DEPARTMENT OF JUSTICE

JOURNAL OF FEDERAL LAW AND PRACTICE

Volume 71 December 2023 Number 4

Acting Director
Norman Wong
Editor-in-Chief
Christian A. Fisanick
Managing Editor
Kari Risher
University of South Carolina Law Clerks
Chandler Hines LauraKate Roland
Jay Slappy Kara Wagstaff

United States Department The Department of Justice Journal of

of Justice Federal Law and Practice is published
by the Executive Office for United States
Executive Office for United
Attorneys
States Attorneys
Office of Legal Education
Washington, D.C. 20530
1620 Pendleton Street
The Department of Justice Journal
Columbia, SC 29201
of Federal Law and Practice is
published pursuant to Cite as:
28 C.F.R. § 0.22(c).
71 DOJ J. FED. L. & PRAC., no. 4, 2023.

Internet Address:

https://www.justice.gov/usao/resources/
journal-of-federal-law-and-practice

The opinions and views contained herein are those of the authors and do not necessarily reflect
the views of the Department of Justice. Further, they should not be considered as an
endorsement by EOUSA of any policy, program, or service.
Page Intentionally Left Blank
 Tax Enforcement
In This Issue

Introduction
David A. Hubbert . . . . . . . . . . . . . . . . . . . . . . . 1

Restitution in Criminal Tax Cases: Common Pitfalls and

Practical Strategies
Elissa Hart-Mahan & Hannah Cook . . . . . . . . . . . . 5

Investigating Legal Source Income Tax Cases

Todd Ellinwood & Caryn Finley . . . . . . . . . . . . . . 23

Follow That Lead! Obtaining and Using Tax Information

in a Non-Tax Case
Andrew H. Kahl . . . . . . . . . . . . . . . . . . . . . . . . 47

Tax Fraud Involving COVID-Relief Provisions

David Zisserson . . . . . . . . . . . . . . . . . . . . . . . . 63

Attorney–Client Privilege in the Context of Tax

Preparation and Tax Planning
Larry Wszalek & Stuart Wexler . . . . . . . . . . . . . . 79

Prosecuting Tax Obstruction Under 26 U.S.C. § 7212(a)

Gregory S. Knapp & Joseph B. Syverson . . . . . . . . . 97

Sentencing Advocacy in Criminal Tax Cases—Making the

Government’s Case for the Appropriate Sentence
Stanley J. Okula, Jr. & Matthew Hicks . . . . . . . . . . 109

A Fool for a Client: Legal and Practical Considerations

When Facing Pro Se Defendants
Katie Bagley & Melissa Siskind . . . . . . . . . . . . . . . 129

A Taxing Dilemma: Navigating the Crime–Fraud

Exception in Criminal Tax Cases
Sean Beaty & Wilson Stamm . . . . . . . . . . . . . . . . 155

Prosecuting Fraudulent Tax Return Preparers

Sarah Kiewlicz & Thomas F. Koelbl . . . . . . . . . . . . 175
 Tax Enforcement
In This Issue - Continued
Gathering and Using Foreign Evidence in Tax Cases
Kimberle E. Dodd & Nanette L. Davis . . . . . . . . . . 199

Monetary Claims Against the Government: When Are They

Tax Refund Cases?
Jason Bergmann & Richard J. Markel . . . . . . . . . . . 223

They Don’t Make ‘Em Like They Used To: Statutory

Jurisdictional Requirements in the Age of the Clear-
Statement Rule
Marie E. Wicks & Michael W. May . . . . . . . . . . . . 241

Note from the Editor-in-Chief

Christian A. Fisanick . . . . . . . . . . . . . . . . . . . . . 265
Introduction
David A. Hubbert
Deputy Assistant Attorney General
Tax Division
It brings me great pleasure to introduce this issue of the Department of
Justice (Department) Journal of Federal Law and Practice, which focuses
on tax enforcement, especially criminal tax enforcement. We welcome this
opportunity to share the expertise and practical insights of the talented
trial attorneys and AUSAs who litigate these complex and challenging
cases.
This year marks the 90th anniversary of the creation of the Tax Di-
vision, which is charged with primary responsibility for supervising all
federal litigation involving the internal revenue laws. The Tax Division’s
mission is to enforce the nation’s tax laws fully, fairly, and consistently
in federal and state courts throughout the country in order to promote
voluntary compliance with the tax laws, maintain public confidence in the
integrity of the tax system, and promote the sound development of the in-
ternal revenue laws. That mission remains as critical as ever. The Internal
Revenue Service (IRS) projects that the tax gap—the difference between
taxpayers’ true liability and the amount of tax paid on time—will rise
to $688 billion per year.1 Along with the IRS’s own audit and collection
efforts, the Department’s tax enforcement work is critical to recovering
unpaid taxes, deterring would-be tax cheats, and ensuring that those who
pay their fair share on time don’t bear the tax burden of those who flout
the laws.
I am pleased that some of our most experienced litigators and alumni
have contributed articles to this issue that address every stage of a crimi-
nal tax case from investigation through charging, litigating, and sentenc-
ing, as well two articles on jurisdictional issues in civil cases.
Several of the articles in this issue discuss common categories of tax
offenses. Assistant Chief Thomas Koelbl and Attorney Sarah Kiewlicz dis-
cuss prosecutions of return preparers who prepare false returns for their
clients, or who prepare fraudulent returns in the names of identity theft
victims. They give advice on how to investigate, charge, and successfully
prosecute and sentence these offenders. Assistant United States Attor-

1 IRS Research, Applied Analytics & Statistics, Federal Tax Compliance Research:
Tax Gap Projections for Tax Years 2020 and 2021, at 4, Pub. 5869 (2023),
https://www.irs.gov/pub/irs-pdf/p5869.pdf.

December 2023 DOJ Journal of Federal Law and Practice 1

ney (AUSA) Caryn Finley and Criminal Appeals and Tax Enforcement
Policy Section (CATEPS) Attorney Todd Ellinwood review tactics for
investigating and prosecuting these “legal source income” cases, in which
a taxpayer seeks to evade their obligations to report and pay taxes on
income earned legally. Such cases are critical for effective tax enforce-
ment, and a solid investigation can help establish the necessary mens rea.
And, because criminals are constantly innovating, and fraudsters were
quick to exploit the federal programs intended to provide relief in the
face of the COVID-19 pandemic, Assistant Chief David Zisserson, the
Tax Division’s COVID fraud coordinator, discusses the tax-related relief
CARES Act provisions that have been the subject of fraud. He discusses
the statutes that can and cannot be used to charge this fraud and the
Department procedures implicated in these cases.
In 2018, the Supreme Court’s opinion in Marinello v. United States in-
terpreted the tax obstruction statute, 26 U.S.C. § 7212(a), to require that
the defendant’s obstructive conduct have a nexus to a “particular admin-
istrative proceeding.”2 CATEPS Attorneys Gregory Knapp and Joseph
Syverson explain what that means for attorneys investigating, charging,
and prosecuting these “corrupt endeavors” to obstruct and impede the
administration of the internal revenue laws.
Our cases increasingly involve people, entities, and financial accounts
around the world, which means investigations must become increasingly
international. Senior Litigation Counsel Nanette Davis and Attorney Kim-
berle Dodd offer practical suggestions and considerations for attorneys
seeking to obtain foreign evidence and information, highlighting the guid-
ance and resources available from both the Department and the IRS.
The privacy of tax returns and other tax information is protected by
law, but that information is not only critical evidence in tax prosecutions–
it can be a powerful tool in prosecuting other kinds of crime. First Assis-
tant U.S. Attorney Andrew Kahl of Iowa reviews how to obtain and use
tax information in non-tax cases to further your investigation and bolster
your proof at trial.
Pro se defendants are always a challenge, but tax defiers and sovereign
citizens often seek to manipulate the right to represent themselves to
impede judicial proceedings. Melissa Siskind, Director of the National Tax
Defier Initiative, and Assistant Chief Katie Bagley provide guidance for
prosecutors navigating Faretta hearings to ensure that the defendant’s
waiver of counsel holds up on appeal and practical tips for litigating
against pro se defendants.
Attorney–client privilege is always a tricky area to navigate, so we

2 138 S. Ct. 1101 (2018).

