7 August 2001

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

## Handbook 109.1 Summons Handbook Chapter 5 Summons for Taxpayer Records and Testimony
### Contents [109.1] 5.1 Overview [109.1] 5.2 Taxpayer Records and Testimony [109.1] 5.3 Taxpayer Records In Possession of Others [109.1] 5.3.1 Taxpayer Records Involuntarily Turned Over to Others [109.1] 5.4 Rights and Privileges of Person Summoned [109.1] 5.4.1 Fifth Amendment Privilege Against Self Incrimination [109.1] 5.4.1.1 Rights Concerning Partnership and Other Unincorporated Association Books and Records [109.1] 5.4.1.2 Rights Concerning Corporate Books and Records [109.1] 5.4.1.2.1 Rights of Corporate Officers [109.1] 5.4.2 Right to Be Represented by Counsel [109.1] 5.4.3 Privileged Communication and Summons [109.1] 5.4.4 Right to Make an Audio Recording of the Proceeding [109.1] 5.4.5 Defendant's Right to Quash Summons Proceeding [109.1] 5.4.6 Rights of Third-Party Witnesses to Refuse Unreasonable Requests and Raise Valid Defenses [109.1] 5.4.7 Noncompliance by the Witness or a Representative [109.1] 5.4.8 Disclosure Issues [109.1] 5.4.9 Collection, Examination, and EP/EO [109.1] 5.5 Dual Representation [109.1] 5.5.1 Interviewing the Witness [109.1] 5.5.2 Obstruction of Interview [109.1] 5.5.3 Suspension of Interview [109.1] 5.5.4 Procedures for Exclusion of Attorney Prior to Interview of Witness
### [109.1] 5.1 (04-30-1999) Overview
This chapter contains the following sections: Taxpayer Records and Testimony Taxpayer Records in Possession of Others Rights and Privileges of Persons Summoned Dual Representation
### [109.1] 5.2 (04-30-1999) Taxpayer Records and Testimony
Taxpayer records and testimony may be summoned whether they are in the possession of the taxpayer or in the possession of others, including third-party recordkeepers. Information or evidence furnished voluntarily by a person may be used even if it is incriminatory.
### [109.1] 5.3 (04-30-1999) Taxpayer Records In Possession of Others
Taxpayer records may not be in the possession of the taxpayer but in the possession of other individuals or entities. In general, the records may be obtained by summons, whether the records have been voluntarily or involuntarily turned over to others.
### [109.1] 5.3.1 (04-30-1999) Taxpayer Records Involuntarily Turned Over to Others
A person cannot successfully oppose a summons for records possessed by another person when the other person obtained the records either by operation and due process of law or by the legal actions of another. For example, courts have ordered production of documents from: a referee in bankruptcy; a federal court where they had been impounded; a state attorney general, who obtain records by subpoena; an employer who came across incriminating documents at the workstation of an employee/embezzler; a clerk of a state court; a federal prison official; and U.S. Customs agents. Refer in this handbook to 5.4.1(2)-(3)(Note) for a discussion of records that are shielded from production by a combination of the Fifth Amendment and the attorney-client (or IRC 7525 confidentiality) privileges when given to an attorney (or an IRC 7525 Federally Authorized Tax Practitioner (ATP)) to obtain legal advice.
