TAX
FRAUD INVESTIGATIONS -- A PROCEDURAL
ROAD MAP© - PART
I
Burton J. Haynes and Joseph M. Jones
I. Introduction
An IRS fraud investigation is a harrowing
experience, not only for the corporate
officers, directors and employees who
are the subject of the investigation,
but for the corporation's legal advisors
as well. The process many begin innocuously
with a routine civil tax examination,
or with the jolting arrival of a grand
jury subpoena. The investigators may
not know exactly what (or who) they are
after, and will be very guarded in what
they tell corporate representatives about
the basis, nature, scope and direction
of their investigation. Without a thorough
understanding of how and why tax fraud
matters are investigated and prosecuted
by the IRS and the Department of Justice,
it is likely that the corporation's representatives
will lose forever numerous opportunities
to protect their clients from prosecution.
Even worse, ill-advised statements and
disclosures may materially assist the
government in its prosecutorial efforts.
The purpose of this article is to familiarize
corporate officers and legal representatives
with the policies and procedures applicable
to such cases so that this hazardous
road need not be travelled in the dark.
The article will be presented in two
parts, with the first part focusing on
the initiation and processing of a tax
fraud investigation by the IRS Criminal
Investigation Division. The second part
of the article, to be published in the
next issue of the Corporate Criminal
Liability Reporter, will discuss the
review procedures applicable to such
cases as they journey from the Criminal
Investigation Division, through IRS District
Counsel and the Tax Division of the Department
of Justice, to the U.S. Attorney's Offices
throughout the country where tax fraud
cases are indicted and tried.
Information is the key to the successful
defense of any criminal tax case. The
investment of substantial time, effort
and ingenuity is required, since the
true facts can never be determined by
a few cursory interviews with company
personnel about whether they "know of
anything that was done wrong." At a very
early stage of the investigative process,
it will be necessary for the corporation's
representatives to determine whether
the government's request for the voluntary
production of voluminous records and
for ready access to company employees
will be honored. It is impossible to
respond appropriately to these requests
without having done everything possible
to collect all relevant facts. Understanding
the process utilized by the government
in investigating these cases will help
mold and channel the corporation's own
efforts to gather the facts needed to
respond effectively throughout an investigation.
II. In the Beginning....
A. Referrals from the Examination Division
How do criminal tax investigations begin?
Answering this question in any given
case is seldom easy, and is sometimes
impossible. In practice, tax fraud investigations
arise from a variety of sources. About
half result from information sent to
the Criminal Investigation Division by
other departments of the IRS. The most
frequent source of these "referrals" is
the Examination Division, which conducts
civil tax audits. Its examiners, or "Revenue
Agents," have the most contact with taxpayers,
and it is not uncommon for an astute
Revenue Agent conducting a routine corporate
examination to unearth facts that hint
at the presence of fraud. The Internal
Revenue Manual, the Agents' bible, states
that "when the examiner discovers a firm
indication of fraud, the examination
should be immediately suspended without
disclosing to the taxpayer or representative
the reason for the action."1
Revenue agents are instructed to look
for evidence of fraud whenever they audit
income, estate or gift tax returns.2 Not
surprisingly, the examiner often obtains
his first hint of possible presence of
fraud from the corporate taxpayer's own
officers and employees.3 Dealing
with a "routine" civil tax audit when
corporate officers are already aware
of potential "problem" areas is thus
one of the most difficult dilemmas corporate
counsel can face.4
Once a Revenue Agent determines that
the facts constitute a "firm indication
of fraud," he prepares a Referral Report
for Potential Fraud Cases (Form 2797).
This report is directed to the Criminal
Investigation Division, and contains
all of the information the agent has
gathered which leads to the suspicion
that tax fraud has been committed.5 It
takes some time to prepare one of these
reports, particularly in a complex case.
Thus, experienced practitioners know
that when an aggressive auditor who has
been badgering the company for documents
and information on a daily basis suddenly
disappears with no explanation, it is
not necessarily cause for celebration.6
B. Referrals from Other IRS Divisions
Other offices within the Internal Revenue
Service also refer cases to the Criminal
Investigation Division, though none with
the frequency of the Examination Division.
Revenue Officers, employees of the Collection
Division, sometimes refer cases involving
alleged intentional failure to file federal
income or employment tax returns, or
cases involving willful attempts to defeat
IRS levies or rescue seized property.
The Employee Plans and Exempt Organizations
Division also refers a few cases to CID,
such cases generally involving misuse
of pension fund assets or fraudulent
claims of tax exempt status.