2 DOJ Journal of Federal Law and Practice December 2023

have two articles to help prosecutors navigate this area in criminal tax
investigations. Section Chief Larry Wszalek and Attorney Stuart Wexler
discuss privilege issues when an attorney participated in tax prepara-
tion and planning, including dual-purpose communications and advice
for minimizing the burden of managing potentially privileged documents.
Senior Litigation Counsel Sean Beaty and Attorney Wilson Stamm help
attorneys evaluate when to invoke the crime–fraud exception to the priv-
ilege, which revokes protection from communications intended to further
a client’s illegal scheme, and practical tips for doing so.
A meaningful sentence of incarceration is essential to appropriately
punish offenders and deter would-be tax cheats, but prosecutors may
struggle against some judges’ perception that tax crime isn’t serious
crime. To counter this, prosecutors should consider sentencing at every
stage, from investigation to sentencing hearing. Senior Litigation Counsel
Stan Okula and Attorney Matthew Hicks offer a step-by-step plan to de-
velop good sentencing facts and persuasively present them to the district
court.
Restitution is integral to criminal tax enforcement, ensuring both that
tax cheats don’t keep their ill-gotten gains and that the Treasury is made
whole, but restitution in tax cases is complicated. CATEPS Attorneys
Elissa Hart-Mahan and Hannah Cook discuss practical strategies for ob-
taining restitution and avoiding common pitfalls.
This issue also includes two articles that may interest civil litigators.
Assistant Chief Michael May and Appellate Attorney Marie Wicks review
recent developments in the shifting landscape of jurisdictional versus non-
jurisdictional claims-processing rules in both tax and non-tax civil cases,
offering practical strategies for litigators. Assistant Chief Jason Bergmann
and Attorney Richard Markel of the Division’s Court of Federal Claims
section explain the jurisdiction of the Court over monetary claims against
the United States, which is sometimes exclusive and sometimes overlaps
with the district courts, and when such claims are tax refund cases that
qualify for district-court jurisdiction.
I would like to thank the authors for their excellent contributions,
as well all those who helped edit, review, and publish this issue of the
Journal. Tax cases can be both enormously challenging and enormously
rewarding (in both the figurative and the financial sense), and I hope
these articles are useful to you in the very necessary work of protecting the
public fisc against fraud and ensuring a tax system fair to all Americans.

December 2023 DOJ Journal of Federal Law and Practice 3

About the Author
David A. Hubbert is the Deputy Assistant Attorney General serving as
the Head of the Tax Division at the Department of Justice in Washington,
D.C. He began his long career with the Tax Division through the Honors
Program. He has served as a civil trial and appellate attorney, trial section
chief, the Deputy Assistant Attorney General for Civil Matters, and the
Acting Attorney General for the Division.

4 DOJ Journal of Federal Law and Practice December 2023

Restitution in Criminal Tax
Cases: Common Pitfalls and
Practical Strategies
Elissa Hart-Mahan
Criminal Appeals and Tax Enforcement Policy Section
Tax Division

Hannah Cook
Criminal Appeals and Tax Enforcement Policy Section
Tax Division
Restitution is a Department of Justice priority, but restitution in crim-
inal tax cases presents some unique challenges. This article provides an
overview of restitution in criminal tax cases, along with tips for avoiding
common mistakes.

I. Criminal restitution basics

Criminal restitution is a monetary penalty imposed at sentencing that
aims to make victims of crime whole by compensating them for their ac-
tual losses.1 Federal courts have “no inherent power to order restitution,”
and thus a sentencing court may only order restitution as authorized
by statute.2 Which restitution statute applies depends on the offense of
conviction and will affect the nature and duration of the restitution obli-
gation, as explained further in part II.
The government can be, and typically is, a victim for restitution pur-
poses in criminal tax cases.3 This part covers issues common to restitu-
tion in all criminal cases, including how restitution is calculated. Part
II explains how to determine which restitution statute applies. Part III
discusses the district court’s obligation to set a payment schedule and
common issues that arise related to such schedules. Part IV addresses
the Internal Revenue Service’s (IRS’s) statutory mandate to assess and
collect restitution ordered in criminal tax cases. And part V provides a

1 United States v. Brock-Davis, 504 F.3d 991, 998 (9th Cir. 2007).
2 United States v. Helmsley, 941 F.2d 71, 101 (2d Cir. 1991).
3 See United States v. Ekanem, 383 F.3d 40, 44 (2d Cir. 2004) (government meets the
definition of “victim” under the MVRA).

December 2023 DOJ Journal of Federal Law and Practice 5

summary checklist with restitution best practices.
A. How to calculate restitution
Restitution is based on the actual loss caused by the offense of convic-
tion, and thus it must be calculated differently from the tax loss used to
determine the offense level under the U.S. Sentencing Guidelines (Guide-
lines).4 The district court must determine the amount of restitution and
cannot delegate this determination to the Bureau of Prisons, U.S. Pro-
bation, or an executive branch agency.5 The government must prove the
amount of loss for restitution by a preponderance of the evidence.6

1. Actual loss
The restitution amount should be based on the loss actually suffered
by the victim of the offense.7 Restitution does not include intended loss
that does not actually occur.8 So, for example, if a defendant filed false tax
returns seeking fraudulent refunds, the amount of restitution is limited
to the refunds that the IRS actually issued. Because the Guidelines loss
amount typically includes all intended loss, the restitution amount may
differ from the Guidelines loss amount. Courts will vacate restitution
orders based on intended rather than actual loss, so prosecutors should
ensure that the restitution amount equals the actual loss to the victim.9
The amount of actual loss should include interest, in order to fully
compensate the victim for the time-value of money. Thus, prosecutors
should include pre-judgment interest (that is, the interest that accrues
between the date of the victim’s loss and the date of sentencing) in the
amount of restitution. Post-judgment interest (that is, interest that ac-
crues on the restitution debt after sentencing) is governed by 18 U.S.C. §
3612(f), and the district court may waive post-judgment interest if it finds
that the defendant does not have the ability to pay.
While interest is part of the actual loss to the victim, civil penalties
generally should not be included in restitution because they are not an

4 See United States v. Galloway, 509 F.3d 1246, 1253 (10th Cir. 2007) (remanding for
recalculation of restitution amount where district court used estimated rather than
actual loss).
5 United States v. Butler, 297 F.3d 505, 519 (6th Cir. 2002).
6 18 U.S.C. § 3664(e).
7 18 U.S.C. §§ 3663(a)(1)(A), 3663A(a).
8 See United States v. Rhodes, 330 F.3d 949, 953 (7th Cir. 2003) (intended loss under
the Guidelines differs from the actual loss contemplated by restitution statutes).
9 See, e.g., United States v. Finkley, 324 F.3d 401, 404 (6th Cir. 2003);
United States v. Messner, 107 F.3d 1448, 1455 (10th Cir. 1997).

6 DOJ Journal of Federal Law and Practice December 2023

aspect of the victim’s actual loss.10 An exception to this general rule
exists, however, when the object of the offense involves the failure to pay
civil penalties, as in evasion of payment under 26 U.S.C. § 7201 or willful
failure to pay under 26 U.S.C. § 7203. In other cases, as discussed in
part II, penalties may be included only if the defendant agrees to pay the
penalties as part of a plea agreement.11

2. Loss caused by the offense of conviction, not

relevant conduct
The restitution amount is limited to the loss “directly and proxi-
mately” caused by the offense of conviction and, absent agreement by
the defendant, does not include loss caused by relevant, uncharged, or
acquitted conduct.12 This is another way in which the restitution amount
will differ from the Guidelines loss amount. Thus, if a defendant is charged
with multiple counts in an indictment, but pleads guilty to only a sin-
gle count, restitution is limited to the loss caused by that single count
unless the plea agreement provides otherwise, even if the Guidelines loss
amount would include the loss caused by all of the defendant’s conduct.
Restitution orders that include loss caused by relevant conduct without
the defendant’s agreement will be vacated on appeal.13
In cases where “a scheme, conspiracy, or pattern” is an element of the
offense of conviction, restitution should include all loss caused by conduct
committed in the course of the scheme.14 And, as discussed in part II, a
defendant may agree to pay restitution for loss caused by relevant conduct
as part of a plea agreement. The plea agreement should specify the details
of what relevant conduct is included.15

10 See United States v. Chalupnik, 514 F.3d 748, 754 (8th Cir. 2008) (“[T]he amount
of restitution that may be awarded is limited to the victim’s provable actual loss, even
if more punitive remedies would be available in a civil action.”).
11 18 U.S.C. § 3663(a)(3) (“The court may also order restitution in any criminal case
to the extent agreed to by the parties in a plea agreement.”).
12 United States v. Frith, 461 F.3d 914, 921 (7th Cir. 2006); see also Hughey v. United
States, 495 U.S. 411, 413 (1990).
13 See, e.g., United States v. Inman, 411 F.3d 591, 595 (5th Cir. 2005);
United States v. Barnhart, 599 F.3d 737, 747 (7th Cir. 2010); United States v. Amason,
318 F. App’x 442, 444 (8th Cir. 2009) (not precedential).
14 United States v. Frith, 461 F.3d 914, 920 (7th Cir. 2006) (internal quotation omit-
ted).
15 18 U.S.C. § 3663(a)(3).

December 2023 DOJ Journal of Federal Law and Practice 7

B. Restitution cannot be reduced after sentencing,
but a defendant is entitled to appropriate credits
Once a district court has entered a restitution order and any di-
rect appeals have concluded, a defendant generally cannot seek to re-
duce the amount of restitution.16 The Mandatory Victims Restitution
Act (MVRA) provides a mechanism for a victim to seek to increase the
amount of restitution based on newly discovered losses, but no such mech-
anism exists for a defendant seeking to reduce a restitution obligation
after the sentence becomes final.17
That said, a victim is not entitled to recover more than the amount
of loss suffered as a result of the offense.18 Thus a defendant is entitled to
receive credit for payments made to compensate the victim.19 In tax cases,
this means that a defendant’s restitution payments should be credited to
any applicable civil tax liabilities, and any payments made to the IRS to
satisfy the civil tax liabilities upon which the restitution is based should
also be credited toward the defendant’s restitution liability. For example,
in return preparer cases, the defendant may be entitled to credits based
on payments made by the clients for the liabilities at issue.
Although a defendant must receive credit for restitution payments
made that correspond to civil tax liabilities, a criminal restitution obliga-
tion in a tax case is distinct from civil tax liability, and a restitution order
does not prevent the IRS from collecting civil tax liabilities or assessing
additional civil penalties for the years at issue.20 Any plea agreement
should explain that the agreement to pay restitution does not settle, sat-
isfy, or compromise the defendant’s civil tax liabilities.

