38.3.1  Miscellaneous Matters

38.3.1.1  (08-11-2004)
Resubmissions Following Declinations by the Department of Justice

  1. Where the Department of Justice (DOJ) or the US Attorney has declined to authorize criminal proceedings, the letter declining prosecution will be reviewed by the Special Agent in Charge (SAC) office that initiated the prosecution recommendation to determine whether the declination should be protested and the case resubmitted to DOJ. To be effective, resubmissions to DOJ should normally be based on additional evidence and/or legal arguments overlooked by DOJ. Where there is a disagreement in judgment, the resubmitted case should be particularly strong from an evidentiary standpoint or be of significant import to the tax enforcement program.

  2. In addition, the fact that DOJ notifies the taxpayer that the matter has been returned to Criminal Investigation at the time of the declination will not preclude a resubmission of the matter, or the subsequent prosecution of the case if prosecution is warranted. Taxpayers who contact either Criminal Investigation or the Criminal Tax attorney following the receipt of such notification should be advised that the matter is still under consideration for prosecution if a resubmission is contemplated, or that the case has been (or will be) returned to the Service for civil disposition as appropriate.

  3. When the SAC determines resubmission is appropriate, the case will be returned to the Criminal Tax attorney for review and evaluation regarding a possible resubmission. The Criminal Tax attorney will notify the Area Counsel (CT) that he/she is in receipt of a resubmission. The Area Counsel (CT) will notify the Associate Chief Counsel (CT) of the resubmission.

  4. If after reviewing the case, the Criminal Tax attorney concurs with the SAC’s decision to resubmit the case, the complete case file will be transmitted to the Associate Chief Counsel (CT) for review and evaluation. If the Criminal Tax attorney disagrees with the prosecution recommendation, he/she will prepare a criminal evaluation memorandum and return the case to the SAC.

  5. The Associate Chief Counsel (CT) will review and evaluate the case and prepare a criminal evaluation memorandum. The criminal evaluation memorandum and the entire case file will be transmitted to the Director of Field Operations for coordination with the SAC.

38.3.1.2  (10-03-2007)
Assignments Requiring Associate Chief Counsel (Criminal Tax) Approval and/or Concurrence

  1. The following assignments require Associate Chief Counsel (CT) approval and/or concurrence:

    1. Criminal reference letters where the recommended violation is 18 U.S.C. §§ 1621, 1622, or 1623, involving perjury, subornation of perjury, or a false declaration occurring during the Tax Court proceedings require the signature of the Associate Chief Counsel (CT)

    2. Cases previously referred for prosecution and declined by the Tax Division or US Attorney should be submitted to the Associate Chief Counsel (CT) for consideration and evaluation of Criminal Investigation’s decision to resubmit the case to DOJ

    3. Grand Jury Investigation Requests or Expansions involving politically sensitive individuals as defined in CCDM 38.2.2.2.3 ( http://publish.no.irs.gov/getpdf.cgi?catnum=39138)

    4. Administrative Cases involving politically sensitive individuals as defined in CCDM 38.2.1.3.3 ( http://publish.no.irs.gov/getpdf.cgi?catnum=39136)

    5. Search Warrants directed at the premises owned, controlled or under the dominion of a subject or target of an investigation described in CCDM 38.1.1.3.1(5) ( http://publish.no.irs.gov/getpdf.cgi?catnum=39133)

    6. The authority to authorize forfeiture proceedings with respect to nonwagering IRC § 7302 forfeitures that do not solely relate to violations regarding the filing of Forms 8300 concerning the receipt of more than $10,000.00 cash by a trade or business pursuant to IRC § 6050I

    7. Final recommendations regarding petitions for remission or mitigation of forfeitures

38.3.1.3  (08-11-2004)
Prosecution Standards

  1. In order to concur with Criminal Investigation’s criminal prosecution recommendation, the evidence must be sufficient to establish guilt beyond a reasonable doubt and a reasonable probability of conviction must exist.

  2. All the facts and circumstances must be considered when reviewing a criminal tax case. Consideration must be given to various factors, including but not limited to whether a voluntary disclosure was made, whether dual or successive prosecution exists, the health, age and mental condition of the taxpayer and whether solicitation of returns has occurred. The presence of any of the foregoing may impact on willfulness and significantly impair or eliminate the probability of conviction. These factors should be considered as early as possible in each case (e.g., prereferral, inventory review) to avoid unnecessary utilization of resources. If any of the above factors is present in a criminal case, it must be discussed thoroughly in the criminal evaluation memorandum.

38.3.1.3.1  (08-11-2004)
Voluntary Disclosure Practice

  1. It is currently the practice of the IRS that a voluntary disclosure will be considered along with all other factors in the investigation in determining whether criminal prosecution will be recommended. This voluntary disclosure practice creates no substantive or procedural rights for taxpayers, but rather is a matter of internal IRS practice, provided solely for guidance to IRS personnel. Taxpayers cannot rely on the fact that other similarly situated taxpayers may not have been recommended for criminal prosecution.

  2. A voluntary disclosure will not automatically guarantee immunity from prosecution; however, a voluntary disclosure may result in prosecution not being recommended. This practice does not apply to taxpayers with illegal source income.

  3. A voluntary disclosure occurs when the communication is truthful, timely, and complete, and when:

    1. The taxpayer shows a willingness to cooperate (and does in fact cooperate) with the IRS in determining his or her correct tax liability; and

    2. The taxpayer makes good faith arrangements with the IRS to pay in full the tax, interest, and any penalties determined by the IRS to be applicable

  4. A disclosure is timely if it is received before:

    1. The IRS has initiated a civil examination or criminal investigation of the taxpayer, or has notified the taxpayer that it intends to commence such an examination or investigation

    2. The IRS has received information from a third party (e.g., informant, other governmental agency, or the media) alerting the IRS to the specific taxpayer’s noncompliance

    3. The IRS has initiated a civil examination or criminal investigation that is directly related to the specific liability of the taxpayer

    4. The IRS has acquired information directly related to the specific liability of the taxpayer from a criminal enforcement action (e.g., search warrant, grand jury subpoena)

  5. Any taxpayer who contacts the IRS in person or through a representative regarding voluntary disclosure will be directed to Criminal Investigation for evaluation of the disclosure. Special agents are encouraged to consult Area Counsel on voluntary disclosure issues.