C. Cases Initiated by CID
The Criminal Investigation Division
generates many of its own cases without
referrals from other divisions of the
Service. Its agents constantly monitor
newspapers for articles about prominent
local citizens, criminal activities,
evidence of unexplained affluence, or
other items which seem to suggest possible
avenues of investigation. Often the Special
Agents in the IRS District will divide
up the district geographically and assign
responsibility for monitoring local newspapers
from small towns within the district.
Of course this does not mean that appearing
in the paper is a guarantee of being
subjected to either an IRS audit or a
criminal investigation, but agents do
check to see whether a corporations's
financial success as described in the
newspaper is similarly reflected in the
company's tax returns. In fact, it is
not unusual for agents to find that the
local business or businessman being described
in such glowing terms in the press has
somehow neglected to even file tax returns.
Agents also design and implement district,
regional or national "projects," including
some undercover projects, focusing on
particular industries or business types.7 These
kinds of preliminary inquiries lead with
some frequency to the initiation (or "numbering")
of active criminal cases.
Agents also follow leads obtained in
a given investigation in order to develop
cases on related parties. Thus, a seemingly
unrelated investigation of one of a corporation's
employees, suppliers or customers can
easily lead to an investigation of the
corporation itself. Cases against corporations
have even resulted from investigations
of union officials involved in representing
the firm's employees.
D. Cooperation with Other Investigative
Agencies
Special Agents also spend time conversing
with their colleagues in other federal,
state and local investigative agencies.
In fact, CID agents are assigned to maintain
liaison with specific law enforcement
agencies in hope of developing cases
from information gathered from these
agencies. Thus, a corporation which is
having difficulties with a particular
federal or state regulatory agency may
come under the scrutiny of the IRS Criminal
Investigation Division because of information
exchanged by investigators on an informal
basis over a friendly cup of coffee.
In addition to these informal relationships
with other investigators, the IRS Criminal
Investigation Division participates in
formal programs of cooperation with other
federal agencies. Numerous tax fraud
cases result each year from the ongoing
cooperation between the IRS and the Drug
Enforcement Agency.8 Of
more interest to corporate officers and
legal representatives is the long history
of cooperation between the IRS and the
Securities and Exchange Commission. A
few years ago when the SEC was actively
investigating questionable foreign payments
by U.S. companies and was asking those
companies to make "voluntary disclosure" of
their past misdeeds, the information
collected was turned over by the SEC
to the IRS Criminal Investigation Division.
Indeed, IRS Special Agents were invited
by the SEC to attend the meetings during
which corporate representatives made
the disclosures, and a number of criminal
tax fraud prosecutions resulted.9 The
Service also has agents who maintain
close working relationships with staff
members of the major stock and commodities
exchanges, and who are always interested
in stories of unusual trading activities.
The unproven suspicions of any one of
dozens of other federal, state and local
law enforcement and regulatory agencies
can set a criminal tax investigation
in motion.
E. Tips from Informants
The IRS also receives information from
the general public, and in fact encourages
it with a generous reward program.10 The
Service receives hundreds of calls each
day from citizens who want to provide
information on the misdeeds of their
friends, neighbors, employers, competitors,
ex-lovers and former (or present) spouses.
All of these calls are routed to the
Criminal Investigation Division, and
each caller speaks with a Special Agent
or Tax Fraud Investigative Aide who dutifully
records the information provided, trying
to elicit as much detail as possible.
If warranted, follow-up meetings are
arranged, and the relevant IRS files
are pulled for review. Many of these
calls are of mere entertainment value,
but more than a few result in full scale
tax fraud investigations. The confidentiality
of these informants is jealously guarded
by the IRS, and many taxpayers are investigated,
tried, convicted and incarcerated without
ever knowing that the process began with
a tip from a former employee or spouse.
III. Staffing of Tax Fraud Investigations
A. Special Agents
Successful football teams study the
opposing players with great interest,
and it is no less important for corporate
officers and their representatives to
know who is on the other side in an IRS
criminal investigation. As noted above,
these investigations are conducted by
Special Agents from the IRS Criminal
Investigation Division.11 The
agents involved in these cases are a
relatively well trained group. The recruiting
standards are the highest for any non-lawyers
position in the Service, and indeed many
Special Agents are lawyers or Certified
Public Accountants. The Criminal Investigation
Division has a far lower turnover rate
than the Examination or Collection Divisions,
and the typical Special Agent stays with
the IRS until retirement. Many have previously
worked as Revenue Agents in the Examination
Division, and at one time such experience
was required.12
Unlike Revenue Agents, who are under
a great deal of pressure to close civil
tax audits as quickly as possible, Special
Agents have the luxury of time. Often
a tax fraud investigation takes twelve
to twenty-four months to complete, with
1,000 to 2,000 staff hours being devoted
to the case. In appropriate circumstances,
an entire team of agents will be assigned
to a large corporate criminal investigation,
and the resources they are permitted
to devote where the case appears to have
good prosecution potential will be virtually
unlimited.
