7 August 2001

See contents of full IRS Handbook of Criminal Investigation: http://cryptome.org/irs-ci/irs-ci.htm

## Handbook 5 THE INVESTIGATIVE PROCESS Chapter 15 CLOSING THE SUBJECT CRIMINAL INVESTIGATION
### Contents [5] 15.1 OVERVIEW [5] 15.2 PROCEDURES FOR CLOSING ADMINISTRATIVE INVESTIGATIONS THAT HAVE RESULTED IN A CRIMINAL PROSECUTION, A PLEA OF GUILTY OR NOLO CONTENDERE [5] 15.3 PROCEDURES FOR CLOSING GRAND JURY INVESTIGATIONS THAT HAVE RESULTED IN A CRIMINAL PROSECUTION OR A PLEA OF GUILTY OR NOLO CONTENDERE [5] 15.4 PROCEDURES FOR CLOSING DIRECTLY REFERRED INVESTIGATIONS THAT HAVE RESULTED IN A CRIMINAL PROSECUTION, PLEA OF GUILTY OR NOLO CONTENDRE [5] 15.5 PROCEDURES FOR CLOSING DISCONTINUED INVESTIGATIONS [5] 15.5.1 Discontinued Administrative Investigation [5] 15.5.2 Discontinued Grand Jury Investigation [5] 15.6 CLOSING THE ADMINISTRATIVE, DISCONTINUED, GRAND JURY AND DIRECT REFERRAL INVESTIGATION ON CRIMINAL INVESTIGATION MANAGEMENT INFORMATION SYSTEM (CIMIS) DATABASE Exhibit [5] 15-1 United States Attorney Closing Letter (To be used at the close of a criminal case referred by Counsel to the U.S. Attorney) (Use Appropriate Letterhead) Exhibit [5] 15-2 United States Attorney Closing Letter (To be used at the close of a grand jury investigation resulting in criminal prosecution) (Use Appropriate Letterhead) Exhibit [5] 15-3 United States Attorney Closing Letter (to be used at the close of grand jury investigation not resulting in criminal prosecution) (Use Appropriate Letterhead) Exhibit [5] 15-4 United States Attorney Closing Letter (To be used at the close of a criminal case referred directly to the U.S. Attorney) (Use Appropriate Letterhead)
### [5] 15.1 (12-14-1998) OVERVIEW
A criminal referral (requesting grand jury investigation or a criminal prosecution) is in effect until it is terminated (see I.R.C. § 7602(c)(2)(B)). Generally, the termination of a criminal referral is accomplished by a letter from the Department of Justice. The Department of Justice has delegated preparation of the letter terminating the referral to the Service. Thus, the responsibility for closing criminal investigation rests with the referring authority. This chapter provides guidelines and procedures for the Chief, Criminal Investigation (CI) to follow in closing administrative referrals, grand jury investigations and direct referrals (i.e., investigations involving Race Track "Ten Percenters" , arrests by special agents, and violations of Title 31 and related Title 18 offenses). This chapter also discusses the closing of discontinued investigations - either administrative or grand jury. The following are sections found in this chapter; Procedures for closing administrative investigations that have resulted in a criminal prosecution, a plea of guilty, or nolo contendre. Procedures for closing grand jury investigations that have resulted in a criminal prosecution, a plea of guilty or nolo contendere. Procedures for closing directly referred investigations that have resulted in a criminal prosecution, a plea of guilty or nolo contendere. Procedures for closing discontinued administrative or grand jury investigations. Procedures for closing administrative, grand jury, and direct referral investigations on Criminal Investigation Management System (CIMIS).