  6. Examples of voluntary disclosures include:

    a. A letter from an attorney that encloses amended returns from a client which are complete and accurate (reporting legal source income omitted from the original returns), which offers to pay the tax, interest, and any penalties determined by the IRS to be applicable in full and which meets the timeliness standard set forth above. This is a voluntary disclosure because all elements of (3) above are met.
    b. A disclosure made by a taxpayer of omitted income facilitated through a barter exchange after the IRS has announced that it has begun a civil compliance project targeting barter exchanges; however the IRS has not yet commenced an examination or investigation of the taxpayer or notified the taxpayer of its intention to do so. In addition, the taxpayer files complete and accurate amended returns and makes arrangements with the IRS to pay in full, the tax, interest, and any penalties determined by the IRS to be applicable. This is a voluntary disclosure because the civil compliance project involving barter exchanges does not yet directly relate to the specific liability of the taxpayer and because all other elements of (3) above are met.
    c. A disclosure made by a taxpayer of omitted income facilitated through a widely promoted scheme which the IRS has begun a civil compliance project and already obtained information that might lead to an examination of the taxpayer; however, the IRS has not yet commenced an examination or investigation of the taxpayer or notified the taxpayer of its intent to do so. In addition, the taxpayer files complete and accurate returns and makes arrangements with the IRS to pay in full, the tax, interest, and any penalties determined by the IRS to be applicable. This is a voluntary disclosure because the civil compliance project involving the scheme does not yet directly relate to the specific liability of the taxpayer and because all other elements of (3) above are met.
    d. A disclosure made by an individual who has not filed tax returns after the individual has received a notice stating that the IRS has no record of receiving a return for a particular year and inquiring into whether the taxpayer filed a return for that year. The individual files complete and accurate returns and makes arrangements with the IRS to pay the tax, interest, and any penalties determined by the IRS to be applicable in full. This is a voluntary disclosure because the IRS has not yet commenced an examination or investigation of the taxpayer or notified the taxpayer of its intent to do so and because all other elements of (3) above are met.

  7. Examples of what are not voluntary disclosures include:

    a. A letter from an attorney stating his or her client, who wishes to remain anonymous, wants to resolve his or her tax liability. This is not a voluntary disclosure until the identity of the taxpayer is disclosed and all other elements of (3) above have been met.
    b. A disclosure made by a taxpayer who is under grand jury investigation. This is not a voluntary disclosure because the taxpayer is already under criminal investigation. The conclusion would be the same whether or not the taxpayer knew of the grand jury investigation.
    c. A disclosure made by a taxpayer, who is not currently under examination or investigation, of omitted gross receipts from a partnership, but whose partner is already under investigation for omitted income skimmed from the partnership. This is not a voluntary disclosure because the IRS has already initiated an investigation that is directly related to the specific liability of this taxpayer. The conclusion would be the same whether or not the taxpayer knew of the ongoing investigation.
    d. A disclosure made by a taxpayer, who is not currently under examination or investigation, of omitted constructive dividends received from a corporation that is currently under examination. This is not a voluntary disclosure because the IRS has already initiated an examination that is directly related to the specific liability of this taxpayer. The conclusion would be the same whether or not the taxpayer knew of the ongoing examination.
    e. A disclosure made by a taxpayer after an employee has contacted the IRS regarding the taxpayer’s double set of books. This is not a voluntary disclosure even if no examination or investigation has yet commenced because the IRS has already been informed by the third party of the specific taxpayer’s noncompliance. The conclusion would be the same whether or not the taxpayer knew of the informant’s contact with the IRS.

38.3.1.4  (08-11-2004)
Dual and Successive Prosecution

  1. DOJ’s Dual Prosecution Policy. The dual prosecution policy precludes the initiation or continuation of a federal prosecution following a state prosecution based substantially on the same act or acts unless there is a compelling federal interest supporting the dual prosecution. US Attorneys’ Manual (USAM), Sec. 9-2.031.

  2. DOJ’s Successive Prosecution Policy. The successive prosecution policy applies when there has been a prior federal prosecution based substantially on the same act or acts unless there is a compelling federal interest supporting the successive prosecution. USAM, 9-2.031.

38.3.1.4.1  (08-11-2004)
Application of the Dual and Successive Prosecution Policies

  1. If either policy is applicable, prosecution will not be initiated without prior approval of the Assistant Attorney General, Tax Division.

  2. The policies:

    1. Apply whenever the underlying acts or transactions have been the subject of a prior criminal proceeding to which jeopardy attached;

    2. Are not terminated upon the filing of an indictment or criminal information; and

    3. Are not influenced by the fact that reversal of the earlier conviction is a possibility.

  3. Whenever the Solicitor General concludes that either the dual or successive prosecution policies has been violated, a motion will be filed requesting that the judgment of conviction be vacated.

  4. The foregoing reflects:

    1. DOJ, under its dual or successive prosecution procedures, evaluates all IRS recommendations for prosecution in light of any state and federal convictions of the taxpayer occurring before the criminal tax trial is commenced or guilty plea accepted concerning conduct that may also constitute the criminal tax offense;

    2. DOJ will probably decline a criminal tax prosecution if the taxpayer is already serving a long jail sentence on any matter;

    3. Absent compelling reasons, DOJ will not institute prosecution where the taxpayer has previously been convicted for the same transaction (i.e., where the unreported income in the proposed criminal tax case was derived from bribery, for which the taxpayer has been convicted);

  5. In applying its dual or successive prosecution policy, the Tax Division has asserted that it considers such matters as the similarity in the transaction(s) in the earlier conviction and the criminal tax case; the appropriateness of the punishment in connection with the prior conviction; its deterrent effect; and, where appropriate, the appellate status of the prior conviction.