16 18 U.S.C. § 3664(o); United States v. Puentes, 803 F.3d 597, 607 (11th Cir. 2015);
United States v. Wyss, 744 F.3d 1214, 1219 (10th Cir. 2014).
17 18 U.S.C. § 3664(d)(5). See generally Pub. L. No. 104-132, § 204(a), 110 Stat. 1227
(1996) (codified as amended at 18 U.S.C. § 3663A).
18 See United States v. Nucci, 364 F.3d 419, 423–24 (2d Cir. 2004).
19 See United States v. Helmsley, 941 F.2d 71, 102 (2d Cir. 1991);
United States v. Ruppert, 82 F. App’x 196 (9th Cir. 2003).
20 Morse v. Commissioner, 419 F.3d 829, 833–35 (8th Cir. 2005).

8 DOJ Journal of Federal Law and Practice December 2023

 Amount of Restitution
Guilty plea = amount
agreed to in plea
Trial conviction = actual loss from counts of agreement (can in-
conviction clude relevant con-
duct)
If scheme or conspir- If there is no scheme Always use the Tax
acy is an element of or conspiracy, include Division Form Plea
the offense, include loss directly caused by Language to ensure
all loss caused dur- the offense of convic- clarity.
ing the course of the tion.
scheme.

II. Picking the right statutory framework

One common area of confusion is whether the district court may im-
pose restitution as an independent part of a defendant’s sentence, or
whether restitution is only available as a condition of supervised release.
Another issue that regularly arises is whether restitution is mandatory
or discretionary. The answers to these questions depend on two factors:
whether the defendant is convicted of Title 18 or Title 26 offenses, and
whether the defendant pled guilty or was convicted at trial.

A. Step one: Does the offense of conviction arise

under Title 18 or Title 26?
The offense of conviction determines which restitution statute applies,
and whether restitution is mandatory or discretionary.

1. Title 18 offenses
For most Title 18 tax-related offenses, restitution is mandatory and
must be ordered as an independent part of the sentence.21 The MVRA
instructs the sentencing court to order restitution for any offense that is
“an offense against property under [Title 18] . . . including any offense
committed by fraud or deceit.”22 The MVRA therefore covers conspiracies
to defraud the United States under 18 U.S.C. § 371, as well as wire or mail
fraud, making a false claim against the United States (18 U.S.C. §§ 286

21 See United States v. Turner, 718 F.3d 226, 236 (3d Cir. 2013); United States v. Gib-
son, No. 1:15-CR-10323-IT, 2020 WL 1027774, at *1 (D. Mass. Mar. 3, 2020).
22 18 U.S.C. § 3663A(c)(1)(A)(ii).

December 2023 DOJ Journal of Federal Law and Practice 9

and 287), and theft of government funds (18 U.S.C. § 641).23
Once the district court determines that a particular offense falls within
the MVRA, restitution is mandatory for that offense regardless of a de-
fendant’s financial situation.24 Restitution under the MVRA is limited to
the loss caused by the offense of conviction, though as noted above, where
the Title 18 offense includes a scheme or conspiracy as an element of the
offense, the restitution amount covers all losses caused by conduct carried
out during the course of the scheme.25 Note, however, that even though
restitution is mandatory and the total amount of restitution is not im-
pacted by a defendant’s financial circumstances, the district court is still
required to consider those circumstances when establishing a payment
schedule as described in part III.26
Restitution for Title 18 offenses must be ordered as an independent
part of the sentence. This means that the restitution liability remains en-
forceable for “the later of 20 years from the entry of judgment or 20 years
after the release from imprisonment” of the defendant.27 As discussed
further in part III, restitution ordered as an independent part of the sen-
tence can be made due and payable immediately, and a defendant can be
ordered to pay such restitution while he is incarcerated, as provided by
the district court’s judgment and payment schedule.
a. Identity theft
Cases in which the defendant is charged with identity theft or ag-
gravated identity theft present different challenges than other Title 18
tax-related offenses. This is because, while the IRS is typically the vic-
tim of the predicate felony, the victim of the identity theft counts is not
the IRS, but the individual whose identity was stolen. Those individuals
have rights under the Victims’ Rights and Restitution Act (VRRA),28
Crime Victims’ Rights Act (CRVA),29 and other statutes, as detailed in
the Attorney General Guidelines for Victim and Witness Assistance (At-
torney General Guidelines). When a defendant is convicted of an identity

23 United States v. Turner, 718 F.3d 226, 236 (3d Cir. 2013) (conspiracy to defraud
the United States is an “offense against property” under MVRA); United States v.
Singletary, 649 F.3d 1212, 1220 (11th Cir. 2011) (wire fraud is an “offense against
property”); United States v. Blanchard, 618 F.3d 562, 577 (6th Cir. 2010) (MVRA
applies to offenses under 18 U.S.C. § 287); United States v. Ekanem, 383 F.3d 40,
42–44 (2nd Cir. 2004) (MVRA applies to offenses under 18 U.S.C. § 641).
24 United States v. Sawyer, 825 F.3d 287, 292 (6th Cir. 2016).
25 United States v. Frith, 461 F.3d 914, 920 (7th Cir. 2006).
26 United States v. Day, 418 F.3d 746, 761 (7th Cir. 2005).
27 18 U.S.C. §§ 3613(b), (f).
28 34 U.S.C. § 20141.
29 18 U.S.C. § 3771.

10 DOJ Journal of Federal Law and Practice December 2023

theft offense, the district court must order restitution to the individual
victims. Prosecutors should consult the Attorney General Guidelines and
the Victim-Witness Coordinator in the applicable district when charging
identity theft offenses.

2. Title 26 offenses
Title 26 offenses are not covered by the mandatory restitution provi-
sion of the MVRA or the discretionary restitution statute of the Victim
Witness Protection Act (VWPA).30 However, district courts may order
restitution for Title 26 offenses as a condition of probation or supervised
release. The probation statute provides that a district court may order
as a condition that the defendant “make restitution to a victim of the of-
fense.”31 The supervised release statute similarly provides that a district
court may impose “any condition set forth as a discretionary condition
of probation” under subsection (b) of the probation statute, which is the
subsection that includes restitution.32
Because both statutes use the term “may,” restitution in these cases
is discretionary, not mandatory. The Sentencing Guidelines provide, how-
ever, that a district court shall impose restitution as a term of supervised
release or probation when restitution is not otherwise provided for.33 Fol-
lowing United States v. Booker, this provision is advisory, but still strongly
suggests district courts should order restitution.34 Remember that, as dis-
cussed above, restitution may only be imposed for the losses caused by
the conduct for which the defendant was convicted.35
Note that restitution imposed as a condition of probation or super-

30 18 U.S.C. § 3663. United States v. Hoover, 175 F.3d 564, 569 (7th Cir. 1999)
(VWPA does not apply to Title 26 offenses); United States v. Meredith, 685 F.3d 814,
827 (9th Cir. 2012) (noting MVRA does not apply to Title 26 offenses).
31 18 U.S.C. § 3563(b)(2). See also United States v. Batson, 608 F.3d 630, 634
(9th Cir. 2010) (“The district court is therefore authorized by § 3563(b)(2) to order
restitution as a condition of probation to the victim of any criminal offense, including
those in Title 26, for which probation is properly imposed.”).
32 18 U.S.C. § 3583(d). See also Batson, 608 F.3d at 635 (“Accordingly, the Super-
vised Release Statute, together with the Probation Statute, unambiguously authorizes
federal courts to order restitution as a condition of supervised release for any crim-
inal offense, including one under Title 26, for which supervised release is properly
imposed.”).
33 U.S.S.G. § 5E1.1(a)(2).
34 See United States v. Frith, 461 F.3d 914, 920 n.2 (7th Cir. 2006) (noting § 5E1.1
advisory after United States v. Booker ).
35 Batson, 608 F.3d at 637 (restitution imposed as a condition of supervised release
compensated only for losses caused by conduct that is the basis of the offense of
conviction).

December 2023 DOJ Journal of Federal Law and Practice 11

vised release may only be collected while the defendant is on probation
or supervised release. Collection may not begin until the defendant’s pe-
riod of supervision begins.36 If supervised release or probation is revoked,
the restitution obligation ceases unless the defendant is sentenced to an
additional term of supervised release or probation with restitution as a
condition following his release from custody.37 And restitution ordered
solely as a condition of supervised release ceases to be enforceable after
the period of supervision or probation terminates.

