Obtaining Tax Records in a Criminal Prosecution
by: J mccoy • June 23, 2011 • no comments
So, you're in the midst of defending a client and you realize that obtaining a particular individual's tax records would be both relevant and helpful to your case. How do you go about it? Well, I've looked into it and the short answer is: "It ain't easy, but it's doable!"
Based on my research so far, the most expedient route to take in attempting to gain the individual's federal tax returns is to issue a subpoena duces tecum either to the person his or herself or to other individuals who may possess copies of the returns. This seems like the best route because the statute that governs IRS disclosure of tax return information limits the circumstances under which IRS employers can divulge return information, but there are no similar limits on obtaining return information via subpoena.
26 U.S.C. § 6103 details the appropriate circumstances under which the IRS can disclose tax return information to third parties. § 6103(i) is the most relevant part of the statute for our purposes; it details when and how the IRS can disclose tax return information in criminal proceedings not related to tax administration. It states that the IRS can only disclose tax return information during a criminal proceeding pursuant to an ex parte order from a federal district court judge or magistrate. The statute limits this avenue to government prosecutors, specifically attorney generals and any attorney in charge of a criminal division organized crime strike force.
However, the statute doesn't foreclose subpoenaing the estate of the deceased or any other person who may have possession or control of the tax return. Courts have consistently found that the dictates of the statute don't impinge upon situations in which parties to litigation use compulsory process to obtain tax records. For instance. in Heathman v. U.S. Dist. Court for Central Dist. Of California, 503 F.2d 1032 ( 9th. Cir. 1974), the court held that the statute "only restricts the dissemination of tax returns by the government and that this section does not otherwise make copies of tax returns privileged," Id. at 1035. The situation is also analogous to that in St. Regis Paper Co. v. United States, 368 U.S. 208 (1961) where the court held that census data, while confidential within the government, it could be subpoenaed from the individual who compiled the data and reported it to the government. Id. at 218. The court also explicitly analogized census data to tax returns in dicta while making their holding. Id. The Second Circuit has held that "[d]isclosure by the taxpayer himself of his copies of returns is not an unauthorized disclosure, even though it be made by reason of legal compulsion," U. S. ex rel. Carthan v. Sheriff, City of New York, 330 F.2d 100, 101 (2d Cir. 1964). Finally, the court in Stokwitz v. United States, 831 F.2d 893 (9th Cir. 1987) stated that "[§] 6103 was not designed to provide the only means for obtaining tax information; it simply provides the only means for acquiring such information from the IRS." Id. at 897.
In the single case from Oregon (that I could find) dealing directly with the issue of tax returns and their confidentiality, the court noted that it is "discretionary with a court in which a civil action is pending to require one party to produce a copy of a federal or state tax return for inspection by an adverse party in a discovery proceeding," State ex rel Thesman v. Dooley, 270 Or 37, 45 (1974). While this is clearly a civil case, a great argument could be made that there is no rational basis for the court to refuse to exercise this discretion in a criminal case, especially given the liberty interest at stake here.
Your particular case may be entirely appropriate for a request, under Brady v. Maryland, 373 U.S. 83 (1963), that the court enforce a subpoena for the tax returns as the information included therein is material to your client's defense or punishment. Id. at 87; See State v. Bassine, 188 Or App 228, 235 (2003). This would require arguing that the suppression of the tax returns would be prejudicial to your client. See Kyles v. Whitley, 514 U.S. 419, 433-34 (1995).
If the prosecution asserts that the tax returns are privileged, then an argument can be made that "since the Government which prosecutes an accused also has the duty to see that justice is done, it is unconscionable to allow it to undertake prosecution and then invoke its governmental privileges to deprive the accused of anything which might be material to his defense." U.S. v. Reynolds, 345 U.S. 1, 12 (1953). The standard for materiality, or relevance, is if the disputed evidence/testimony carries enough "seeds of innocence" to compel disclosure. Gilmore v. United States, 256 F.2d 565, 567 (5th Cir. 1958). Stated alternately, there need only be a "likelihood" of relevance. United States v. Nixon, 418 U.S. 683, 700 (1974).
Lastly, it may be helpful to note that federal accountant-client privilege only applies to certain enumerated adjudicative situations, namely noncriminal tax proceedings before the IRS or a federal court. See 26 U.S.C. § 7525(a)(2). As such, it may not be applicable in your case.
I hope this is helpful and good luck out there!