38.3.1.4.2  (08-11-2004)
Exceptions to the Dual and Successive Prosecution Policies

  1. Prosecution of a case having dual or successive prosecution implications is not necessarily prohibited if the Assistant Attorney General, Tax Division, concludes that the prior proceeding left substantial federal interests demonstrably unvindicated.

38.3.1.4.3  (08-11-2004)
Review of Dual and Successive Prosecution during Investigative Stage

  1. The procedures outlined below are not meant to preclude the use of informal prereferral consultation between Criminal Investigation and the Criminal Tax attorney.

  2. When Criminal Investigation identifies the existence or potential existence of dual and/or successive prosecution issues, Criminal Investigation may ask the Criminal Tax attorney for prereferral legal assistance. Sufficient facts should be provided to enable the Criminal Tax attorney to determine whether dual or successive prosecution policy considerations apply and if they do apply, whether there are, nevertheless, compelling reasons to prosecute the criminal tax offense.

  3. Criminal Tax Attorney Procedures during the Investigatory Stage. Upon receipt, the Criminal Tax attorney will review the request and determine whether the dual or successive prosecution policy considerations apply and so advise the SAC in writing. The Criminal Tax attorney is encouraged to work with Criminal Investigation in the early detection and resolution of dual or successive prosecution issues.

  4. DOJ’s Dual and/or Successive Prosecution Prereferral Opinions. Where compelling reasons exist warranting prosecution, notwithstanding the existence of dual and/or successive prosecution issues, opinions pertaining to the specific case may be obtained from the Tax Division. The Criminal Tax attorney prepares a written request with relevant documentation attached, for the SAC’s signature, to the appropriate Chief, [Region] Criminal Enforcement Section, Tax Division, for its opinion on the application of the policy. Extreme care will be exercised so that only material meeting the tests set forth in IRC § 6103(h)(2) is forwarded to the Tax Division. The Tax Division has agreed to this procedure and will give expeditious consideration to requests for opinions.

38.3.1.4.4  (08-11-2004)
Reviewing Cases with Dual or Successive Prosecution Considerations

  1. When present in a case, the Criminal Tax attorney will discuss the dual or successive prosecution considerations in the criminal evaluation memorandum. The discussion will address whether or not compelling reasons exist warranting prosecution.

38.3.1.5  (08-11-2004)
Health, Age, and Mental Condition

  1. The taxpayer’s health, age and mental condition (not rising to the level of insanity), both at the time of the alleged offense and at the time of the referral for prosecution, are among the factors to be considered when reviewing a prosecution recommendation.

  2. The criminal evaluation memorandum must analyze and discuss these factors to the extent they affect willfulness and the probability of conviction.

38.3.1.6  (08-11-2004)
Solicitation of Returns

  1. Solicitation generally consists of an oral or written request for the filing of specific returns by a revenue agent and/or officer, or a summons for information by which a return can be prepared if the taxpayer understands that a return could be filed in lieu of specific compliance with the summons.

  2. DOJ considers the active solicitation of a return as detrimental to a criminal case in that the defense can be expected to argue that the prosecution was instituted because of the unsuccessful attempt to dispose of the matter civilly and as a substitute for unsuccessful collection. Solicitation of a return where no return is subsequently filed is not considered to detract from prosecution. When solicitation is present in a criminal case, the Criminal Tax attorney must discuss its possible impact on the successful prosecution of the case in the criminal evaluation memorandum.

38.3.1.7  (08-11-2004)
Fugitive and Absentee Taxpayers

  1. There are a number of problems in referring a case where the taxpayer is either outside the United States or a fugitive. DOJ employs the following presumptions in determining whether such a case merits indictment:

    1. If the party is a United States citizen, DOJ will assume he/she has some ties with the United States that will induce him/her to return.

    2. If the party is an alien, the presumption will be against his/her returning to the United States.

  2. When reviewing prosecution recommendations involving a fugitive taxpayer, the Criminal Tax attorney will look into all the facts and circumstances, including the taxpayer’s business interests and family ties in the United States, and evidence supporting and/or rebutting either of the presumptions should be discussed in the criminal evaluation memorandum.

38.3.1.8  (10-03-2007)
Balancing Criminal and Civil Aspects

  1. The criminal and civil aspects of a case do not present an either/or proposition. Rather, the criminal and civil aspects of a case should be balanced to the extent possible without prejudicing the criminal prosecution.

  2. While a case is under criminal investigation, and until the criminal aspects of the case are closed, all proposed civil actions must be coordinated with the Criminal Tax attorney/manager. Regardless of which Operating Division generates the request, the Criminal Tax attorney/manager will consult with all necessary civil attorneys/managers, as well as Criminal Investigation and/or DOJ. If agreement is reached between the parties, the Criminal Tax attorney/manager will provide to the requesting client the Counsel position regarding whether and to what extent any civil action may take place prior to the time the criminal aspects of the case are closed. If agreement is not reached, then the matter will be reconciled using normal reconciliation procedures. See CCDM 31.1.4.4 ( http://publish.no.irs.gov/getpdf.cgi?catnum=29650).

  3. Examples of proposed civil actions that require coordination with the Criminal Tax attorney include without limitation:

    • contact with the criminal target

    • solicitation of consents to extend the civil statute of limitations

    • assessments, including jeopardy and termination assessments

    • issuance of notices of deficiency

    • filing notices of federal tax lien

    • issuance of summonses

    • solicitation of collection waivers

    • any collection action

    • eliminating or partially conceding the fraud penalty

    • investigation of offers in compromise

  4. Once the criminal aspects of a case have been concluded, proposed civil actions should be discussed with the Area Counsel (CT). All civil actions, including reduction of deficiency figures below the criminal figures, will be determined by the appropriate civil Associate Area Counsel.