### [109.1] 5.4 (04-30-1999) Rights and Privileges of Person Summoned
Persons summoned to testify before the Service or to produce records may assert certain rights or defenses including the following: Fifth Amendment Privilege Against Self Incrimination Right to Be Represented by Counsel Attorney-Client, Federally Authorized Tax Practitioner-Taxpayer, Husband-Wife, and Clergy-Penitent Privileges Right to Make a Audio Recording of the Proceeding IRC 7609 Noticees Right to Petition to Quash a Third-Party Summons Right of Third-Party Witness to Refuse Unreasonable Requests and to Raise Appropriate Defenses Representation Issues Disclosure Issues
### [109.1] 5.4.1 (04-30-1999) Fifth Amendment Privilege Against Self Incrimination
The Fifth Amendment to the Constitution provides that no person shall be compelled to be a witness against himself. However, information or evidence furnished voluntarily by an individual taxpayer or witness who has been summoned may be used even though it may be incriminating. IRC 7602 authorizes the Service to compel taxpayers and third persons to testify and to produce books and records by issuing a summons. However, if answering a question would tend to incriminate the summoned person, that person may assert his or her Fifth Amendment privilege and refuse to answer. In contrast, a summoned person has no Fifth Amendment privilege in the contents of voluntarily created, pre-existing documents because the Government did not compel that person to create the documents. However, the act of producing those documents may tend to incriminate a summoned person because the mere act of production compels that person to tacitly admit that the documents exist, they are in that person's possession, and he or she believes the documents produced are those required by the summons. Whether any of these tacit admissions may tend to incriminate a summoned person will depend on the facts and circumstances of each case. Consequently, that person may have a valid Fifth Amendment privilege against producing voluntarily created, pre-existing documents. This situation may exist when a taxpayer (or other person) is summoned to produce the records of his or her sole proprietorship. See 5.4.1(3). If a taxpayer transfers the records of his or her sole proprietorship to another person, the Service can summon the third-party to produce those records. The taxpayer cannot raise a Fifth Amendment objection to prevent a summoned third-party from producing these records because the privilege against self-incrimination is personal to the taxpayer, i.e., it extends only to testimony and records sought from the taxpayer. This is true even though the taxpayer could have successfully avoided producing the records when they were in his or her possession pursuant to a Fifth Amendment objection. However, a significant exception to this rule exists when the taxpayer transfers the records of his or her sole proprietorship to an attorney to obtain legal advice. If, under these circumstances, the taxpayer could have avoided producing these records while they were in his or her possession, the attorney-client privilege will prevent the Service from summoning the records from the attorney so long as the taxpayer transferred the records to obtain legal advice. NOTE: IRC 7525 extends the attorney-client privilege to communications between a taxpayer and a federally authorized tax practitioner in noncriminal tax matters before the Service and noncriminal tax proceedings in federal court. See 5.4.3(1)b. While a warning of constitutional privilege against self-incrimination (i.e., "You have the right to not answer questions that may incriminate you." ) may not be required as a matter of law, such warning may have substantial significance from an evidentiary standpoint in overcoming a contention that the testimony or information was given involuntarily, under compulsion. A witness who contends that the testimony or information was given involuntarily, under compulsion, has the burden of sustaining that contention. Summoning a taxpayer or other witness to take a handwriting exemplar is within the authority of IRC 7602. This does not violate any constitutional rights or policies enunciated by Congress. Compulsion of handwriting exemplars is neither a search or a seizure subject to Fourth Amendment protections nor testimonial evidence protected by the Fifth Amendment privilege against self-incrimination. A handwriting exemplar is an identifying physical characteristic.
### [109.1] 5.4.1.1 (04-30-1999) Rights Concerning Partnership and Other Unincorporated Association Books and Records
The Supreme Court has ruled that an individual cannot rely upon the privilege against self-incrimination to avoid producing the records of a collective entity that are in his or her possession, even if these records might incriminate him or her personally. Partnership books and records are not the personal property of an individual; they are the collective property of a group of persons. Partnership books and records voluntarily submitted by one partner may be used in evidence against the other partners without violating their constitutional rights. A trustee can be directed to comply with a summons which calls for the production of certain books and records of the trust. Since the trust is a separate entity, the trustee can not claim the Fifth Amendment privilege. The books were held in a representative rather than a personal capacity.
### [109.1] 5.4.1.2 (04-30-1999) Rights Concerning Corporate Books and Records
The privilege against self-incrimination under the Fifth Amendment does not apply to corporations. The theory for this is that the State, having created the corporation, has reserved the power to inquire into its activities, and that an inanimate corporate body should not be afforded the same protection as a natural person in avoiding incrimination. A corporate officer may not refuse to produce corporate records held by him or her in an official capacity, even though their production may incriminate him or her or the corporation.
