Compelled Production of Documents and Testimony Tax Examinations (Portfolio 633)

Description

Bloomberg Tax Portfolio, Compelled Production of Documents and Testimony in Tax Examinations, No. 633, describes and analyzes the various methods by which taxpayers and third parties can be legally compelled to produce books, records and testimony pursuant to a civil or criminal tax investigation, as well as the privileges and defenses that may be available to protect such evidence from compelled production.

Congress has granted the IRS broad investigatory powers to enforce the federal tax laws. The IRS may issue an administrative summons to a taxpayer under either civil or criminal investigation and to third parties who possess documents relevant to that taxpayer’s case. In certain criminal investigations, the IRS may also seek to invoke a grand jury, which has wide latitude and discretion to demand the production of documents and testimony pursuant to the issuance of a grand jury subpoena. A taxpayer receiving a summons or subpoena has various defenses available to him, including the Fifth Amendment privilege against self-incrimination, the attorney-client privilege and the work product doctrine. Furthermore, there are certain limitations, both procedural and substantive, on the investigating power of the IRS, such as the John Doe summons rules.

This Portfolio focuses on the power of the IRS and the grand jury to issue and seek enforcement of administrative summonses or subpoenas to taxpayers and third parties who possess documents and testimony relevant to tax investigations, and the limitations imposed on such power. It discusses the ability of the IRS and the grand jury to investigate both U.S. and foreign taxpayers, as well as the special procedures which may be applicable with respect to documents located in foreign countries. In this context, the Portfolio addresses the attendant jurisdictional issues, tax treaties, tax information exchange provisions and various specially enacted statutory provisions specifically pertaining to obtaining documents which are located abroad. The Worksheets include portions of the Internal Revenue Manual related to the production of testimony and documents and sample letters to be utilized to protect the attorney-client privilege in certain situations.

Table of Contents

I. IRS Summons Power and the Powell Test
II. Limitations on the Summons Power
III. Summons Enforcement
IV. Summonses to Third-Parties
V. Church Tax Inquiries and Examinations
VI. Special Aspects of Foreign Records
VII. Tax Grand Jury Investigations
VIII. Other Means of Obtaining Information: Search Warrants, Mail Covers, Electronic Surveillance, and Undercover Tax Investigations
IX. Documentary Privileges