B. Joint Investigations with Cooperating
Revenue Agents
Criminal tax cases are usually conducted
as "joint investigations," in which one
or more Revenue Agents from the Examination
Division are assigned to assist the Special
Agents with the case. If the investigation
results from a referral from an examiner
who detects indications of possible fraud
during a civil audit, often this examiner
is assigned as the "cooperating agent." In
other cases, the cooperating agent will
be one of a small cadre of the most senior
and experienced Revenue Agents in the
District. These agents, like their Special
Agent counterparts, have often testified
in numerous criminal trials, and make
extremely effective government witnesses.
During the investigation, the cooperating
Revenue Agents are responsible for making
all computations of the actual tax consequences
of the fraudulent conduct alleged, and
provide invaluable assistance to the
criminal investigators in the more complex
and technical areas of tax law and accounting
often encountered in large corporate
investigations.13
IV. Classification of IRS Criminal
Investigations
A. Administrative vs. Grand Jury Investigations
Criminal tax fraud cases are either
handled as "administrative" or "grand
jury" investigations. In the former,
the Service conducts the investigation
on its own, utilizing the administrative
summons to compel the production of documents
and testimony, while in grand jury investigations
the Special Agents work in conjunction
with the local U.S. Attorney's Office
and/or the Department of Justice Tax
Division, and utilize grand jury subpoenas
to obtain the documents and testimony
they seek.
The Service's stated policy is to utilize
administrative investigations when possible,
and to request that an investigation
be conducted by a grand jury only where
the IRS is experiencing particular difficulty
obtaining the evidence it needs through
the use of administrative summonses,
where an investigation would be facilitated
by the ability to grant immunity to key
witnesses,14 or
where the investigation be more efficient
if integrated with a probe already being
conducted by a grand jury in conjunction
with the U.S. Attorney's Office:
Investigations of particular cases or
projects may be conducted by means of
the administrative process, or by seeking
a grand jury investigation. The administrative
process is the preferred alternative
and all investigations shall be by means
of the administrative process unless...
seeking a grand jury investigation is
necessary and appropriate in the circumstances
where:
(a) It is apparent that the administrative
process cannot develop the relevant
facts within a reasonable period of
time, or
(b) Coordination of the tax investigation
with an on-going grand jury investigation
would be more efficient, and
(c) The case has significant deterrent
potential. IRM 9267.21.
An IRS request that a matter be handled
by grand jury investigation is directed
to the Department of Justice, where authority
to approve such requests has been delegated
to the Deputy Assistant Attorney General
in charge of the Criminal Section of
the Tax Division.15
U.S. Attorney's Offices throughout the
country also initiate tax-related grand
jury probes when investigations being
conducted by their offices reveal evidence
of possible tax crimes. As with requests
initiated by the IRS, such grand juries
may be utilized only with the approval
of the Department of Justice Tax Division.
There are numerous procedural differences
between grand jury and administrative
cases. One such difference relates to
the method of compelling the production
of documents or testimony. As noted above,
agents conducting administrative investigations
use the statutory power of the Commissioner's
Summons.16 Administrative
summonses may be used for any civil tax
purpose, or in connection with a criminal
tax matter until the case is referred
out of the IRS to the Department of Justice.