### [109.1] 5.4.1.2.1 (04-30-1999) Rights of Corporate Officers
The mere fact that a corporate officer may not refuse to produce corporate records does not take away the constitutional protection which is the right of any individual. The corporate officer may still refuse to give testimony or exhibit personal records which may tend to incriminate him or her as an individual, or to testify regarding the whereabouts of corporate records not in his or her possession. Also, the corporate officer's act of production may not be used against him or her in court.
### [109.1] 5.4.2 (04-30-1999) Right to Be Represented by Counsel
A witness who appears in response to a summons must be afforded the opportunity to be represented by an attorney.
### [109.1] 5.4.3 (04-30-1999) Privileged Communication and Summons
There are certain special types of relationships in which information communicated by one person to the other is held confidential and privileged between them. This privilege may exist between: Attorney and Client In general, the communications from a taxpayer to an attorney that are made to secure legal advice are privileged, and the attorney cannot be compelled to disclose that information to the Service. Also, if the taxpayer creates records to facilitate the exchange of privileged communications with the attorney, those records are privileged. However, if a taxpayer turns over pre-existing records to an attorney, the Service can obtain those records, unless they were otherwise privileged from production while in the taxpayer's possession. Federally Authorized Tax Practitioner and Taxpayer The RRA of 1998 created a new confidentiality privilege in IRC 7525 for communications between taxpayers and "any federally authorized tax practitioner" concerning "tax advice.""Federally authorized tax practitioners" are the persons described in Circular 230 as subject to regulation. "Tax advice" means any advice given "with respect to a matter which is within the scope of the individual's authority to practice." The new privilege may be asserted both in "any noncriminal tax matter before the Internal Revenue Service" and in "any noncriminal tax proceeding in Federal court with respect to such matter." It may be asserted "to the extent the communication would be considered a privileged communication if it were between a taxpayer and an attorney," except for written communications made "in connection with the promotion of the direct or indirect participation of such corporation in any tax shelter." The new privilege does not arise automatically but must be asserted by the taxpayer. Service employees may still seek the same information in the same manner as before. The only difference is that taxpayers may now assert, in noncriminal proceedings, a confidentiality privilege for communications made after the date of enactment to federally authorized tax practitioners concerning tax advice sought or received. When questions of statutory interpretation arise, consult district counsel. Husband and Wife Clergyman and Penitent Psychotherapist-Patient Privileged communications cannot be obtained by issuing a summons. See Rights of Prospective Witnesses and Defendants 9.4.5.11 in the Investigative Techniques Handbook for further information on privileged communication.
### [109.1] 5.4.4 (04-30-1999) Right to Make an Audio Recording of the Proceeding
Taxpayers or their representatives may ask to make audio-tape recordings of the proceedings. If the taxpayer requests to tape record the interview, the Service employee must also record the meeting. Cameras or videotape equipment are not permitted. At no time should employees try to physically confiscate this equipment. Follow the requirements of IRC 7521 and the procedures set forth elsewhere in the IRM concerning audio-taped interviews.
### [109.1] 5.4.5 (04-30-1999) Defendant's Right to Quash Summons Proceeding
See Special Procedures for Third-Party Summons in Chapter 6 of this Handbook.
### [109.1] 5.4.6 (04-30-1999) Rights of Third-Party Witnesses to Refuse Unreasonable Requests and Raise Valid Defenses
Third-party witnesses are protected against summonses that are overbroad and beyond the scope of the relevancy test in IRC 7602(a). Refer to subsections 4.4(1)-4.4.3. Third-party witnesses may assert all valid rights and privileges, including the Fifth Amendment privilege against self-incrimination, the right to be represented by counsel, the spousal privilege, and the attorney-client privilege.