### [5] 15.2 (12-14-1998) PROCEDURES FOR CLOSING ADMINISTRATIVE INVESTIGATIONS THAT HAVE RESULTED IN A CRIMINAL PROSECUTION, A PLEA OF GUILTY OR NOLO CONTENDERE
The investigative files can be made available to the IRS civil functions for tax assessment or collection after an administrative case has been prosecuted or after a plea of guilty or nolo contendere. The procedures to accomplish this are outlined in paragraph (2) through (8) of this section below. Within 5 workdays of when the criminal phase of a case referred by Counsel has been concluded, the Chief will ensure that a closing letter is prepared and presented to the United States Attorney, or his or her representative, for signature. See Exhibit 15-1. The closing letter must accurately summarize: The date and nature of the indictment or information. The date and result of the adjudication. The date and nature of the sentence imposed. Whether there has been appellate action, and if so, the result. In addition, the closing letter must contain the following language: "Pursuant to IRC 7602(c)(2)(B), this action constitutes a termination of the referral and, as such, you are now free to seek appropriate civil action." The Chief will ensure the closing letter and one copy are distributed as follows: The original will be mailed (hand delivered where possible) to the Counsel office responsible for the preparation of the criminal referral letter (i.e., District Counsel, Regional Counsel, or Assistant Chief Counsel (Criminal Tax)) who will be responsible for notifying CI and Examination (Collection, where appropriate) of the U.S. Attorney's action. A copy will be mailed to the office of the Assistant Chief Counsel (Criminal Tax) in all cases except where they are the recipient of the original letter. The United States Attorney's office will then provide the letter to IRS District Counsel office. At that time, the civil functions are free to make assessments and collections as appropriate and CI can provide Examination or Collection with their investigative files. When the Chief, CI is formally notified by Counsel as specified above in paragraph 3 a. of this section, the Chief shall so inform the Chief of both district Examination and Collection functions and furnish the party who forwarded the administrative file a copy of the Special Agent's Report (SAR). A summary of the outcome of the criminal investigation should be included in the transmittal memorandum unless such information has already been furnished by the District Counsel at the time they issued the closing letter. If the investigation was not conducted with the cooperation of district Examination or Collection function, no copy of the report need be prepared and forwarded to those divisions unless it relates to matters within their normal jurisdiction.
### [5] 15.3 (12-14-1998) PROCEDURES FOR CLOSING GRAND JURY INVESTIGATIONS THAT HAVE RESULTED IN A CRIMINAL PROSECUTION OR A PLEA OF GUILTY OR NOLO CONTENDERE
When the investigative aspects of a grand jury investigation have concluded, the special agent will prepare a final report similar to the final report in an administrative investigation and address it to the attorney for the government. If prosecution is recommended, the Chief will forward the report to Counsel for review (except in Organized Crime and Drug Enforcement Task Force (OCDETF) and "pure" money-laundering investigations). The special agent should prepare separate exhibit folders for information developed during the course of the administrative aspects of the investigation (if there were any) and for documents governed by Rule 6(e). Grand jury information should be clearly labeled as such and the Chief should not give copies of the report containing grand jury information to any person not specifically on the Grand Jury Access List. After criminal prosecution or plea of guilty or nolo conterdere in a grand jury investigation, the Chief will, within 5 workdays, ensure that a closing letter is prepared and presented to the United States Attorney, or his or her representative, for signature (see Exhibit 15-2). The Chief will ensure the closing letter and one copy are distributed as follows: The original will be mailed (hand delivered where possible) to the Counsel office responsible for the preparation of the grand jury evaluation letter (i.e., District Counsel, Regional Counsel or Assistant Chief Counsel (Criminal Tax)), who will then be responsible for notifying CI and Examination (Collection, where appropriate) of the U.S. Attorney's action; A copy will be mailed to the office of the Assistant Chief Counsel (Criminal Tax) in all cases except where they are the recipient of the original letter. The closing letter must accurately summarize: The date and nature of the indictment or information. The date and result of the adjudication. The date and nature of the sentence imposed. Whether there has been appellate action, and if so, the result. In addition, the closing letter must contain the following language: "Pursuant to IRC 7602(c)(2)(B), this action constitutes a termination of the referral and, as such, you are now free to seek appropriate civil action." The letter will be prepared in accordance with the secrecy requirements of the Federal Rules of Criminal Procedure Rule 6(e) in that grand jury information will not be disclosed in the letter. The Chief will provide a copy of the special agent's report to the Chief, Examination Division (Collection Division, as appropriate), unless prohibited by the Federal Rules of Criminal Procedure Rule 6(e).