38.3.1.9  (08-11-2004)
Exhibits

  1. The exhibits for Part 38 have been consolidated for ease of use.

Exhibit 38.3.1-1  (08-11-2004)
Search Warrant Check Sheet

1. TARGET(s)
2. VIOLATION(s)
3. PREMISES TO BE SEARCHED
  a. Identified (address and location description)
    i. Business or corporate office(s)
    ii. Residence
    iii. Other (specify/describe)
  b. Are owned or controlled by
    i. Accountant
    ii. Lawyer
    iii. Physician
    iv. Public official (federal, state, local, or foreign) or political candidate
    v. Member of the clergy
    vi. News media official (electronic or printed)
    vii. Labor union official
    viii. Official of an organization deemed to be exempt under I.R.C. § 501(c) or (d)
    ix. Disinterested third parties
4. AFFIDAVIT IDENTIFIES IN NONCONCLUSORY TERMS KEY FACTS ESTABLISHING PROBABLE CAUSE TO BELIEVE:
  a. Specified crime(s) has been (or is being) committed
    i. All elements of the offense established
    ii. If conspiracy (18 U.S.C. § 371) alleged, two or more persons are party to the agreement to commit the offense or defraud the U.S.
  b. There is evidence of the crime, e.g., records
    i. Records sought
      1. have nexus to crime alleged and
      2. are described with requisite particularity (No laundry lists; no general subpoena-type lists; Appropriate accounting terminology used when describing books and records)
    ii. Clearly defined temporal limitations
      1. Tax years/periods and/or calendar years at issue
      2. Tailored to statute of limitations
    iii. Records clearly limited to targets and related entities specifically mentioned in affidavit
    iv. Computers
      1. Computer expert justification for seizure
      2. Computer expert procedure to be followed
      3. Computer system/components identified w/particularity
  c. Evidence sought is presently on the premises to be searched
    i. Observations of Informant/Witness/Agent or Admissions
      1. Reliability
      2. Specificity
      3. Not over 6 months old
    ii. Accurate description/depiction of where the evidence is located and how maintained
    iii. Staleness
      1. History of owner’s possession of evidence/records sought
      2. Relevant retention period(s) for evidence/records sought
      3. Likelihood evidence/records sought are still on premises to be searched
5. INFORMANTS AND WITNESSES
  a. Basis of Knowledge/Credibility/Reliability
    i. Extent of personal, actual knowledge of relevant information
    ii. Criminal/informant history
    iii. Informant reward claim
  b. Independent, substantial corroboration
6. REASONS WHY LESS INTRUSIVE MEANS (E.G., SUMMONS, SUBPOENA) ARE NOT BEING USED ARE ADEQUATELY DISCUSSED
7. POTENTIAL PROBLEMS AND PROPOSED RESOLUTIONS
  a. Privileges and privilege team
  b. Use of permeated-with-fraud theory
  c. Other (specify/describe)
8. MEMO TO FILE
  a. I have reviewed this search warrant application for legal sufficiency and compliance with IRS policy and procedure and conclude:
    i. There are sufficient facts to establish probable cause to believe:
      1. The target(s) has committed (or is committing) the alleged violations (specify)
      2. The records sought are likely to contain evidence of such crimes.
      3. The records sought are presently located on the premises to be searched.
    ii. There is sufficient explanation as to why other less intrusive means to obtain this evidence/records are not being utilized.

Exhibit 38.3.1-2  (08-11-2004)
Compulsion Order

Compulsion Order
18 U.S.C. §§ 6002, 6004
Internal Revenue Service Proceeding
Investigating the Tax Liability of:
Name of subject of investigation
Address
At the request of the Special Agent in Charge, [City], and the Director of Field Operations [Area], submitted with supporting documentation sufficient to show to my satisfaction:
1. That [Name of witness] has been summonsed to testify or provide other information to the Internal Revenue Service pursuant to 26 U.S.C. § 7602; and
2. That [Name of witness] has refused to testify or provide other information on the basis of his/her privilege against self-incrimination; and
3. That, in the judgment of the Chief, Criminal Investigation, the testimony or other information from [Name of witness] may be necessary to the public interest; and
4. That the aforesaid request has been approved by the Assistant Attorney General of the Tax Division of the Department of Justice, pursuant to the authority vested in him/her by 18 U.S.C. § 6004 and 28 C.F.R. 0.175.
NOW, THEREFORE, IT IS ORDERED, pursuant to 18 U.S.C. § 6002 that [Name of witness] gives testimony or provide other information that he/she refuses to give or provide on the basis of his/her privilege against self-incrimination as to all matters about which he/she may be interrogated during the course of the Internal Revenue Service proceedings.
This order shall become effective only if after the date of this order [Name of witness] refuses to testify or provide other information on the basis of his/her privilege against self-incrimination.
That pursuant to 18 U.S.C. § 6004, [Name of witness] be granted use immunity in any criminal case, except a prosecution for giving a false statement or otherwise failing to comply with this order.
This order is issued with the approval of the Assistant Attorney General, Tax Division, Department of Justice by the Chief, Criminal Investigation, Internal Revenue Service, pursuant to the authority delegated to him/her by 18 U.S.C. § 6004, Treasury Department Order No. 150-88, dated November 24, 1977 and Delegation Order 169 (as revised).
  UNDERSCORE
[Name]
Chief, Criminal Investigation
Internal Revenue Service
UNDERSCORE
Date
 