The summons is served personally on the
person or organization whose testimony
is sought. The Internal Revenue Manual
directs that a summons to a corporation
be served "upon a corporate officer,
director, managing agent, or other person
authorized to accept service of process
for the corporation."17
A summons may be made returnable at
any time and place reasonable under the
circumstances.18 The
place specified will usually be the Special
Agent's office. The time must be at least
ten days from the date of service of
the summons.19 The
period is somewhat longer if the summons
is served on a "third-party recordkeeper."20 In
this case, notice of the issuance of
the summons must be furnished to the
taxpayer within three days of such service,
and the return date may not be less than
twenty-three days from the date of the
notice. The purpose of the period of
delay is to allow the taxpayer to challenge
the summons and halt compliance therewith
by a third-party recordkeeper.21
Disputes over the enforcement of administrative
summonses are handled by U.S. District
Courts. Willful failure to obey a summons
is a misdemeanor violation of IRC 7210,
and a person convicted thereunder may
be imprisoned for up to one year and/or
fined up to $1,000.22 In
order to contest a summons, it is necessary
for the taxpayer to file a motion to
quash within twenty days of notice of
the issuance of the summons.23 Both
the IRS and the party receiving the summons
are notified of the filing of the motion
to quash, but the party summoned nevertheless
has an obligation to assemble the records
demanded by the summons and have them
available for production on the date
specified.24
In a grand jury investigation, administrative
summonses are not used. Instead, grand
jury subpoenas are issued in coordination
with an Assistant U.S. Attorney. Unlike
IRS summonses, no notification of the
issuance of a subpoena is given to the
subject of the investigation. Furthermore,
there is no statutory delay period to
facilitate challenges, and subpoenas
can be made returnable on very short
notice.
Another significant difference between
administrative and grand jury investigations,
especially when the taxpayer under investigation
is a corporation, is access to witnesses
interviews. In an administrative investigation,
witness interviews are conducted by Special
Agents, usually at the IRS offices or
at the offices of the witnesses. A friendly
witness, such as a corporate employee,
may request that counsel for the corporation
be present during the interview. Although
the agent won't like it, he is required
to accede to this request. In a grand
jury investigation, witness interviews
often take place either informally in
the U.S. Attorney's Office, or under
oath in the grand jury. Not even counsel
for the witness himself is permitted
to be present in the grand jury room
during the witness' testimony, and whereas
a witness in an administrative investigation
has the right to record an interview
conducted by a Special Agent25,
the testimony a witness gives to a grand
jury will be available to the defense,
if at all, only pursuant to the rules
of discovery after indictment. The opportunity
to attend and even record witness interviews
during an administrative investigation
is of great benefit to defense counsel
trying to understand where the government
is going and what information it has
amassed along the way. Although witnesses
can (and should) be debriefed after they
come out of the grand jury room, it is
a poor substitute for actually having
counsel for the corporation present during
the interviews.
B. General Enforcement vs. Special Enforcement
Cases
Criminal investigations are classified
within the Internal Revenue Service as "General
Enforcement Program" or "Special Enforcement
Program" cases. The latter category includes
efforts to identify and prosecute those
who "derive substantial income from illegal
activities and violate the tax laws or
other related statutes...."26 Cases
involving narcotics dealers, corrupt
politicians, organized crime figures
and labor racketeers are typical of those
covered
V. The Purpose
of IRS Criminal Investigations
Why
does the IRS devote so much
time and money to criminal
investigations? Many
corporate and individual taxpayers,
when faced with the overwhelming
onslaught of full scale tax fraud
investigation, question whether
it makes sense for the government
to spend so much time and effort
trying to collect taxes from
them. Unfortunately,
this question misses the point. Although
the primary job of the Internal
Revenue Service is to collect money,
it is not the purpose of a criminal
investigation to secure the payment
of taxes from the individual or
corporation under investigation. Indeed,
when a criminal tax case is initiated,
the "civil features" of
the case, such as collecting taxes,
are placed in suspense.
[27]
The sole purpose
of a criminal tax investigation
is to obtain sufficient evidence to prosecute the individual taxpayer or
responsible corporate officials under scrutiny.
[28]
The objective is to foster "voluntary
compliance" among other taxpayers who observe the pain and suffering
of their peers, and who therefore choose to follow the straight and narrow
path to avoid the same fate:
The
federal tax enforcement program
is designed to protect the
public interest in preserving
the integrity of this nation's
self-assessment tax system
through vigorous enforcement
of the internal revenue laws. The
purpose of a criminal tax prosecution
is to expose the wrongdoer, thereby
deterring other potential tax violators.
[29]
All
actions taken by a corporation
and its representatives during
a criminal tax investigation
must proceed from a thorough and
realistic understanding of the
Service's objectives in these
cases. Taxpayers unfamiliar
with the process are often
tempted to think that if they
just admit their mistakes and
pay the tax the agent will go away. These
are not civil tax examinations,
and the same approach which might
lead to the rapid conclusion of
a civil audit will merely bolster
the Service's criminal case and
provide valuable evidence which
will later be used in the prosecution
of the corporation and its officers. Special
Agents enjoy nothing more than
dealing with a taxpayer or representative
who does not understand the important
differences between a civil audit
and a criminal investigation. The
investigation will end only when
in the view of the agent "sufficient
evidence to convict has been obtained
and there are no reasonable grounds
to expect that further investigation
may produce significant results
in relation to the available evidence
and to the additional time and
investigative effort involved."