### [109.1] 5.4.7 (04-30-1999) Noncompliance by the Witness or a Representative
When a summoned witness or the witness' representative indicates the witness will not comply with the summons: do not make an indication or agreement, express or implied, that it is not necessary or required for the witness to appear, and inform the witness or representative that refusal or failure to comply with the summons may result in judicial remedies provided by law, but if a valid reason exists, such as an illness, continue the date by mutual agreement to another fixed date. The witness' representative cannot appear instead of the witness on the appearance date set in the summons. Continue the interview when a summoned taxpayer or witness claims either the self-incrimination privilege of the Fifth Amendment, the attorney-client privilege or the confidential communications privilege under IRC 7525 even though it is clear that the questions will not be answered. Have the summoned taxpayer claim the privilege for each question. If the summoned person refuses to submit to questioning and to the request for documents, that person cannot be compelled to remain and continue the interview. Prepare a memorandum describing the facts and occurrences during the interview, include the questions asked and the responses given. If a summoned taxpayer appears and wishes to suspend the interview to consult with an authorized representative, continue with the interview. Inform the taxpayer that an interview may usually be suspended for that purpose, but not when it is required by a summons. IRC 7521(b)(2).
### [109.1] 5.4.8 (04-30-1999) Disclosure Issues
In addition to an attorney, a summoned party is permitted to have other persons present during the interview. Written authorization from the taxpayer is required for consenting to or requesting such disclosure. NOTE: However, when a witness appears pursuant to a summons and is accompanied by a person (other than the taxpayer) who does not represent the individual witness, such person may be excluded from the interview. An example of a situation in which a person may be excluded from the interview is where a corporate official (witness) is summoned in his/her individual capacity regarding an examination of the corporation, and an attorney representing the corporation, who does not also represent the witness, attempts to attend the interview. However, if the witness refuses to be interviewed if that person is excluded and the person is a designee of the taxpayer within the meaning of IRC 6103(c) and its regulations, the interview will proceed unless the interviewing officer makes a determination that continuation of the interview will impede development of the case. If such a determination is made, the interview will be terminated and a request will be made to District Counsel for a recommendation for judicial enforcement of the summons by the Department of Justice and exclusion of the person from any future interviews pursuant to the court's order. Information obtained as a result of a summons issued in a tax administration investigation or examination is considered return information subject to the disclosure provisions of IRC 6103 and related regulations, and IRC 7213, 7213A, and 7431. Information obtained in a "pure" money laundering or Bank Secrecy Act investigation or examination does not fall within the above-listed disclosure provisions. NOTE: In a money laundering or Bank Secrecy Act investigation or examination, once a "related statute" call has been made, from that point forward all information obtained, including information resulting from a summons, becomes return information subject to the above-listed disclosure provisions. Make no commitments to the taxpayer or third-party witness to: provide a greater degree of confidentiality or limitation of use than is provided by existing law and regulation; limit the disclosure of information, such as agreeing that information will not be turned over to other agencies otherwise entitled to disclosure of that information upon proper request, or impose other conditions regarding the acceptance and use of information by the IRS, such as agreeing to use tax data for civil purposes only. Take precautions to ensure that no violations of law concerning the disclosure of income tax and other matters occur.
### [109.1] 5.4.9 (04-30-1999) Collection, Examination, and EP/EO
The IRS must explain a taxpayer's rights before an interview, during an examination and during the collection process.