### [5] 15.4 (12-14-1998) PROCEDURES FOR CLOSING DIRECTLY REFERRED INVESTIGATIONS THAT HAVE RESULTED IN A CRIMINAL PROSECUTION, PLEA OF GUILTY OR NOLO CONTENDRE
A direct referral is an "Organized Crime and Drug Enforcement Task Force (OCDETF)" or a non-Title 26 "pure" money-laundering investigation which was directly referred to the United States Attorney's office without going through IRS District Counsel. When the criminal phases of a case directly referred by CI have been concluded through prosecution, a plea of guilty or nolo contendere, the Chief will, within 5 workdays, ensure that a closing letter is prepared and presented to the United States Attorney for his or her representative, for signature (see Exhibit 15-3). The Chief will ensure the closing letter and one copy are distributed as follows: The original will be mailed (hand delivered where possible) to the District Director, Attn.: Chief, Examination Division (Collection Division, where appropriate) along with a copy of the special agent's report unless prohibited by the Federal Rules of Criminal Procedure Rule 6(e) A copy will be mailed to Assistant Chief Counsel (Criminal Tax). The closing letter must accurately summarize: The date and nature of the indictment or information. The date and result of the adjudication. The date and nature of the sentence imposed. Whether there has been appellate action and, if so, the result. Also, the closing letter must contain the following language: "Pursuant to IRC 7602(c)(2)(B), this action constitutes a termination of the referral and, as such, you are now free to seek appropriate civil action." As discussed above in paragraph (1) of this section, a direct referral is recognized as an "Organized Crime and Drug Enforcement Task Force (OCDETF)" or non--Title 26 "pure" money laundering investigation which was directly referred to the United States Attorney's office without going through IRS District Counsel. These investigations have proceeded through the grand jury setting; therefore, the procedures outlined above in section 14.3 of this chapter are also applicable. NOTE: The unique characteristic of a directly-referred investigation is that the Chief, CI, forwards the SAR directly to the United States Attorney's office. It is then the responsibility of the United States Attorney or the Assistant United States Attorney to get approval to prosecute the referred case from DOJ Tax Division. (In other types of administrative and grand jury investigations, this responsibility rests with IRS.)
### [5] 15.5 (12-14-1998) PROCEDURES FOR CLOSING DISCONTINUED INVESTIGATIONS
When an investigation is discontinued, the formal closing and associated civil aspects of the case are handled differently for an administrative investigation than for a grand jury investigation.
### [5] 15.5.1 (12-14-1998) Discontinued Administrative Investigation
Information developed during the course of an administrative tax investigation is not subject to Federal Rules of Criminal Procedures Rule 6(e) and, therefore, can be used by IRS civil functions in the assessment and collection of a tax liability. When the Chief approves a final report discontinuing an investigation, he or she will promptly inform the Chief of the cooperating function, in writing, of the determination. For joint investigations initiated by referral from a function other than the cooperating function, the Chief will notify the referring function, by memorandum, of the disposition of the investigation. In a report of a discontinued investigation which is being referred to Examination for further action, the special agent will: Include a section on evidence developed during the investigation that would support or negate a recommendation of the civil fraud penalty. Not make a recommendation concerning civil penalties. Not use language that may indicate CI's position on the imposition of the civil fraud penalty. In those instances where an investigation has been terminated or a criminal referral from Examination or Collections was declined by a memorandum, a statement should be made in the report to the effect that nothing was discussed or occurred in the case which precludes the assertion of the civil fraud penalty. In joint investigations, the withdrawal report should contain a statement that the cooperating officer's Group Manager has been advised of the proposed withdrawal action and concurs with it. The special agent will also transfer all original tax returns to Examination with the final report.