[30]
VI. The Special
Agent's Report
The final
product of the IRS criminal
investigation is the Special
Agent's Report.
[31]
This report bears
about as much resemblance to the
typical Revenue Agent's Statement
of Audit Changes as a Reader's
Digest story bears to a James Michener
novel. The
hundreds, or thousands, of documents collected by the Special Agent during
his or her investigation will be assembled, labelled,
organized, scheduled and explained. The
fraudulent transactions will be explained in narrative form, with extensive
cross-references to the documents and to transcripts of the testimony of
the witnesses. All contacts with
the taxpayer or the taxpayer's representatives, no matter how innocuous,
will be documented by contemporaneous memoranda. Particular
attention is paid to those items of evidence which demonstrate that the
misstatements on the returns or other inaccuracies were the product of
willful intent, and not innocent mistakes or inadvertence. A computation
of the tax consequences of the alleged fraudulent transactions, i.e. the
omitted income or the false deductions, will be prepared by the cooperating
Revenue Agent and included in the report. Finally, all defenses
raised or even suggested by the taxpayer, no matter how outlandish, will
be set forth, and where possible refuted, with documents and the testimony
of witnesses.
The purpose of the Special Agent's Report is to synthesize
and present all of the evidence to
be used in the various stages of
review and in the ultimate prosecution
of the case.
[32]
Reports are also
written when the agent concludes
that the facts do not warrant prosecution,
although these "withdrawal" reports
don't contain the same degree of detail and documentary support found in
a "prosecution" report. The agent, who has typically developed
a deep personal commitment to the case by this point, prepares the report
to speak for him in the review process which follows, and to forcefully
convey his conclusion that the case is one which the government can successfully
prosecute. Although intended
as a straightforward presentation of the facts, it is inevitable that the
agent's personal sense of commitment to the case reflects itself in the
interpretation of the facts and the conclusions drawn therefrom.
[33]
The Special Agent's Report follows the
case throughout its subsequent administrative life, and all reviewer who
deal with the case later will have had their opinion of the case formed
in large measure by this document.
VII. To Be
Continued....
In
the next issue of the Corporate Criminal
Liability Reporter, we will examine
the processing of the Special Agent's
prosecution recommendation as it
is reviewed first within the Criminal
Investigation Division, the by IRS
District counsel, and finally by
the Criminal Section of the Department
of Justice Tax Division, before finally
being sent to the U.S. Attorney's
Office in the appropriate district
for indictment and trial. At
each stage of this review sequence
defense opportunities are presented,
and a knowledge of the process
is essential if corporate counsel
is to effectively utilize the opportunities
which the process provides.
. IRM
4231, Audit Guidelines for Examiners, '981(1).
. The
Audit Guidelines for Examiners advises
Revenue Agents "(t)he discovery
and development of fraud cases
is a normal result of effective examinations. Auditing
techniques employed by examiners,
if thy are to be effective, should
be designed to disclose not only
errors in accounting and application
of tax law, but also irregularities
that indicate the possibility of
fraud." IRM 4231, '961(1).
. "The
Audit Guidelines for Examiners" states
that (t)he first symptom alerting
the examiner to the possibility of
fraud will frequently be provided
by the taxpayer. Conduct
during the examination and method
of doing business may be indicative
of the filing of improper returns. IRM
4231, '962(1).
. See
Marvin J. Garbis, "Handling
the Eggshell Audit."
. Sometimes
an enthusiastic Revenue Agent will
follow the road too far before referring
the case to the Criminal Investigation
Division, and a few agents have engaged
in outright deception to gather this
information prior to preparing the
referral. In
a few cases, this has resulted in
suppression of the evidence gathered. U.S. v. Toussaint, 456 F.Supp. 1069 (S.D. Texas 1978), but see U.S. v. Caceres, 440 U.S. 741 (1979).
. For
example, a project might seek to
identify well drillers from city
or county permits or funeral directors
from death certificate records. This information is then cross-checked
against returns, giving preliminary
indications of failure to file or
understatement of income. In
a particularly interesting recent
effort, the "Business Opportunities
Project," the Service sought
and found businessmen who had cheated
on their taxes by the device of using
Special Agents posing as prospective
buyers of their companies. Often
a "second set of books" was
produced to substantiate income higher
than that shown on the tax returns,
and to thus justify a higher value
for the business being sold. See Jones
v. Berry, 722 F.2d 443 (9th Cir.,
1983), cert. den., 104 S.Ct.