Exhibit 38.3.1-3  (08-11-2004)
Act of Production Compulsion Order

Compulsion Order
18 U.S.C. §§ 6002, 6004
Internal Revenue Service Proceeding
Investigating the Tax Liability of:
Name of subject of investigation
Address
At the request of the Special Agent in Charge [City], and the Director of Field Operations [Area], submitted with supporting documentation sufficient to show to my satisfaction:
1. That [Name] has been summonsed to produce the books and records of [Name], to the Internal Revenue Service pursuant to 26 U.S.C. § 7602; and
2. That [Name] has refused to produce these books and records on the basis of his/her privilege against self-incrimination; and
3. That, in the judgment of the Chief, Criminal Investigation, the production of these books and records from [Name] may be necessary to the public interest; and
4. That the aforesaid request has been approved by the Assistant Attorney General of the Tax Division of the Department of Justice, pursuant to the authority vested in him/her by 18 U.S.C. § 6004 and 28 C.F.R. 0.175.
NOW, THEREFORE, IT IS ORDERED, pursuant to 18 U.S.C. § 6002 that [Name] produce the books and records of [Name] which he/she refuses to give or provide on the basis of his/her privilege against self-incrimination during the course of the Internal Revenue Service proceeding.
This order shall become effective only if after the date of this order [Name] refuses to produce the books and records on the basis of his/her privilege against self-incrimination.
That pursuant to 18 U.S.C. § 6004, [Name] be granted use immunity relative to the act of production of books and records of [Name], in any criminal case, except a prosecution for perjury, giving a false statement or otherwise failing to comply with this order.
This order is issued with the approval of the Assistant Attorney General, Tax Division, Department of Justice by the Chief, Criminal Investigation, Internal Revenue Service, pursuant to the authority delegated to him/her by 18 U.S.C. § 6004, Treasury Department Order No. 150-88, dated November 24, 1977 and Delegation Order 169 (as revised).
  UNDERSCORE
[Name]
Chief, Criminal Investigation
Internal Revenue Service
UNDERSCORE
Date
 

Exhibit 38.3.1-4  (08-11-2004)
Memorandum of Law and Fact to the SAC Re: Administrative Title 18 Forfeitures

      [Date]  
        [CASE No.]
[Name]
         
MEMORANDUM FOR SPECIAL AGENT IN CHARGE, [City] FIELD OFFICE
  Attn: Supervisory Special Agent [Name]
  Special Agent [Name]
FROM: [Name]
Attorney [City]
SUBJECT: Proposed Administrative Forfeiture of ___ seized at
[Place of Seizure]
Property Owner: ___
AFTRAK No. ____
On [date], you forwarded to us a Form 4008, Seized Property Report, indicating that the above-described property had been seized on [date], pursuant to a seizure warrant issued by the United States in the district of ___ for forfeiture under 18 U.S.C. § 981(a)(1)(A) as property traceable to property involved in financial and monetary transactions in violation of 18 U.S.C. §§ 1956/1957.
Based on our review of this matter, we conclude there is a basis for civil forfeiture of this property and advise you to send notice of intent to administratively forfeit that property to all parties having an interest therein no later than [date that is 60 days from date of seizure] .
FACTS
[Set forth all relevant information/facts on the underlying scheme, how Criminal Investigation became aware of the scheme, and the relationship of the seized property to the scheme, i.e., the basis of seizure.]
[Set forth relevant facts specific to alleged violation, for example:
For violations of 31 U.S.C. § 5324(a), set out facts concerning pattern of deposits or withdrawals, such as several deposits on same day to different accounts, or same account at different branches or different tellers, knowledge of Bank Secrecy Act requirements, how the property was involved in or traceable to structuring activity.
For violations of 18 U.S.C. §§ 1956/1957, set out information regarding underlying criminal activity. How the property constitutes proceeds of that activity, and information regarding the financial or monetary transaction.]
[CASE No.]      
LAW AND ANALYSIS
[Set out 18 U.S.C. § 981(a)(1)(A), (or 31 U.S.C. § 5317(c)) and language of predicate statute.
[If a violation of 31 U.S.C. § 5324(a), discuss how pattern of transactions constitutes structuring. How is this property involved in the structuring violation, or traceable to property involved in such activity? If there has been deposit and withdrawal activity in the account, does 18 U.S.C. § 984 apply and allow forfeiture.]
[If theory is that property is forfeitable as involved in or traceable to a violation of § 1956, discuss what evidence indicates:
  The property constitutes the proceeds of specified unlawful activity (SUA), and what is the SUA? How does this property constitute the proceeds of it? What is the financial transaction or attempted transaction? What is the intent, specified in § 1956(a)(1), with which the transaction was conducted?]
[If theory is that property is forfeitable as involved in or traceable to a violation of § 1957, discuss what evidence indicates:
  What is the monetary transaction? How is the property criminally derived? Is the value of the property greater that $10,000? What is the financial institution?]
[How is the property involved in a transaction or attempted transaction that violates § 1956 or § 1957, or how is it traceable to property so involved?]
[Discuss Government’s burden of proof (preponderance of the evidence), analyze available evidence in light of this burden, and the elements of proof for forfeiture.]
[Discuss applicable defenses, potential Constitutional bases for challenge, and impact of mitigation guidelines if applicable, e.g., innocent owners defenses and the proportionality of civil forfeiture (i.e., excessive fines determination). If appropriate, discuss elapsed time since seizure in context of statutory requirements under 18 U.S.C. § 983.]
[If the Service lacks a legal or factual basis to forfeit property seized, set forth reasons why the seized property cannot be forfeited and discuss case law that bears on the issue. For example: the Government cannot prove a transaction occurred with the SUA proceeds. If an alternative forfeiture theory could work with additional investigation, give guidance and offer assistance.]
CONCLUSION
[Set out the steps to perfect forfeiture, including requirement to publish an advertisement advising of the seizure and pending forfeiture, the time periods for filing a claim or petition for remission or mitigation of forfeiture and steps to take should one be filed. Advise that Criminal Investigation should contact Counsel if a Claim, a Petition of Remission or Mitigation, or an offer in compromise is received.]
[Case No.]      
[If memorandum recommends return of the property, conclude with recommendation on deficiency of proposed forfeiture and need to return seized property.]
As indicated above, we find there is sufficient evidence to sustain forfeiture of the subject property by a preponderance of the evidence. Accordingly, this office recommends you act under Delegation Order No. 158 to perfect administrative forfeiture by taking the steps required for such perfection.
If you have any questions or concerns about this matter, please contact the undersigned at (123) 456-7890.
        [Name]
Area Counsel [City]
Criminal Tax
         