### [5] 15.5.2 (12-14-1998) Discontinued Grand Jury Investigation
When the investigative aspects of a grand jury investigation have concluded, the special agent will prepare a discontinued final report similar to the final discontinued report in an administrative investigation and address it to the attorney for the government. The Chief will forward the discontinued report to Counsel for review (except in OCDETF and "pure" money-laundering investigations). The special agent should prepare separate exhibit folders for information developed during the course of the administrative aspects of the investigation (if there were any) and for documents governed by Rule 6(e). Grand jury information should be clearly labeled as such and the Chief should not give copies of the report containing grand jury information to any person not specifically on the Grand Jury Access List. At the conclusion of a grand jury investigation that does not result in a criminal prosecution, the Chief will, within 5 workdays, ensure that a closing letter is prepared and presented to the United States Attorney, or his or her representative, for signature (see Exhibit 15-4). The Chief will ensure the closing letter and one copy are distributed as follows: The original will be mailed (hand delivered where possible) to the District Director, Attn.: Chief, Examination Division (Collection Division, where appropriate), along with a copy of the SAR unless prohibited by the Federal Rules of Criminal Procedure Rule 6(e); A copy will be mailed (hand delivered where possible) to the Counsel office responsible for reviewing the grand jury request and or grand jury evaluation. The closing letter must contain the following language: "Pursuant to Internal Revenue Code (IRC) 7602(c)(2)(B), this action constitutes a termination of the referral, and as such, you are now free to seek appropriate civil action." The letter will be prepared in accordance with the secrecy requirements of the Federal Rules of Criminal Procedure Rule 6(e) in that matters occurring before the grand jury will not be disclosed in the letter. Information developed during the course of a grand jury investigation typically cannot be used by IRS in the civil assessment of tax unless a Rule 6(e) Order has been obtained by the attorney for the government. See section 15.3 above and Handbook 9.3, Chapter 1, in the section entitled, Grand Jury Information and Civil Matters, for details concerning what can be disclosed and how it is to be done. NOTE: If the SAR does not recommend prosecution against the subject(s) of the grand jury investigation or anyone who has been submitted as the subject of the investigation on the Form 9131, Request for Grand Jury Investigation, or a grand jury expansion request, the special agent must notify the designated Counsel attorney that the investigation was concluded without a prosecution recommendation. Failure to do so leaves an open grand jury file in District Counsel for which CI is responsible.
### [5] 15.6 (12-14-1998) CLOSING THE ADMINISTRATIVE, DISCONTINUED, GRAND JURY AND DIRECT REFERRAL INVESTIGATION ON CRIMINAL INVESTIGATION MANAGEMENT INFORMATION SYSTEM (CIMIS) DATABASE
In addition to the closing letter, prepare a Form 4930, CI General/Primary/Subject Investigation Report, completing the item showing the appropriate closing status code and the item stating the appropriate reason closed code. Refer to Handbook 9.9 for details on completing the Form 4930. The data on Form 4930 should be inputted into CIMIS within 48 hours of closing the investigation.
Exhibit [5] 15-1 (12/14/98) United States Attorney Closing Letter (To be used at the close of a criminal case referred by Counsel to the U.S. Attorney) (Use Appropriate Letterhead) District Counsel [District] Regional Counsel [Region] Assistant Chief Counsel (Criminal Tax) Internal Revenue Service City, State, Zip Code RE: United States v. Doe Criminal No. DJ No. Dear [Name]: On [Date], John Doe was indicted on nine counts of preparing false returns, in violation of I.R.C. § 7206(1). On [Date], the court sentenced Mr. Doe to two years imprisonment with one year of supervised probation. A special condition of probation requires Mr. Doe to give the United States Probation Office full access to all of his financial information and he is prohibited from engaging in the tax return preparation business during his period of incarceration and probation. Pursuant to I.R.C. § 7602(c)(2)(B) the above action constitutes a termination of the referral, and as such, you are now free to seek appropriate civil action. We have returned the exhibits in this case directly to the special agent and are closing our files in this matter. Sincerely, [Name] UNITED STATES ATTORNEY [Name] ASSISTANT UNITED STATES ATTORNEY cc: Assistant Chief Counsel (Criminal Tax) CC:CT Room 2571, 1111 Constitution Ave., N. W., Washington, D.C. 20229