### [109.1] 5.5 (04-30-1999) Dual Representation
Treasury Department Circular No. 230 (Rev. 6-79), which covers the practice of attorneys, certified public accountants, enrolled agents, and enrolled actuaries before the Internal Revenue Service, provides the following with respect to dual representation: 10.29 Conflicting Interests: No attorney, certified public accountant, or enrolled agent shall represent conflicting interests in his practice before the Internal Revenue Service, except by express consent of all directly interested parties after full disclosure has been made. Dual representation exists when a summoned third-party witness is represented by an attorney, certified public accountant, enrolled agent, or other person who also represents the taxpayer or another interested party. It may also occur where an attorney under investigation represents a third-party witness in that investigation or where an attorney-witness seeks to represent another witness in the same investigation. An interested party is one who has a significant pecuniary interest in the testimony of the witness or who, by virtue of the nature of the investigation and the known facts, may be incriminated by the witness. When dual representation exists, notify the Group Manager, and consult District Counsel, if necessary, to determine the appropriate course of action. NOTE: When dual representation is not allowed, continue the summons appearance date to allow time for a resolution of the matter if the attorney witness refuses to testify or produce documents. Except as provided below, the mere existence of a dual representation situation which may potentially have an adverse impact on the investigation will not, without some action by the attorney to impede or obstruct the investigation, provide a sufficient basis for seeking a disqualification. However, where an attorney's representation has substantially prejudiced the questioning of a third-party witness and, as a result, has significantly impaired the progress of the investigation, the Service will request the Department of Justice to seek a court order, as part of the summons enforcement proceeding, to disqualify that attorney as counsel for that witness. In view of the well-established principle granting a person the right to counsel of one's choice, this disqualification procedure will only be used in extreme circumstances, such as where an attorney has taken some action to improperly or unlawfully impede or obstruct the investigation. It is essential that the interviewing officer have sufficient facts to support such allegations. The provisions referring to "attorneys" apply to other representatives (non-attorneys) who represent witnesses or taxpayers.
### [109.1] 5.5.1 (04-30-1999) Interviewing the Witness
Upon learning that counsel represents both the taxpayer under investigation (or other interested party) as well as the summoned witness, the interviewing officer should give consideration to exploring with the attorney, prior to the interview of the witness, whether or not the attorney realizes that his representation of both the subject of the investigation and the witness may be a conflict of interest. If, after discussing the potential conflict of interest with the attorney, the question is not resolved, the interviewing officer should ask the witness these questions at the beginning of the interview: Do you wish the attorney to be present during the questioning? Did you hire the attorney for this purpose? Are you paying for the attorney's services, either alone or in conjunction with someone else-if the latter, do you know who? Do you know that the attorney also represents the taxpayer? Do you know that the attorney is being paid by the taxpayer (or some other person) ? In those instances where the interviewing officer becomes aware of the potential conflict of interest during the interview, he/she should explore the issue by asking the questions listed. In some situations it may be appropriate for the interviewing officer to tell the witness that in the view of the Service, the interest of the taxpayer under investigation, conflicts with that of the witness. After disclosure of the dual or multiple representation has been made, if the witness unequivocally states that he/she wishes the attorney in question to represent him/her and that he/she is utilizing the services of the attorney in this matter, then the interview should proceed. However, if the witness states that he/she does not wish to retain that attorney because of the possible conflict of interest, then the witness should be given the opportunity of either proceeding with the interview without an attorney present or adjourning the interview to a specific future date that affords the witness a reasonable amount of time to hire another attorney. The witness should be advised that his/her failure to comply with the summons may result in a recommendation to the Department of Justice that a summons enforcement proceeding be initiated.