2343 (1984).
. A
formal agreement has been in place
for almost ten years between the
IRS and the Drug Enforcement Agency,
under which the DEA provides to the
IRS names and other information on
DEA "Class I" violators. See IRM 4566.52 et seq.
. See
Fink, Tax Fraud, p.5-19 (1986).
. IRC §7623 and IRM 4569.1. The reward can be as high as 10% of the
taxes collected as a result of the
information furnished.
. Practitioners
frequently deal with clients who
have been contacted by IRS employees
but do not know whether these generic
IRS "agents" were Revenue
Agents, Revenue Officers or Special
Agents. Corporate employees should be instructed
that in any official encounter with
an employee of the IRS they should
record the name, title and office
affiliation of the person by whom
they are contacted. In
addition, it is crucial to keep good
notes and contemporaneous memos on
what is said by and to an IRS agent
and what documents are furnished
to him.
. A
novice trial attorney in his first
criminal tax case is reported to
have opened his cross examination
of the Special Agent by reaching
for a little humor, asking, "Agent
Smith, just what is it that makes
you so special?" Neither
the young lawyer nor his client recovered
after the agent listed for the jury's
benefit his various academic degrees,
business and accounting courses,
extensive government training, numerous
major investigations, and the series
of awards he had received for his
successful cases. Corporate
counsel should never underestimate
either the expertise or tenacity
of the Special Agents assigned to
an investigation.
. The
cooperating Revenue Agent in a joint
investigation is responsible for
the "examination features" of
the case, including "reconciliation
of the taxpayer's records with his/her
tax returns, test-checking book entries,
inspecting canceled checks, reconciling
control accounts with subsidiary
accounts, determining and substantiating
tax and accounting adjustments having
no significant effect on the criminal
features of the case, and computation
of the basis for tax and the tax
liabilities, including such computations
in those instances when the taxpayer
has no books and records." IRM
4564.31.
. In
the last few years, the IRS has been
making more use of administrative
immunity. The
IRS, with the concurrence of the
Department of Justice, can grant
immunity to a witnesses without the
intervention of the US Attorney's
Office or the Courts.
. Department
of Justice, Manual for Criminal
Tax Trials, p.1-9; IRM 9267.22.
. Regs. '1.301.7605-1(a).
. Regs. '301.7609-1 provide that notice is not required
if the person summoned is an employee
of the taxpayer.
. "Any
person who, being duly summoned to
appear to testify, or to appear and
produce books, accounts, records,
memoranda, or other papers, as required
under '' 6420(e)(2), 6421(f)(2), 6427(j)(2), 7602, 7603 and 7604(b), neglects to appear or to produce
such books, accounts, records, memoranda
or other papers, shall, upon conviction
thereof, be fined not more than $1,000,
or imprisoned not more than 1 year,
or both, together with costs of prosecution." IRC §7210.
. IRM
9781-50, Handbook for Special Agents, '311(2)(a).
. Controls
are placed on all related tax modules
in the IRS computer system for the
taxpayer under investigation so that
all activity on such accounts is
routed directly to the Special Agent. The Special Agent controlling the case
must even be consulted before payments
are posted to the taxpayer's account.
. The
Special Agent's Handbook states that "(t)he
purpose of a special agent's investigation
is to obtain facts and evidence. His/her primary aim is to determine whether
the person under investigation has
committed a criminal violation, and,
if the facts disclose violations
subject to criminal or civil penalties
within the jurisdiction of the Criminal
Investigation Division, to obtain
whatever evidence is required to
sustain criminal proceedings of the
assertion of civil penalties." IRM
9781, Special Agent's Handbook, '313(1).
. United
States Attorney's Manual, '6-2.010.
. IRM
9781, Special Agent's Handbook, '313(4).
. In
a grand jury investigation the Special
Agent's Report is abbreviated in
form and content because the Department
of Justice and the grand jury have
already been involved in the case,
often from its inception.
. The
Special Agent's Handbook, IRM 9781,
explains that "the purpose of
a report is to present in suitable
form all the pertinent facts relating
to a matter in order that appropriate
action may be taken." See generally IRM 9781, '610
et seq.
. It
is difficult to address this editorial
license, however, because the Special
Agent's Report is never disclosed
in its entirety, and even those parts
which may be obtained by the defense
are surrendered by the government
only as part of post-indictment discovery.