        _________
[Attorney Name]
Criminal Tax, [City]
         
1cc: Division Counsel/Associate Chief Counsel (Criminal Tax), Washington, D.C.
2cc: Supervisory Special Agent
1cc: Special Agent

Exhibit 38.3.1-5  (08-11-2004)
Memorandum of Law and Fact to the SAC Re: Administrative Title 26 Forfeitures

      [Date]  
        [CASE No.]
[Name]
MEMORANDUM FOR SPECIAL AGENT IN CHARGE, [City] FIELD OFFICE
  Attn: Supervisory Special Agent [Name]
  Special Agent [Name]
FROM: [Name]
Attorney [City]
SUBJECT: Proposed Administrative Forfeiture of [Property] seized at
  [Place of Seizure]
  Property Owner: ___
  AFTRAK No. ___
On [date], you forwarded to us a Form 4008, Seized Property Report, indicating that the above-described property had been seized on [date], pursuant to a seizure warrant issued by the United States in the district of ___ for forfeiture under I.R.C. §§ 7301/7302 as property used or intended to be used in violation of the internal revenue laws.
Based on our review of this matter, we conclude there is a basis for civil forfeiture of this property and advise you to send notice of intent to administratively forfeit that property to all parties having an interest therein no later than [date that is 60 days from date of seizure].
FACTS
[Set forth all relevant information/facts on the underlying scheme, how Criminal Investigation became aware of the scheme, and the role of the seized property in the scheme, i.e., the basis of seizure.]
LAW AND ANALYSIS
[Set out language of I.R.C. § 7301 or 7302, as applicable, and case cites underlying principle that property used or intended for use to violate an internal revenue law or regulation is forfeitable. Set forth theory of "active aid," citing United States v. One 1954 Rolls Royce Silver Dawn, 777 F.3d 1358 (9th Cir. 1985). How does each particular seized item serve as an "active aid" in a violation of an internal revenue law or regulation.]
[Discuss Government’s burden of proof (preponderance of the evidence), analyze available evidence in light of this burden, and the elements of proof for forfeiture. How does each particular seized item serve as an "active aid" in a violation of an internal revenue law or regulation? If appropriate, discuss elapsed time since seizure in context of possible due process impact; four factor test from United States v. $8,850, 461 U.S. 555 (1983).]
[Case No.]
[If the Service lacks a legal or factual basis to forfeit property seized, set forth reasons why the seized property cannot be forfeited and discuss case law that bears on the issue. For example: the property cannot be considered an "active aid" in violation of the internal revenue law or regulation. If an alternative forfeiture theory could work with additional investigation, give guidance and offer assistance.]
CONCLUSION
[Set out the steps to perfect forfeiture, including requirement to publish an advertisement advising of the seizure and pending forfeiture, the time periods for filing a claim and cost bond or petition for remission or mitigation of forfeiture and steps to take should one be filed. Advise that Criminal Investigation should contact Counsel if a Claim and Cost Bond, a Petition of Remission or Mitigation, or an offer in compromise is received.]
[If memorandum recommends return of the property, conclude with recommendation on deficiency of proposed forfeiture and need to return seized property.]
As indicated above, we find there is sufficient evidence to sustain forfeiture of the subject property by a preponderance of the evidence. Accordingly, this office recommends you act under Delegation Order No. 157 to perfect administrative forfeiture by taking the steps required for such perfection. If you have any questions or concerns about this matter, please contact the undersigned at (123) 456-7890.
         
      ________
Area Counsel [(City]
Criminal Tax
 
        ________
[Attorney Name]
Criminal Tax, [City]
         
1cc: Division Counsel/Associate Chief Counsel (Criminal Tax), Washington, D.C.
2cc: Supervisory Special Agent
1cc: Special Agent

Exhibit 38.3.1-6  (08-11-2004)
Letter to Attorney Offering Conference

[Symbols]  
Ms. [Name]
Attorney at Law
[Address]
 
In re: [Name of Taxpayer]
[City]
 
Dear Ms. [Name]:  
This office has under consideration a recommendation that criminal proceedings be instituted against [Name of Taxpayer] for [criminal violation/statute] for the years ___ through ___, in violation of [cite statute]. Based on the information currently available, the additional income and tax for criminal purposes is ______ [list the amounts]. The ______ method of proof was used to determine the tax liabilities. Please note that the recommended charges, additional income and tax amounts, and method of proof are subject to change.
If you desire a conference in this matter, it will be held on [date] at [time], in my office which is located at [address]. Please contact this office before [date] indicating whether or not you plan to attend the conference. If you wish to contact me by telephone, my telephone number is [telephone number]. If you prefer, you may submit in writing any defenses or other information which you want this office to consider in lieu of a face-to-face meeting. Please forward any such information before the above conference date. Please note our review of this matter will not be delayed beyond the above conference date.
Please be advised that the conference is not an opportunity for discovery. Moreover, plea bargaining, civil settlement, negotiations and/or compromise of the tax liabilities involved will not be considered or discussed at this conference.
    Sincerely,
     
    ______
[Name]
Special Agent in Charge

Exhibit 38.3.1-7  (08-11-2004)
Letter to Taxpayer Offering Conference

[Symbols]  
[Taxpayer Name]
[Address]
 