B. Step two: Did the defendant agree to pay

restitution as part of a plea agreement?
If a defendant agrees to pay restitution as part of a plea agreement,
that can simplify determining the amount and type of restitution that can
be ordered in a Title 26 case. The VWPA provides that a district court
may “order restitution in any criminal case to the extent agreed to by the
parties in a plea agreement,” regardless of the offense of conviction.38 The
Tax Division’s Form Plea Language, which is available in the Criminal
Tax Manual, provides a template that prosecutors should use whenever
possible to avoid ambiguity.39

1. Amount of restitution
If a defendant agrees to pay restitution as part of a plea agreement,
the parties can agree upon an amount of restitution that goes beyond
the count of conviction and that includes penalties. Section 209 of the
MVRA, the Justice Manual, and the Attorney General Guidelines all
mandate that, when negotiating plea agreements, prosecutors must con-
sider “requesting that the defendant provide full restitution to all victims
of all charges contained in the indictment or information, without regard
to the count to which the defendant actually plead[s].”40 Accordingly,
prosecutors should seek to have defendants agree to pay restitution for

36 United States v. Hassebrock, 663 F.3d 906, 924 (7th Cir. 2011) (“Because a district
court can only impose restitution as a condition of supervised release, a defendant
cannot be required to pay restitution until his period of supervised release begins.”);
United States v. Westbrooks, 858 F.3d 317, 328 (5th Cir. 2017), vac’d on other grounds
by 138 S. Ct. 1323 (2018).
37 United States v. Gifford, 90 F.3d 160, 162 (6th Cir. 1996) (“restitution obligations
cease upon revocation of probation when the restitution is a discretionary condition
of probation or supervised release).
38 18 U.S.C. § 3663(a)(3).
39 U.S. Dep’t of Just., Criminal Tax Manual, 44.10.
40 Pub. L. No. 104-132 § 209; U.S. Dep’t of Just., Justice Manual, 9-16.320;
Attorney General Guidelines, 65–66.

12 DOJ Journal of Federal Law and Practice December 2023

all the loss caused by their relevant conduct when negotiating plea agree-
ments. The simplest way to handle the amount of restitution in a plea
agreement is to specify a sum certain that defendant agrees to pay. If
the parties cannot agree on an amount, the defendant can agree to pay
restitution for certain conduct and leave the amount of restitution to be
determined by the district court.41 If the parties have not agreed to a sum
certain, prosecutors should be sure to identify the conduct for which the
defendant is agreeing to pay restitution with as much specificity as possi-
ble, including the applicable tax years and tax type.42 The plea agreement
should state that restitution is due in full and payable immediately (to
avoid issues described in part III). As noted, prosecutors should use the
Tax Division’s Form Plea Language for restitution whenever possible.

2. Plea agreements in Title 26 cases

Because 18 U.S.C. § 3663(a)(3) authorizes the district court to order
restitution “in any criminal case to the extent agreed to by the parties
in a plea agreement,” a defendant in a Title 26 case who agrees to pay
restitution may be ordered to pay restitution as an independent part of
the sentence.43 Restitution ordered as an independent part of the sen-
tence is enforceable for a much longer period of time than restitution
ordered solely as a condition of supervised release or probation, and thus
prosecutors negotiating plea agreements in Title 26 cases should seek to
include a restitution provision in all plea agreements.44 In order to ensure
that the agreement clearly provides for restitution, prosecutors should use
the Tax Division’s Form Plea Language whenever possible. Any ambigu-
ities in the agreement will be construed against the government, and an
agreement to pay taxes or to cooperate with the IRS does not constitute
an agreement to pay restitution.45 A defendant’s agreement to pay resti-
tution does not make restitution mandatory: The district court retains
discretion regarding whether to order restitution. Accordingly, prosecu-
tors should ensure that the district court explicitly orders restitution as
an independent part of the sentence at sentencing and should ensure that
the written judgment accurately reflects the court’s restitution order. The

41 United States v. Anderson, 545 F.3d 1072, 1079 n.7 (D.C. Cir. 2008) (district court
authorized to order restitution under plea agreement where parties agreed district
court should determine amount).
42 See United States v. Gottesman, 122 F.3d 150, 152 (2d Cir. 1997) (court lacked
power to order restitution under section 3663(a)(3) where plea agreement did not
mention the word “restitution”).
43 Anderson, 545 F.3d at 1077–78.
44 See 18 U.S.C. §§ 3613(b), (f).
45 Gottesman, 122 F.3d at 151–52.

December 2023 DOJ Journal of Federal Law and Practice 13

judgment should list the restitution obligation separately from the con-
ditions of supervised release.46 This step is critical, as restitution ordered
as a condition of supervised release is only collectible during the period
of supervision and is thus less likely to be fully paid.47

Type of Offense
Title 18 Title 26
Restitution is manda- Guilty plea: If the Trial conviction: The
tory as an indepen- defendant agrees, the court may order resti-
dent part of the sen- court may order resti- tution solely as a con-
tence. tution as an indepen- dition of supervised
dent part of the sen- release.
tence.

III. Payment schedules

Both the MVRA and the Sentencing Guidelines require the district
court to order restitution for “the full amount” of each victim’s losses
without regard to the defendant’s ability to pay.48 The process of for-
mulating a restitution order, however, does not end there. There is a
statutory presumption in favor of restitution being due and payable im-
mediately,49 but the MVRA also provides that the district court must
“specify in the restitution order the manner in which, and the schedule
according to which, the restitution is to be paid” after considering sev-
eral factors, including the defendant’s financial condition.50 This payment
schedule requirement causes several common issues.

46 See United States v. Gifford, 90 F.3d 160, 162 (6th Cir. 1996) (concluding district
court had imposed restitution as an independent part of the sentence where it was
listed separately from conditions of supervised release).
47 See United States v. Hassebrock, 663 F.3d 906, 924 (7th Cir. 2011) (when resti-
tution is a condition of supervised release, “a defendant cannot be required to pay
restitution until his period of supervised release begins”).
48 18 U.S.C. § 3664(f)(1)(A) (“the court shall order restitution to each victim in
the full amount of each victim’s losses as determined by the court and without con-
sideration of the economic circumstances of the defendant”); U.S.S.G. § 5E1.1(a)(2)
(court shall require restitution “for the full amount of the victim’s loss” as condition
of supervised release).
49 18 U.S.C. § 3572(d).
50 18 U.S.C. § 3664(f)(2).

14 DOJ Journal of Federal Law and Practice December 2023

A. District court record
The payment schedule may consist of a single lump-sum payment,
in-kind payments, or periodic partial payments at specified intervals.51
The payment schedule should be specified in the criminal judgment and
its formulation may not be delegated to the Bureau of Prisons or the
probation office.52
Circuits differ as to how explicitly a district court must consider the
defendant’s financial circumstances in setting a payment schedule. More
explicit remarks are required when full payment is due immediately. For
example, the Third Circuit concluded that a district court plainly erred
when it failed to state on the record that it had considered a defendant’s
financial circumstances when requiring immediate full payment.53 In an-
other case, however, the same court held that a district court did not
plainly err when it imposed a payment schedule requiring partial lump-
sum payments and then periodic installment payments without explicitly
stating it had considered the defendant’s financial circumstances.54 Gen-
erally, however, a district court should explicitly state that it has con-
sidered a defendant’s financial circumstances, particularly if it requires
payment of restitution in one lump-sum payment.

B. Clarifying the payment schedule is a floor, not a

ceiling
Many restitution orders, however, do not call for single lump-sum
payments and instead require monthly or quarterly payments. As a result,
questions often arise as to whether the government may attempt to collect
the full amount of restitution owed or only the amount the defendant owes
to date under the payment plan. In other words, is the amount due under
the payment plan a ceiling or a floor?
Section 3572 of Title 18 provides that a defendant who owes restitution
“shall make such payment immediately, unless, in the interest of justice,
the court provides for payment on a date certain or in installments.”55

51 18 U.S.C. § 3664(f)(3)(A).
52 United States v. Coates, 178 F.3d 681, 685 (3d Cir. 1999) (collecting cases); see also
United States v. Ahidley, 486 F.3d 1184, 1191 (10th Cir. 2007) (district court failed to
comply with section 3664(f)(2) when it “was completely silent about the subject of a
restitution payment schedule” at sentencing and required a single lump-sum payment).
53 Coates, 178 F.3d at 684.
54 United States v. Lessner, 498 F.3d 185, 202 (3d Cir. 2007). See also
United States v. Sawyer, 521 F.3d 792, 798 (7th Cir. 2008) (failure to set payment
schedule does not impact substantial rights or fairness of judicial proceedings).
55 18 U.S.C. § 3572(d)(1).

