Taxpayers and counsel will interact with government personnel in various situations during the course of a criminal tax investigation or prosecution. In a previous article, we discussed how counsel should behave in IRS conferences and in correspondence with IRS or DOJ personnel. In this article, we will look into some additional interactions between government personnel and counsel.

Defense Strategies for Grand Jury Appearances

Counsel cannot follow their client into the Grand Jury room, so preparing the client for the Grand Jury in a tax crime case is an extremely important defense strategy. At the outset, the client should be counseled to remember to remain calm, follow counsel’s advice, and not to be intimidated by the prosecutor’s aggressive questioning. A witness being questioned by a Grand Jury should bring a pen and paper into the room to take notes. Counsel should also provide the witness with a prepared statement to read in the event that the taxpayer needs to assert any applicable privileges or objects to a question based on perceived impropriety. The witness may also take notes documenting the lines of inquiry made by the prosecutor as well as the answers provided. When the Grand Jury questioning begins, the witness does have the right to halt the process and consult with counsel if the questioning begins to drift into areas not previously reviewed with counsel.

When appearing in front of a grand jury, a witness should remember to listen carefully to each question, think before answering, be sincere and truthful, refrain from volunteering or speculating, and refrain from answering questions which are unclear or not understood completely. If a witness must appear before a Grand Jury on numerous occasions, he or she runs the risk of giving inconsistent answers on similar questions or topics. In such a situation, it is wise to seek out a transcript of prior testimony to alleviate these concerns.

Producing Documents to a Grand Jury in Criminal Tax Cases

Sometimes, taxpayers and other witnesses are served with subpoenas duces tecum and must produce documents in response to a Grand Jury. Counsel should be involved in reviewing the document request, carefully reviewing the language to determine exactly what documents are being requested under the scope of the subpoena. A client or witness served with a subpoena document request should never produce anything which is not explicitly demanded by the subpoena. At the same time, counsel should be keenly aware of the possibility that a client will submit false documents to the Grand Jury. These false documents may be prepared with knowledge of pending tax litigation before or after the service of the subpoena. Regardless, if counsel becomes aware of the client submitting false documents, either accidently or intentionally, he should immediately admonish the client against making any affirmative statements about the documents. Witnesses should also be aware that moving records or failing to produce documents in response to a subpoena can result in criminal consequences. Under 18 USC § 1512(c)(1), removing documents with the intent to make them unavailable for a prosecution can result in an obstruction charge and various other forms of record retention or production misconduct charges.

Things to Consider when Making an Early Guilty Plea

When the taxpayer lacks a viable defense, there may be a temptation to make an early guilty plea in an attempt to resolve of the case in a speedy fashion. This may be beneficial for clients under the Sentencing Guidelines, but there are also some drawbacks which must be considered before a plea is made. In order to make an early plea, the taxpayer must be willing to admit guilt to the offense charged. The proposed guilty plea may even be made before the special agent has completed case work and prior to a prosecution recommendation. Once a plea is made, the plea offer is referred to the local U.S. Attorney office and the Tax Division of the DOJ for consideration. The downside to this approach is that any information provided to these entities for consideration of the plea offer may actually be used against the taxpayer if the plea offer is rejected and criminal charges are filed. It is also important to note that an early guilty plea on criminal tax charges will not necessarily resolve any related civil cases. Under Tax Division policy, global settlements dealing with both civil and criminal aspects of the taxpayer’s conduct are prohibited, so the client will still have to face civil liability after the resolution of the criminal tax case.

Making a Voluntary Surrender and Bond in a Criminal Case

If counsel believes that it is very likely a client will be charged with a criminal offense, then it may make sense to make a voluntary surrender to the prosecutor. The prosecutor has the right to make an arrest, and if the voluntary surrender fails the prosecutor may act upon that right to arrest the client. If this occurs, counsel should make several requests in the event of the client’s arrest:

  1. That the client does not have to take a long car ride with the arresting agent;

  2. that the client not be subjected to extensive questioning by the special agent;

  3. that the client not be subjected to interrogated or subjected to a booking interview relate to income or assets.

At the same time, the client should be warned not to make any statements other than a request for counsel. When the client is arrested, it is possible to request bail because taxpayers rarely present flight risk or danger to the community. However, the downside to requesting bail is that the taxpayer often has to make admissions about income or assets, which can work against the taxpayer down the road.

How a Tax Attorney Can Help with Your Criminal Tax Case

If you are under investigation by the IRS for a potential criminal prosecution, then you must consult with an experienced tax attorney. San Diego Tax Attorney has been successfully helping clients with criminal tax issues since the early 1980s. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case. To schedule your free consultation simply fill out the contact form found on this page, or call (858) 481-4844.



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