Dear [Taxpayer Name]:  
This office has under consideration a recommendation that criminal proceedings be instituted against you for [criminal violation/statute] for the years ___ through ___, in violation of [cite statute]. Based on the information currently available, the additional income and tax for criminal purposes is ______ [list the amounts]. The ______ method of proof was used to determine the tax liabilities. Please note that the recommended charges, additional income and tax amounts, and method of proof are subject to change.
If you desire an opportunity to discuss these matters and present any information you think we should have when considering your case, a conference has been scheduled for [date] at [time] at [location]. Should you decide, you may be accompanied by counsel at the conference, or if you prefer, to be represented by counsel without appearing in person. Please note that the government will not provide counsel to represent you at this conference.
Please contact this office before [date] indicating whether or not you plan to attend the conference. If we do not hear from you by then, we will assume that you do not wish to attend a conference. If you wish to contact me by telephone, my number is [telephone number]. If you prefer, you may submit, in writing, any defenses or other information which you may want this office to consider in lieu of a face-to-face meeting. Please forward any such information before the above conference date. Please note our review process can not be delayed beyond the above conference date.
If you are to be represented by counsel, the Treasury Department’s Rules of Practice require such representative to file a proper power of attorney covering the years ___ through ___, together with a statement concerning his/her qualifications to practice. (Treasury Department Form 2848, Power of Attorney, is suggested for this purpose).
Please be advised that the conference is not an opportunity for discovery. Moreover, plea bargaining, civil settlement, negotiations and/or compromise of your tax liability will not be considered or discussed at this conference.
  Sincerely,
   
  ______
[Name]
Special Agent in Charge

Exhibit 38.3.1-8  (08-11-2004)
Sample Conference Outline

  [Special Agent’s Name]
[Revenue Agent’s Name]
CONFERENCE OUTLINE
FOR
Taxpayer’s Name
and Address
I. Description of Case:
An investigation conducted by Criminal Investigation has determined that [Taxpayer] willfully filed false income tax returns for each of the years 1985, 1986 and 1987.
II. Recommended Charges:
The Special Agent has recommended that [Taxpayer] be charged with three counts of violating I.R.C. § 7206(1). Section 7206(1) provides: "Any person who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration of perjury, and which he does not believe to be true and correct as to every material matter shall be guilty of a felony and upon conviction thereof, shall be fined not more than $250,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with costs of prosecution."
III. Method of Proof:
The specific items method of proof was used. This means that the agents documented specific items of income and expenses.
IV. Constitutional Warnings and Advice:
This conference is voluntary on your part, and on the part of your representative(s). Therefore, you or your representative(s) may terminate it at any time.
You, or your representative(s), may refuse to answer any questions or make any statements which may incriminate you, as provided by the Fifth Amendment of the United States Constitution. However, any statements made by you or on your behalf by your representative(s) may be used against you in any subsequent proceedings instituted by the Government. Do you understand these rights?
Please be advised that plea bargaining, civil settlement, negotiations and/or compromise of the tax liabilities involved will not be considered or discussed at this conference.
V. Processing Procedures:
The purpose of this conference is to aid the Government in determining whether prosecution will be recommended to DOJ. Therefore, it is an opportunity for you to present any evidence or information you have which you believe will influence the Government in its determination. However, even if prosecution is recommended, DOJ will make its own de novo review of the case. DOJ may also accept the case as submitted, if prosecution is recommended, in which instance the case will then be forwarded to the appropriate US Attorney for prosecution.
As a result of this conference today, prosecution may also be declined by this office, in which instance the case will not be sent to the DOJ, but rather will be returned to the IRS for civil processing.
Regardless of whether prosecution is recommended or declined by this office, you and/or your representatives will be notified by this office of our decision.
VI. Civil Figures:
Year Additional Tax Fraud Penalty Total Additional Tax & Penalties
1985  $16,156.17  $ 8,078.09  $ 24,234.26
1986  $25,927.71  $12,963.86  $ 38,891.57
1987 $36,476.22 $18,238.11 $ 54,714.33
  $76,560.10 $39,280.06 $117,840.16
These figures are only recommendations of the civil tax liabilities for the years in question. They are not necessarily the same as the criminal tax figures and, since they are only recommendations, are subject to change.
VII. Criminal Penalties
In the event that prosecution is recommended, the potential criminal penalties to which you would be subject if the recommended charges are sustained are:
1. Imprisonment: Up to three (3) years for each count, i.e., up to a maximum of nine (9) years;
AND/OR
2. Fine: Up to $250,000 [$500,000 if corporation] for each count, i.e., up to a maximum of $750,000 [$1,500,000 if corporation].
VIII. General Considerations:
You should also know that although this conference today will be directed to the specific charges recommended which have already been discussed, this office is in no way limited to such charges, and may, in appropriate cases, recommend other charges as well. Therefore, bearing this fact in mind, as well as your Constitutional right to remain silent, we may proceed with a discussion of the case as recommended. I will be making notes of this discussion, and you or your representative may also make notes if you wish.

Exhibit 38.3.1-9  (08-11-2004)
Sample Conference Memorandum

(Symbols)
CONFERENCE MEMORANDUM
In re: John Doe
Los Angeles, California
(Date)
APPEARANCES:
    For Taxpayer: [Name]
Attorney
 
      John Doe
Taxpayer
 
    For Government: [Name]
Special Agent in Charge
 
      [Name]
Criminal Tax Attorney
 
  A conference was held in the above-captioned case on [Date] at [Time]. This was the first conference held in this office in this matter. A power of attorney and declaration of authority to practice has previously been filed with the Service authorizing [Attorney representing taxpayer] to represent John Doe before the Service.
  [Attorney representing taxpayer] informed [SAC] that his client had been informed of his Miranda warnings and knew his rights. [SAC] then informed [Attorney representing taxpayer] of the proposed charges, years, method of proof, and civil figures.
  The taxpayer was reminded that plea bargaining, civil settlement, negotiations and/or compromise of the tax liabilities involved would not be considered or discussed at this conference. In addition, the taxpayer was informed of the recommended criminal charges, years and method of proof being considered, and that if the SAC determines those charges, or others, are appropriate, a prosecution recommendation will be forwarded to DOJ for its consideration. If DOJ concludes that criminal prosecution is warranted, the matter will then be forwarded to the US Attorney’s office for indictment. The taxpayer was also informed of his/her conference opportunity with DOJ in Washington, D.C. Finally, the taxpayer was told that if the SAC concludes prosecution is not warranted, he/she will be notified, in writing, that his/her case is being returned to IRS for civil consideration.
  [Discuss who said what.]
  The conference was terminated at [Time].
        ______
[Name]
Special Agent in Charge
        ______
[Name]
Criminal Tax Attorney
         