December 2023 DOJ Journal of Federal Law and Practice 15

Several courts have held that a payment schedule entered pursuant to
section 3664(f) does not limit the government’s ability to collect the full
amount at any time.56 These courts note section 3572’s presumption that
restitution is due immediately and that setting a payment plan under
section 3664(f) does not necessarily imply a finding that the interests
of justice warrant waiving immediate payment. Other courts, however,
have concluded the presumption was overcome where the district court
ordered specific monthly payments and did not indicate the full sum was
due immediately.57
To avoid these issues, prosecutors should ensure that both plea agree-
ments and the restitution order make clear that a payment schedule is
a floor rather than a ceiling. First, plea agreements should provide that
the defendant agrees that restitution is due and payable immediately and
that any payment schedule will not limit the government’s ability to col-
lect restitution in full. The Tax Division’s Form Plea Language includes
such a provision.
Second, prosecutors should request that the district court specify, both
orally at sentencing and in the written judgment, that the restitution
amount is due in full immediately. Many districts use a standard form
for payment schedules that includes “[i]n full immediately” as the first
option, which should be checked for all restitution orders.58
Third, the district court should use language at sentencing and in the
judgment that clarifies that the payment schedule reflects a minimum
obligation. For example, the Seventh Circuit held that a restitution order
requiring the defendant pay “not less than 10% of [his] gross monthly
income” clearly established a “minimum amount” due rather than lim-
iting the government’s collection options.59 Note that the court should
use language such as “at least” or “not less than” during the sentenc-
ing hearing as well as in the restitution order. The Tenth Circuit held
that the oral sentence and written judgment conflicted where the district

56 United States v. Ekong, 518 F.3d 285, 286 (5th Cir. 2007); United States v. Wykoff,
839 F.3d 581, 582 (7th Cir. 2016).
57 United States v. Martinez, 812 F.3d 1200, 1204 (10th Cir. 2015);
United States v. Hughes, 914 F.3d 947, 949 (5th Cir. 2019) (“When a restitu-
tion order specifies an installment plan, unless there is language directing that the
funds are also immediately due, the government cannot attempt to enforce the
judgment beyond its plain terms absent a modification of the restitution order or
default on the payment plan.”).
58 See e.g., Martinez, 812 F.3d at 1204 (concluding restitution not due in full immedi-
ately in part because box not checked on payment schedule form); Hughes, 914 F.3d at
949 (“we find no language directing that the full restitution amount was immediately
due or owing”).
59 Wykoff, 839 F.3d at 582.

16 DOJ Journal of Federal Law and Practice December 2023

court referenced a defendant paying 25% of his net income and later en-
tered a restitution order requiring “no less than 25% of the net household
income.”60
If a restitution order does not contain language such as “not less than”
and does not have a due immediately clause, the government may request
that the district court modify the payment schedule. Specifically, a district
court may “adjust the payment schedule[] or require immediate payment
in full” when it receives notification of a “material change in the defen-
dant’s economic circumstances.”61 Although defendants are required to
notify the court of changes in their ability to pay restitution, the govern-
ment may also notify the court. The government may then present evi-
dence regarding the defendant’s finances, including new income streams
and previously unknown assets, and seek to have the payment schedule
altered or discarded in favor of restitution being due immediately.

IV. Restitution-based assessments

When a district court orders criminal restitution “for failure to pay
any tax,” the IRS “shall assess and collect the amount of restitution”
as if it were a tax.62 Thus, when restitution is ordered to the IRS in a
criminal tax case, the IRS will use a restitution-based assessment to assess
and collect the amount of restitution. The defendant may not challenge
the amount of the restitution-based assessment in Tax Court or under
any other Title 26 proceeding.63 Similarly, the IRS cannot change the
amount of restitution ordered by the district court, so the restitution order
must be carefully calculated to include all loss caused by the count(s)
of conviction. Note that the IRS cannot assess or collect the amount of
restitution until all appeals of the criminal restitution order are completed
or the time to challenge the order has expired.64 The Department of
Justice, however, may begin to enforce the restitution order as soon as
it takes effect.65 The restitution-based assessment is enforceable when
the underlying restitution order is enforceable, so if restitution is ordered
solely as a condition of supervised release, the IRS may only collect on
the restitution-based assessment during the period of supervision. This
is another reason why it is essential that plea agreements for which a
Title 26 offense was charged provide that the defendant agrees to pay

60 Martinez, 812 F.3d at 1203.

61 18 U.S.C. § 3664(k).
62 26 U.S.C. § 6201(a)(4)(A).
63 26 U.S.C. § 6201(a)(4)(C).
64 26 U.S.C. § 6201(a)(4)(B).
65 18 U.S.C. § 3664(m)(1)(A)(i); 18 U.S.C. § 3664(o).

December 2023 DOJ Journal of Federal Law and Practice 17

restitution and that restitution is due immediately.
Because restitution payments constitute payment of a tax debt, resti-
tution orders should include a detailed breakdown describing how much
of the loss is attributable to each tax year and, if necessary, further broken
down by individual type of tax per year and the names of any relevant
entities or third parties. The restitution order should reflect the amount
of tax due at sentencing: Unlike tax loss, post-offense payments reduce
the amount of restitution regardless of payor or voluntariness of the pay-
ment.66 A detailed restitution order will ensure that the IRS can properly
cross-reference and credit the payments it receives. And because the IRS
cannot independently add interest to the resulting restitution-based as-
sessment,67 prosecutors should include pre-judgment interest as part of
criminal restitution.

V. Conclusion
Restitution is a critical part of criminal tax cases, but it can trip up
even experienced attorneys and judges. To avoid common errors, keep the
following in mind:

• The restitution amount is based on actual loss rather than intended

loss, and is reduced by any payments made at any time prior to
sentencing by any source.
• Absent agreement by the defendant, restitution is only available for
the loss caused by the offense of conviction, not relevant or acquitted
conduct.

– The defendant can agree to pay restitution for the loss caused
by relevant conduct.
– If a scheme or conspiracy is an element of the offense of convic-
tion, the restitution amount includes all loss caused by conduct
during the course of the scheme.

• Whenever possible, have the defendant agree to restitution in a plea

agreement, and use the Tax Division’s Form Plea Language.

– The agreement should describe the taxes (including years, tax-

payer(s), and type of tax) and a specific amount.

66 See, e.g., United States v. Fareri, No. 09-CR-54, 2018 WL 8754169, at *4 (D.D.C.
Oct. 19, 2018) (noting that victim paid back in full before sentencing was not entitled
to restitution).
67 Klein v. Comm’r of Internal Revenue, 149 T.C. 341, 361 (2017).

18 DOJ Journal of Federal Law and Practice December 2023

 – A plea agreement may include restitution for relevant conduct
as long as the agreement explicitly provides for such restitu-
tion.
– The plea agreement should provide that restitution is due in
full immediately and constitutes an independent part of the
sentence.
– The plea agreement should provide that the agreement to pay
restitution does not settle, satisfy, or compromise the defen-
dant’s civil tax liabilities.

• When the defendant has agreed to pay restitution in a plea agree-

ment in a Title 26 case, ensure that the district court orders resti-
tution as an independent part of the sentence.
• For the Title 18 offenses commonly charged in criminal tax cases,
restitution is mandatory and an independent part of the sentence.
This means it should be imposed in its own section of the judgment,
and not just in the conditions of supervised release.
• For Title 26 trial convictions, restitution may only be ordered as a
condition of probation or supervised release. This means restitution
may only be collected during the period of supervision (not before
or after).
• Remind the district court to state that it considered the defendant’s
financial circumstances, especially if the restitution is due in a single
lump-sum payment.
• Request the district court say at sentencing that the restitution is
due in full immediately, and then confirm the judgment matches.
• Request language at sentencing and in the restitution order clari-
fying that a payment schedule is a floor (that is, “not less than X
per month”) rather than a ceiling.

December 2023 DOJ Journal of Federal Law and Practice 19

 Decision tree for determining type of restitution:

Decision tree for determining amount of restitution:

20 DOJ Journal of Federal Law and Practice December 2023

About the Authors
Elissa Hart-Mahan is an attorney in the Criminal Appeals and Tax
Enforcement Policy Section of the Tax Division. She serves as the Tax
Division’s point person for criminal restitution and regularly briefs and
argues appeals involving restitution issues.
Hannah Cook is an attorney in the Criminal Tax Appeals and Tax
Enforcement Policy Section of the Tax Division. She briefs and argues
appeals on a variety of issues, including restitution.

December 2023 DOJ Journal of Federal Law and Practice 21

Page Intentionally Left Blank

22 DOJ Journal of Federal Law and Practice December 2023

Investigating Legal Source
Income Tax Cases
Todd Ellinwood
Attorney
Criminal Appeals and Tax Enforcement Section
Tax Division

Caryn Finley
Assistant U.S. Attorney
Western District of North Carolina

I. Introduction
For effective tax enforcement, legal source income tax cases are a prior-
ity for the Department of Justice and Internal Revenue Service-Criminal
Investigation (IRS-CI). Traditional legal source income tax investigations
involve individuals and entities that earn income from legal activities,
investments, or holdings and engage in violations of the internal revenue
laws through various means, including evading the assessment or pay-
ment of tax, corruptly impeding or impairing the internal revenue laws,
conspiring to defraud the Internal Revenue Service (IRS), filing false tax
returns or documents, or willfully failing to file tax returns or pay tax
due. Legal source income tax investigations do not include tax return
preparers who prepare false tax returns for their clients; taxpayers who
fail to report illegally earned income; those who engage in stolen iden-
tity refund fraud schemes; tax defiers who advance frivolous objections to
the tax laws; or individuals who willfully fail to collect, account for, and
pay over employment tax. These can be challenging cases. The well-worn
adage that “ignorance of the law is no excuse” does not apply in criminal
tax cases; the mens rea standard of willfulness is the highest imposed
by the law and is defined as the “voluntary, intentional violation of a
known legal duty.”1 This article seeks to provide guidance to prosecutors
in this unfamiliar terrain and give them the tools needed to prosecute
legal source income tax fraudsters.
In the following sections, we cover the common tax fraud statutes and
discuss the pros and cons of each charge. Then, to discuss common issues
in tax prosecutions, we will use a thorough fact pattern as a guide to cover

1 Cheek v. United States, 498 U.S. 192, 201 (1991).

December 2023 DOJ Journal of Federal Law and Practice 23

various pitfalls and traps looming in legal source income tax prosecutions.