Exhibit [5] 15-2 (12/14/98) United States Attorney Closing Letter (To be used at the close of a grand jury investigation resulting in criminal prosecution) (Use Appropriate Letterhead) District Counsel [District] Regional Counsel [Region] Assistant Chief Counsel (Criminal Tax) Internal Revenue Service City, State, Zip Code RE: United States v. Doe Criminal No. DJ No. Dear [Name]: On [Date], John Doe was indicted on nine counts of preparing false returns, in violation of I.R.C. § 7206(1). On [Date], the court sentenced Mr. Doe to two years imprisonment with one year of supervised probation. A special condition of probation requires Mr. Doe to give the United States Probation Office full access to all of his financial information and he is prohibited from engaging in the tax return preparation business during his period of incarceration and probation. Pursuant to I.R.C. § 7602(c)(2)(B) the above action constitutes a termination of the referral, and as such, you are now free to seek appropriate civil action. We have returned the exhibits in this case directly to the special agent and are closing our files in this matter. You are reminded that Rule 6(e) of the Federal Rules of Criminal Procedure greatly restricts the civil use of items constituting matters occurring before the grand jury. You are invited to submit questions regarding what constitutes such matters, and the procedures to be employed with the below named Assistant United States Attorney or with your District Counsel. Sincerely, [Name] UNITED STATES ATTORNEY [Name] ASSISTANT UNITED STATES ATTORNEY cc: Assistant Chief Counsel (Criminal Tax) CC:CT Room 2571, 1111 Constitution Ave., N. W., Washington, D.C. 20229
Exhibit [5] 15-3 (12/14/98) United States Attorney Closing Letter (to be used at the close of grand jury investigation not resulting in criminal prosecution) (Use Appropriate Letterhead) District Director District A ttention: Chief, Examination Division Internal Revenue Service City, State, Zip Code RE: John Doe Appropriate Investigation No. Dear [Name]: The above named grand jury matter has been closed by this office. As a result, pursuant to I.R.C. § 7602(c) (2) (B) the above action constitutes a termination of the referral, and as such, you are now free to seek appropriate civil action. We have returned the exhibits in this case directly to the special agent and are closing our files in this matter. You are reminded that Rule 6(e) of the Federal Rules of Criminal Procedure greatly restricts the civil use of items constituting matters occurring before the grand jury. You are invited to submit questions regarding what constitutes such matters, and the procedures to be employed with the below named Assistant United States Attorney or with your District Counsel. Sincerely, [Name] UNITED STATES ATTORNEY [Name] ASSISTANT UNITED STATES ATTORNEY cc: District Counsel [District] Regional Counsel [Region] Assistant Chief Counsel (Criminal Tax) CC:CT Internal Revenue Service City, State, Zip Code
Exhibit [5] 15-4 (12/14/98) United States Attorney Closing Letter (To be used at the close of a criminal case referred directly to the U.S. Attorney) (Use Appropriate Letterhead) District Director District Attention: Chief, Examination Division Internal Revenue Service City, State, Zip Code RE: United States v. Doe Criminal No. DJ No. Dear [Name]: On [Date], John Doe was indicted on two counts of aiding and assisting in preparing false returns, in violation of I.R.C. § 7206(1). On [Date], the court sentenced Mr. Doe to two years imprisonment with one year of supervised probation. A special condition of probation requires Mr. Doe to give the United States Probation Office full access to all of his financial information and he is prohibited from engaging in the tax return preparation business during his period of incarceration and probation. Pursuant to I.R.C. § 7602(c)(2)(B) the above action constitutes a termination of the referral, and as such, you are now free to seek appropriate civil action. We have returned the exhibits in this case directly to the special agent and are closing our files in this matter. Sincerely, [Name] UNITED STATES ATTORNEY [Name] ASSISTANT UNITED STATES ATTORNEY cc: Assistant Chief Counsel (Criminal Tax) CC:CT Room 2571, 1111 Constitution Ave., N. W., Washington, D.C. 20229
### Internal Revenue Manual | ### Hndbk. 5 Chap. 15 CLOSING THE SUBJECT CRIMINAL INVESTIGATION | ### (12-14-1998)

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