NOTED: ______
     Date dictated
______
[Name]
Area Counsel

Exhibit 38.3.1-10  (10-03-2007)
Sample Criminal Evaluation Memorandum

[CAUTION: CONTAINS GRAND JURY INFORMATION] or
This heading should appear if the CEM contains grand jury information.
[NOTE: COUNSEL HAS CLASSIFIED THIS CASE AS NON-COMPLEX CASE]
This heading should appear if the administrative case is designated non-complex.
CC:CT:XXX:- -03   Date
MEMORANDUM FOR SPECIAL AGENT IN CHARGE, XX FIELD OFFICE
FROM: [Criminal Tax Attorney/Senior Counsel], XX POD
SUBJECT: Evaluation of SAR and Exhibits [Administrative or Grand Jury] Tax Case
CRIMINAL SUBJECTS(S)
    Name
Address
SSN
    Related Case(s) If related cases(s), provide the names(s) of the criminal subject(s).
COUNSEL'S RECOMMENDATION
  Charge(s) Year(s)   Count(s)
If Counsel believes prosecution is warranted, one of these sentences should follow:
This recommendation concurs with the Special Agent's recommendation.
This recommendation differs from the Special Agent's recommendation and will be explained below.
If Counsel believes prosecution is not warranted, then this sentence should follow "COUNSEL'S RECOMMENDATION" , and there is no need for "Charge(s), Year(s), Count(s)" :
In our opinion, prosecution is not warranted in this matter.
  Venue Statute of Limitations
Bold the Statute of Limitations date if imminent.
EXECUTIVE SUMMARY
In a nutshell, either in a short paragraph or using bullets, summarize the subject's actions that give rise to the criminal prosecution recommendation as well as relevant information important to the reader of this document. For instance, include or note: the amount of tax dollars (including relevant conduct); harm to the government; the indirect method of proof; an expiring statute of limitations; investigative techniques; and the technical tax issues(s). For example:
  • Questionable Return Preparer
• Undercover Investigation
• Twenty-five false returns
• $250,000 of tax harm including relevant conduct
CRIMINAL VIOLATIONS(S) AND DISCUSSION OF THE LAW
Elements of the offense

Discuss the principal evidence available to establish the elements of the criminal offense(s). Please cite Supreme Counsel and/or your specific Circuit Court law, when applicable.
Element #1
Use subheadings for each element of the proposed offense. Set forth items of evidence with bullets to separate and give the reader and idea of how many exhibits/how much evidence there is on a given element.
  • EVIDENCE
Element #2
  • EVIDENCE
Element #3
  • EVIDENCE
Discuss any legal, procedural, and/or policy issues regarding: (1) venue; (2) statute of limitations; (3) how the investigation originated (when and by whom the taxpayer was first contacted); (4) investigative techniques; (5) aspects of personal history of significance to the case; age, marital status during the years at issue (especially in community property states), health (if a major problem is known), education and criminal record.
TAX LOSS, COMPUTATIONS, METHOD OF PROOF AND TECHNICAL TAX ISSUES
Every case may not have a Technical Tax Issue, so this heading will only be utilized when applicable. Note the tax loss, computations and method of proof. When an indirect method of proof is utilized, additional discussion on the method of proof is warranted. When warranted, provide a further discussion. Discuss any tax or tax-related issues or any technical tax issues, e.g., a trust fraud case would include a discussion of the issue of whether a trust was a sham for tax purposes; a case involving a tax shelter promotion would discuss the merits of underlying shelter; etc. Other technical tax issues include: providing the actual line item of the return which is false; Greenberg problem in both specific items and indirect method of proof cases; earnings and profits in corporate diversion cases; failure to file involving one married taxpayer (joint or separate tax rates/community property). Also discuss coordination with other Counsel functions.
CURRENT LIFESTYLE
Bring the case up-to-date. Update information relative to each subject's current lifestyle; job history (is the subject working on the same job); filing history (the recommended offense may be failure to file, but the subject has since been current in filing tax returns); audit history (i.e., was the subject cooperative or obstructive during prior contact with the Service); etc. Note, if this information is relevant to the case and it is not readily available to the agent, then discuss this in the OTHER ISSUES AND SUGGESTIONS section.
DEFENSES
Discuss defense contentions or reasonably probable defenses and available rebuttal evidence. When no defenses are foreseeable, so note.
OTHER ISSUES AND SUGGESTIONS
This heading is optional and should be utilized when applicable.
Discuss problems/issues/concerns with the case. For example, a key witness may have died. Discuss suggestions where the case can be improved. For example, there is an additional witness that should be interviewed; the accountant/return preparer’s testimony may need to be tied down in the grand jury; additional expenses may need to be investigated.
SENTENCING
In either a short paragraph or by using bullets, summarize sentencing, including the base offense level, specific offense characteristics, and proposed adjustments for aggravating or mitigating offense related conduct. For example:
  • TAX LOSS - $250,000 (includes relevant conduct)
• BASE OFFENSE LEVEL - 18 (2001 Book)
• NOTE POSSIBLE ENHANCEMENTS and/or REDUCTIONS
CONCLUSION
After careful consideration, we are [convinced/not convinced] that the evidence relied upon to support the recommended prosecution is sufficient to indicate guilt beyond a reasonable doubt and that there [is/is not] a reasonable probability of conviction.
We are closing our file in this case as of the date of this memorandum. Please be advised that the "referral" of this matter will remain in effect until terminated within the meaning of I.R.C. § 7602(d)(2)(B).
Should you have any questions about this memorandum, please contact the undersigned at xxx-xxx-xxxx.
       
      XXXXXXXXXXXX
Area Counsel (XXX), Criminal Tax
    By: _________
NAME
Criminal Tax Attorney

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