II. Tax offenses and charging considerations

A. Willfulness
For the majority of the charged tax statutes, including misdemeanors,
willfulness is the criminal intent standard, and the government must prove
beyond a reasonable doubt that the defendant knew she was violating the
law.2 This is a subjective standard and the defendant is not required to
have been objectively reasonable in her claimed misunderstanding the
law.3 The defendant could thus assert that she did not know what her
duties were under the law, or that she subjectively believed that she
followed the law, even if that belief is outrageous and objectively unrea-
sonable. Helpfully, though, the jury is allowed to consider the objective
unreasonableness of the belief in determining whether the defendant’s
putative subjective belief was held in good faith.4
Willfulness is rarely subject to direct proof and must generally be
inferred from the defendant’s acts or conduct. During the investigative
stage, marshaling evidence to prove intent becomes paramount and this
evidence will often prove more than one element of the various tax statutes.
While not exhaustive, the following is conduct that could establish that
the defendant was intentionally violating a known legal duty: filing a false
tax return which omits income or overstates deductions; concealing in-
come from a return preparer; keeping a double set of books; using false
identification information; dealing in currency; lying to a revenue agent or
special agent during an audit or investigation, including providing false fi-
nancial statements to the IRS; creating phony invoices for false expenses;
sending income to a shell corporation disguised as business expense; us-
ing nominee bank accounts; removing assets from the reach of the IRS by
placing assets in the names of nominees; causing receipts or debts to be
paid through and in the name of others; and paying creditors instead of
the government.5 This same evidence could also satisfy the government’s

2 Id. at 200–01; United States v. Bishop, 264 F.3d 535, 546 (5th Cir. 2001). But see
26 U.S.C. § 7212(a); 18 U.S.C. § 371.
3 Cheek, 498 U.S. at 202–03; United States v. Powell, 955 F.2d 1206, 1211–12
(9th Cir. 1992). Although it is a subjective standard, “the reasonableness of the de-
fendant’s belief” can be considered in “determining whether the defendant held the
belief in good faith.” See Seventh Circuit Pattern Criminal Jury Instructions § 6.11
(2023).
4 United States v. Grunewald, 987 F.2d 531, 536 (8th Cir. 1993); United States v. Mid-
dleton, 246 F.3d 825, 837 (6th Cir. 2001).
5 Spies v. United States, 317 U.S. 492, 499 (1943) (“By way of illustration, and not

24 DOJ Journal of Federal Law and Practice December 2023

obligation in a prosecution for tax evasion to prove that the defendant
committed an affirmative act of evasion.

B. Common statutes
1. 26 U.S.C. § 7201—tax evasion
Title 26, United States Code, section 7201 (section 7201) is a single
crime which can be committed in two different ways—by willfully at-
tempting to evade or defeat the assessment of a tax (that is, attempting
to prevent the government from determining the true tax liability) or by
willfully attempting to evade or defeat the payment of a tax.6 A typical
example of an evasion-of-assessment case is a successful owner of a busi-
ness who fails to file tax returns while making false entries in his business
records or who files tax returns but pays personal expenses through the
business and conceals those payments with false entries in the business
books and records. As to evasion-of-payment cases, those typically (but
not necessarily) involve a person who has been assessed a tax liability
(either self-assessed or through an IRS audit)7 and then takes measures
to impede and impair the IRS’s ability to collect the taxes owe, perhaps
by placing assets in the name of nominees.8 To prove attempted tax eva-

by way of limitation, we would think affirmative willful attempt may be inferred from
conduct such as keeping a double set of books, making false entries of alterations, or
false invoices or documents, destruction of books or records, concealment of assets or
covering up sources of income, handling of one’s affairs to avoid making the records
usual in transactions of the kind, and any conduct, the likely effect of which would be
to mislead or to conceal.”)
6 See United States v. Orrock, 23 F.4th 1203, 1206–07 (9th Cir. 2022);
United States v. Mal, 942 F.2d 682, 686–88 (9th Cir. 1991); United States v. Dunkel,
900 F.2d 105, 107 (7th Cir. 1990); United States v. Masat, 896 F.2d 88, 91
(5th Cir. 1990); see also United States v. Hunerlach, 197 F.3d 1059, 1065
(11th Cir. 1999); but see Sansone v. United States, 380 U.S. 343, 354 (1965);
United States v. Hogan, 861 F.2d 312, 315 (1st Cir. 1988).
7 Although it is typical for there to have been an assessment in an evasion of
payment case, an assessment is not an element of charge of attempted evasion of
payment as the tax due and owing element arises by operation of law. See, e.g.,
United States v. Farnsworth, 302 F. App’x. 110 (3d Cir. 2008)(not precedential);
United States v. Silkman, 156 F.3d 833 (8th Cir. 1009); United States v. Daniel,
956 F.2d 540, 543 (6th Cir. 1992); United States v. Hogan, 861 F.2d 312, 315
(1st Cir. 1988).
8 See Kawashima v. Holder, 565 U.S. 478, 488 (2012) (noting that although “evasion-
of-payment cases will almost invariably involve some affirmative acts of fraud or deceit,
it is still true that the elements of tax evasion pursuant to § 7201 do not necessarily
involve fraud or deceit.”) (emphasis in original).

December 2023 DOJ Journal of Federal Law and Practice 25

sion,9 the government must show that the defendant engaged in some
affirmative conduct with the requisite intent.10 A mere omission is insuf-
ficient, but failing to file a tax return coupled with an affirmative act of
evasion and a tax due and owing, is called Spies evasion.11 To establish
a violation of section 7201, the following elements must be proved: (1)
an affirmative act constituting an attempt to evade or defeat a tax or
the payment thereof;12 (2) an additional tax due and owing;13 and (3)
willfulness.14
While an additional tax due and owing is an element of tax evasion,15
the government does not have to prove the exact amount of tax due and
owing, though ultimately at trial it will likely present evidence of the tax
loss, if only for jury appeal.16 Therefore, one of the primary considerations
in charging tax evasion is whether to allege the specific tax loss in the
indictment. There is a strong likelihood that the tax loss number will
change during trial preparation and the trial itself, depending on the
evidence that is ultimately admitted and the witnesses that are called.
Charging a specific amount of tax loss in the indictment and then proving
something different at trial may provide defense counsel an opportunity
to question the strength of the government’s case or to confuse the jury.17
Sometimes tax evasion is not necessarily the best charge to bring against
an individual accused of defrauding the IRS because of concerns with the

9 Notably, § 7201 proscribes “attempts” to evade or defeat tax. See 26 U.S.C. § 7201
(“Any person who willfully attempts . . ..”).
10 See Mal, 942 F.2d at 687; Hogan, 861 F.2d at 315.
11 Spies, 371 U.S. at 497–99; United States v. Goodyear, 649 F.2d 226, 227–28
(4th Cir. 1981).
12 Sansone, 380 U.S. at 351; Spies, 371 U.S. at 497–99.
13 Boulware v. United States, 552 U.S. 421, 424 (2008); Sansone, 380 U.S. at 351.
14 Cheek v. United States, 498 U.S. 192, 193 (1991); United States v. Pomponio, 429
U.S. 10, 12 (1976).
15 This element is often described as a “tax deficiency,” but that is shorthand for “tax
due and owing” and the word “deficiency” is not used in the technical sense required
for Tax Court jurisdiction. See United States v. Schoppert, 363 F.3d 451, 455-456
(8th Cir. 2004).
16 United States v. Bishop, 264 F.3d 535, 550–52 (5th Cir. 2001). As long as
the amount proved as unreported is substantial, it makes no difference whether
that amount is more or less than the amount charged in the indictment.
United States v. Johnson, 319 U.S. 503, 517–18 (1943). The Seventh and Ninth Cir-
cuits have held that there is no substantiality requirement for a section 7201 violation.
United States v. Daniels, 387 F.3d 636, 639 (7th Cir. 2004); United States v. Marashi,
913 F.2d 724, 735 (9th Cir. 1990).
17 The Criminal Tax Manual covers a great deal of information related to criminal tax
investigations and prosecutions and includes a section on Indictment and Information
Forms. See U.S. Dep’t of Just., Criminal Tax Manual.