### [109.1] 5.5.2 (04-30-1999) Obstruction of Interview
If the interviewing officer has reason to anticipate that an attorney will improperly impede or obstruct the questioning of a witness, he/she should consult with District Counsel prior to the interview with respect to the manner of conducting the questioning. Speculation that the objective of the investigation might be frustrated is insufficient grounds upon which to seek disqualification of an attorney. The fact that the attorney for the summoned witness also represents the taxpayer (or other interested party) does not provide a basis for concluding that the presence of such attorney would obstruct the investigation. Thus, the mere potential for obstruction is generally an insufficient basis to justify a recommendation for disqualification of an attorney. There must be active obstruction by an attorney before disqualification will be sought. A suit to disqualify an attorney for obstruction will be undertaken only where the facts clearly indicate that he/she has actively impeded the investigation. Unjustifiable obstruction by an attorney may take a variety of forms. It is, therefore, impossible to set forth the precise factual circumstances under which the Government would ask a court to disqualify an attorney as counsel for a third-party witness. The following is an example of a circumstance which may provide the basis for a recommendation for the institution of litigation to seek the disqualification of an attorney: Taxpayer and third-party witness are both represented by the same attorney. The witness is summoned to testify. The attorney refuses to permit the witness to answer questions for other than legitimate reasons or disrupts the questioning by repeatedly making frivolous objections to the questions, or asserts frivolous claims of privilege or defenses on behalf of the witness to delay the investigation, or so disrupts the interview that the interviewing officer, with due diligence and perseverance, is unable to proceed with the interview. This is not intended to suggest that there is anything inherently wrong in claiming the Fifth Amendment privilege. A careful distinction must be drawn between situations in which the proper remedy is to compel the witness to answer and those in which the attorney may be disqualified because of this conduct. The latter is an extreme remedy which will only be sought in very unusual circumstances, as courts are reluctant to deprive a person of his/her choice of attorney. District Counsel, therefore, will make a considered determination on a case-by-case basis prior to seeking disqualification of an attorney.
### [109.1] 5.5.3 (04-30-1999) Suspension of Interview
If the interview is suspended because of the attorney's actions, the witness should be given the opportunity to secure the services of another attorney within a reasonable period of time or proceed without an attorney. If the witness declines either to proceed without an attorney or retain a new one within a reasonable period of time, the witness should be informed that a summons enforcement proceeding and an action to disqualify the attorney will be recommended. Upon suspension of an interview, the interviewing officer will consult with his/her manager. If the manager is in accord with the interviewing officer's view that the facts present an appropriate instance for litigation, a request will be made to District Counsel that they recommend to the Department of Justice that it seek judicial enforcement of the summons and exclusion of the attorney from representing the witness. Suspension of an interview should be made judiciously in view of the time delays in the investigation that may be caused by such action. A record should be made of the circumstances in each instance where an interview is suspended because of dual representation or obstruction by an attorney. The interviewing officer should also have a verbatim transcript of the interview (if possible ) so that the factual allegations concerning the attorney's conduct at the interview may be proven.
### [109.1] 5.5.4 (04-30-1999) Procedures for Exclusion of Attorney Prior to Interview of Witness
Where an individual taxpayer under investigation attempts to appear with a summoned witness as the witness' attorney, the witness should be told that the taxpayer/attorney is the person under investigation and that he/she will not be allowed to be present during the questioning. The witness should be given the opportunity of either proceeding with the interview without the taxpayer present or to adjourn the interview to a specific future date in order to afford the witness an opportunity to secure the services of another attorney. If the witness refuses to either proceed with the interview without the attorney's representations or to adjourn for the purpose of obtaining a new representative, the interview will be terminated and a request will be made to District Counsel for judicial enforcement of the summons and exclusion of the taxpayer from representing the witness. A witness may appear pursuant to a summons accompanied by an attorney who also represents the taxpayer (or other interested party) where the taxpayer (or other interested party) has already made exculpatory statements to the Service alleging that the witness was criminally responsible for circumstances to be discussed during the interview. In this instance, the witness will be told that the attorney also represents the taxpayer (or other interested party) and that the agent believes that an irreconcilable conflict of interest exists which could prejudice the investigation. The witness should then be given the opportunity of either proceeding with the interview without the attorney present or adjourning the interview to secure the services of another attorney. If the witness insists upon retaining the same attorney despite the assertion of a conflict of interest, the interviewing officer will terminate the interview and a request will be made to District Counsel for judicial enforcement of the summons and exclusion of the attorney. Refer to subsection 5.4.8(1) Note in this handbook for a discussion of other situations involving the exclusion of other persons from an interview.
### Internal Revenue Manual | ### Hndbk. 109.1 Chap. 5 Summons for Taxpayer Records and Testimony | ### (04-30-1999)

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