.”
For more information on the government’s efforts to prosecute tax evasion, please contact Jim Mastracchio at (202) 861-1650 (firstname.lastname@example.org) or Jay Nanavati at (202) 861-1747 (email@example.com), BakerHostetler, 1050 Connecticut Ave., Washington, DC 20036 (www.bakerlaw.com).