26 DOJ Journal of Federal Law and Practice December 2023

government’s ability to prove a tax due and owing. As discussed below,
other charges might be better alternatives.
The government must allege in the indictment and prove at trial that
the defendant committed an affirmative act of evasion, but the govern-
ment does not have to prove every affirmative act alleged.18 Thinking
critically about what acts are alleged or using catch-all language such
as “among others” or “including but not limited to” might be the best
approach.19 Section 7201 proscribes attempted evasion of tax “in any
manner,” and an affirmative attempt to evade tax includes “any conduct,
the likely effect of which would be to mislead or to conceal.”20 The gov-
ernment must, however, show that a tax evasion motive played a part in
the defendant’s conduct, “even though the conduct may also serve other
purposes such as concealment of other crime.”21
Federal income taxes are paid on an annual basis, so an alleged evasion
of assessment must relate to a specific year and it must be shown that
the defendant received, in the year alleged in the indictment, the income
upon which the assessment of the tax was evaded.22 Evasion of payment,
however, typically involves conduct that is intended to evade the payment
of several years of taxes due. Therefore, it is often permissible to charge
in one count that the defendant attempted to evade tax due and owing

18 United States v. Mackey, 571 F.2d 376, 387 (7th Cir. 1978).
19 Use of the words “to wit,” on the other hand, can result in the defense making a vari-
ance argument. See, e.g., United States v. D’Amelio, 683 F.3d 412, 416 (2d Cir. 2012)
(“we consider whether it violated the Fifth Amendment Grand Jury Clause to allow
the petit jury to find D’Amelio guilty of attempted enticement of a minor based on
his use of either the telephone or the Internet when a “to wit” clause in his indictment
specified only the latter means of interstate commerce”).
20 Spies v. United States, 317 U.S. 492, 499 (1943). When considering affirmative acts
that have been approved by courts, the prosecution team must keep in mind that the
conduct must have the likely effect to mislead or conceal, which can vary based on the
specifics of the case and the prosecution theory. For example, consider the common
situation of a corporate officer/owner spending corporate funds on personal expenses.
This is quite clearly an affirmative act of evasion of payment. United States v. Boone,
951 F.2d 1526, 1541 (9th Cir. 1991) (holding that “[S]ubstantial evidence was intro-
duced relating to the Boones’ commingling and spending investor monies. It is rea-
sonable for the jury to infer from this evidence that one purpose of their commingling
was to evade the payment of income taxes.”). Whether it is always an affirmative act
of evasion of assessment seems doubtful. If a corporate officer spends corporate funds
on personal expenses and accurately reports that in the business books, it is difficult
to see that act has the likely effect to mislead or conceal.
21 Spies, 317 U.S. at 499.
22 United States v. Boulet, 577 F.2d 1165, 11679–68 (5th Cir. 1978). See U.S. Dep’t
of Just., Criminal Tax Manual, 8.07[2] (more detailed discussion of the unit of
prosecution).

December 2023 DOJ Journal of Federal Law and Practice 27

for multiple years.23
2. Willful failure to file a tax return or pay tax
If a target did not commit any act as part of an attempt to evade the
assessment or payment of tax, the misdemeanor offense of willful failure
to file a return or pay tax, in violation of 26 U.S.C. § 7203 (section 7203),
may be appropriate. An example of such a case is a person who failed
to file a tax return (or pay tax) for a number of years, but otherwise
took no action aimed at thwarting the IRS. To establish a violation of
section 7203 for failure to file a tax return, the government must prove the
following three elements: (1) the defendant was a person required to file
a return; (2) the defendant failed to file at the time required by law; and
(3) the failure to file was willful.24 To establish a violation of section 7203
because the defendant failed to pay a tax, the government must prove
that: (1) the defendant had a duty to pay a tax; (2) the tax was not paid
at the time required by law; and (3) the failure to pay was willful.25
If an individual receives gross income above a threshold amount, then
he will generally have a duty to file a tax return by the required filing
date.26 The filing requirement can change each year because it is tied to
the exemption amount.27 Attention should also be paid to the target’s
age, marital status, and filing status, since these factors can impact the
filing requirement. Title 26, United States Code, section 6072 prescribes
the time for filing income tax returns, which is typically on or before
the 15th day of April following the close of the calendar year.28 Properly
alleging in the indictment the date when the legal duty to file arose is
important as it is one of the elements of a violation of section 7203.29 It

23 See United States v. Shorter, 809 F.2d 54, 56–57 (D.C. Cir. 1987), abrogated on
other grounds by Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597–98 (1993);
United States v. Root, 585 F.3d 145, 152 (3d Cir. 2009).
24 United States v. Hassebrock, 663 F.3d 906, 919 (7th Cir. 2011); United States v. Mc-
Kee, 506 F.3d 225, 244 (3d Cir. 2007).
25 United States v. Tucker, 686 F.2d 230, 232 (5th Cir. 1982); see Sansone v. United
States, 380 U.S. 343, 351 (1965); In re Wray, 433 F.3d 376, 378 (4th Cir. 2005).
26 United States v. Middleton, 246 F.3d 825, 840–41 (6th Cir. 2001); see also McKee,
506 F.3d at 245 (government must prove that an individual has a duty to file a tax
return based on the receipt of income of a taxable nature, and bears burden of proving
taxable character of funds).
27 26 U.S.C. § 6012(a)(1)(A).
28 26 U.S.C. § 6072(a). The filing due date can be later than April 15 due to weekends
and/or holidays, so the exact date should be checked for each count. See U.S. Dep’t
of Just., Criminal Tax Manual, 10.05[3][b].
29 United States v. Bourque, 541 F.2d 290, 293–94 (1st Cir. 1976);
United States v. Goldstein, 502 F.2d 526, 528 (3d Cir. 1974).

28 DOJ Journal of Federal Law and Practice December 2023

is also important to ascertain whether an extension to file the tax return
was filed, as that will impact the filing deadline.
Gross income is defined in section 61(a) of the Internal Revenue Code
and broadly means “all income from whatever source derived,” including
compensation for services, gross income derived from business, gains de-
rived from dealings in property, interest, rents, royalties, dividends, and
distributive shares of partnership gross income, among other things.30
In the context of income derived from business activity, gross income is
not gross receipts; the government has to establish that gross receipts
exceeded the cost of goods sold by an amount sufficient to trigger the
reporting requirement.31

3. 26 U.S.C. § 7212(a)—corruptly impeding or

impairing the internal revenue laws
The “Omnibus Clause”—26 U.S.C. § 7212(a)—prohibits acts that cor-
ruptly obstruct or impede, or endeavor to obstruct or impede, the due ad-
ministration of the Internal Revenue Code.32 This statue covers “specific
interference with targeted governmental tax-related proceedings, such as a
particular investigation or audit.”33 The government must establish “that
there is a nexus between the defendant’s conduct” and the particular pro-
ceeding, and that the proceeding was pending or reasonably foreseeable
by the defendant at the time she engaged in the obstructive conduct.34
The quintessential case under this statute involves targets who lie to the
IRS in a civil or criminal investigation or who provide false documents to
an IRS Revenue Agent during a civil examination.
To establish a section 7212(a) Omnibus Clause violation, the gov-
ernment must prove beyond a reasonable doubt that the defendant in
any way: (1) corruptly (2) endeavored to (3) obstruct or impede the due
administration of the Internal Revenue Code.35 The mens rea for sec-
tion 7212(a) is not “willfulness,” but “corruptly,” which requires proof

30 26 U.S.C. § 61(a).
31 United States v. Francisco, 614 F.2d 617, 618 (8th Cir. 1980); Siravo v. United
States, 377 F.2d 469, 473 (1st Cir. 1967); see also United States v. Gillings, 568 F.2d
1307, 1310 (9th Cir. 1978).
32 Marinello v. United States, 138 S.Ct. 1101, 1104–06 (2018); United States v. Bos-
tian, 59 F.3d 474, 477 (4th Cir. 1995).
33 Marinello, 138 S.Ct. at 1104.
34 Id. at 1109–10 (internal quotations omitted).
35 United States v. Marek, 548 F.3d 147, 150 (1st Cir. 2008);
United States v. Winchell, 129 F.3d 1093, 1098 (10th Cir. 1997); United States v. Wil-
son, 118 F.3d 228, 234 (4th Cir. 1997); United States v. Hanson, 2 F.3d 942, 946–47
(9th Cir. 1993).

December 2023 DOJ Journal of Federal Law and Practice 29

that the defendant “act[ed] with an intent to procure an unlawful bene-
fit either for [himself] or for some other person.”36 Similar to affirmative
acts, “endeavor” has a broad definition and there are no categorial lim-
itations on the types of endeavors that fall within the statute.37 More-
over, an endeavor may be corrupt even when it involves means that are
not intrinsically illegal, as long as the defendant commits them to se-
cure an unlawful benefit for himself or others.38 In drafting an indictment
charging section 7212(a), best practice, after the Supreme Court’s deci-
sion in Marinello, counsels expressly alleging the nexus-to-a-pending-or-
foreseeable-proceeding requirement and the facts showing it.

4. 18 U.S.C. § 371—conspiracy to defraud the IRS

Title 18, United States Code, section 371 (section 371) has two prongs—
the offense clause and the defraud clause. A person violates the offense
clause of section 371 by conspiring or agreeing to engage in conduct that
is prohibited by another federal criminal statute, such as conspiring to
commit tax evasion. A person violates the defraud clause of section 371
by conspiring “to defraud the United States, or any agency thereof in any
manner or for any purpose.” When the federal agency being defrauded
is the IRS, such a conspiracy is known as a “Klein conspiracy” after
United States v. Klein.39 Conspiracy charges are useful in any tax case
in which two or more people are working together to defraud the IRS.
Common examples of this involve business partners who cheat on their
taxes, people who are promoting tax shelters, or married couples who are
defrauding the IRS.
Conspiracies under both the offense clause and the defraud clause
of 18 U.S.C. § 371 require three elements be proven beyond a reason-

36 United States v. Floyd, 740 F.3d 22, 31 (1st Cir. 2014) (collecting cases). The
Second Circuit has stated that “[a]lthough we have previously declined to read a
willfulness requirement into § 7212(a), we have held that a substantially similar jury
instruction was ‘as comprehensive and accurate as if the word “willfully” was incor-
porated in the statute.’” United States v. Coplan, 703 F.3d 46, 73 (2d Cir. 2012)
(internal citation omitted).
37 Marinello, 138 S.Ct. at 1102–10.
38 United States v. Mitchell, 985 F.2d 1275, 1278–79 (4th Cir. 1993).
39 247 F.2d 908 (2d. Cir. 1957). The appellation “Klein conspiracy” is in some
sense a misnomer, since the primary holding of Klein is a quote from Hammer-
schmidt v. United States, 265 U.S. 182 (1924). A fulsome explanation of why section
371’s prohibition against conspiring “to defraud the United States, or any agency
thereof in any manner or for any purpose” includes impending government functions
and is not limited to cheating the government out of money or property can be found
in the government’s opposition to a petition for certiorari in Brief for the U. S. in Opp.
to Pet. for Cert. at *6–19, Coplan v. United States, 571 U.S. 819 (2013) (No.12-1299).

30 DOJ Journal of Federal Law and Practice December 2023

able doubt: (1) the existence of an agreement by two or more persons
to commit an offense against the United States or to defraud the United
States; (2) the defendant’s knowing and voluntary participation in the
conspiracy; and (3) the commission of an overt act in furtherance of the
conspiracy.40
Charging under the defraud clause means that the government does
not have to establish all of the elements of an underlying offense (for ex-
ample, tax evasion) and each member’s intent to commit that offense (for
example, willfulness).41 Rather, all that must be proven is that the mem-
bers agreed to interfere with or obstruct one of the government’s lawful
functions (for example, the ascertainment, assessment, and collection of
taxes) “by deceit, craft or trickery, or at least by means that are dishon-
est.”42 For this reason, tax fraud conspiracies are typically charged under
the defraud prong as opposed to the offense prong.
Drafting a Klein conspiracy indictment has additional considerations.
The indictment must allege the “essential nature” of the alleged fraudu-
lent scheme by providing particulars—the name of the agency impeded,
the functions of the agency that were impeded, the means used to im-
pede the agency, and the identities of those charged with impeding the
agency.43
Similar to the evidence used to establish willfulness and the affirmative
act element of tax evasion, the manner by which a target could impede
the functions of the IRS are innumerable. A non-exhaustive list includes
false entries in a business’s books and records, filing a false tax return,
and providing false information to the IRS during an audit or a criminal
investigation.

5. 26 U.S.C. § 7206(1)—filing false tax returns

Violation of 26 U.S.C. § 7206(1) (section 7206(1)) is the “bread and
butter” tax charge for defendants who commit tax fraud and is the most
frequently charged tax statute. This charge is used in any case in which
the target has provided materially false information on a tax return. This
could include a business owner underreporting his gross receipts, a consul-
tant overstating his business expenses, or someone failing to report rental
income. The elements of a section 7206(1) offense are as follows: (1) the
defendant made and subscribed a return, statement, or other document

40United States v. Hough, 803 F.3d 1181, 1187 (11th Cir. 2015).
41United States v. Pinckney, 85 F.3d 4, 8 (2d Cir. 1996).
42Hammerschmidt v. United States, 265 U.S. 182, 188 (1924).
43United States v. Rosenblatt, 554 F.2d 36, 41 (2d Cir. 1977); United States v.
Mohney, 949 F.2d 899, 904 (6th Cir. 1991).

December 2023 DOJ Journal of Federal Law and Practice 31

which was false as to a material matter; (2) the return, statement, or
other document contained a written declaration that it was made under
the penalties of perjury; (3) the defendant did not believe the return,
statement, or other document to be true and correct as to every material
matter; and (4) the defendant falsely subscribed to the return, statement,
or other document willfully, with the specific intent to violate the law.44
While most section 7206(1) prosecutions involve income tax returns,
the statute covers other false documents, including Form 8300, which is
used to report cash payments over $10,000 received in a trade or busi-
ness, and Forms 433-A, 433-B, and 433-F, which are used by taxpayers
with outstanding tax liabilities to report financial information to the IRS
during a civil collection investigation.45
Section 7206(1) requires that the tax return must be “true and correct
as to every material matter.”46 “[A] material matter is one that affects or
influences the IRS in carrying out the functions committed to it by law or
‘one that is likely to affect the calculation of tax due and payable.’”47 As
with tax evasion, counsel should consider whether to specify the amount
of unreported income or false items in the indictment. Best practice of-
ten counsels to allege the falsity with less specificity, for example, “as
the defendant then and there well knew and believed, the amount of to-
tal income was substantially understated.” Further, the indictment may
charge in a single count that several items on the tax return are false and
then prove at trial that only one of those items is false, and a general
jury instruction on unanimity is sufficient.48 Unlike tax evasion, prov-
ing a violation of section 7206(1) does not require that the government

44 United States v. Bishop, 412 U.S. 346, 350 (1973); United States v. Hills, 618 F.3d
619, 634 (7th Cir. 2010); United States v. Griffin, 524 F.3d 71, 75–76 (1st Cir. 2008);
United States v. Marston, 517 F.3d 996, 999 n.3 (8th Cir. 2008).
45 See, e.g., United States v. Pansier, 576 F.3d 726, 736 (7th Cir. 2009);
United States v. Cohen, 544 F.2d 781, 782–83 (5th Cir. 1977). See also
IRS FinCEN, Form 8300 (2014), https://www.irs.gov/pub/irs-pdf/f8300.pdf; IRS,
Form 433-A (2022), https://www.irs.gov/pub/irs-pdf/f433a.pdf; IRS, Form 433-
B (2019), https://www.irs.gov/pub/irs-pdf/f433b.pdf; IRS, Form 433-F (2019),
https://www.irs.gov/pub/irs-pdf/f433f.pdf.
46 Section 7206(1) imposes a penalty upon: “Any person who—(1) . . . Willfully makes
and subscribes any return, statement, or other document, which contains or is verified
by a written declaration that it is made under the penalties of perjury, and which he
does not believe to be true and correct as to every material matter.”
47 Griffin, 524 F.3d at 76 (citations omitted); United States v. Schiff, 801 F.2d 108,
114–15 (2d Cir. 1986).
48 Griffin v. United States, 502 U.S. 46, 49 (1991) (when a jury returns a guilty verdict
on an indictment charging several acts in the conjunctive, the verdict stands if the
evidence is sufficient as to any one of the acts charged).

32 DOJ Journal of Federal Law and Practice December 2023

prove a tax due and owing, so any important falsity on a tax return—like
total income, gross receipts on a Schedule C, deductions or business ex-
penses—can and should be alleged as a false item in the indictment.

III. Common scenarios

A. Fact pattern
A detailed fact pattern will help guide the discussion. This is not
meant to be a convoluted “law school final exam” scenario, but instead
a fact pattern that is chock-full of issues that are seen routinely in legal
source income tax investigations.
Andrew Amos owns and operates two oceanfront businesses in Wright-
sville Beach, NC. Andy’s Umbrellas (AU) is a limited liability company
(LLC) that has been operating since 1997. AU rents umbrellas and chairs
for approximately $25 per day to visitors who are staying at the ocean-
front hotels and is almost entirely a cash business. Amos’s second business
is called Andy’s Jet Skis, Inc. (AJI) and also operates on the Wrightsville
Beach oceanfront. AJI is a corporation with Amos as the single share-
holder that has been operating since 2004. Customers almost always pay
for their AJI rentals by using a credit card. When Amos set up these
businesses, he put $750,000 of his own money into the businesses to buy
jet skis, umbrellas, and other equipment.
Amos has not filed a personal income tax return or corporate income
tax return since 2010. Both entities long ago made the election with the
IRS to be treated as S-corporations,49 so both should be reported on
Form 1120S, U.S. Income Tax Return for an S-corporation. The case was
referred to IRS-CI by an IRS revenue agent who was auditing Amos and
his businesses for tax years 2019 and 2020. The revenue agent was able to
get some bank records—Amos had a business bank account for both AU
and AJI, but he did not have a personal bank account. The revenue agent
also used an administrative summons to obtain the businesses’ books and
records. The revenue agent met with Amos, who supplied some records
to the revenue agent but said that he kept very poor records. He also said
that he paid corporate bills out of the business bank accounts and would
check the bank balances regularly online to make sure he had enough
money to cover the bills. The revenue agent asked Amos how he paid his
personal bills and expenses if he did not have a personal account. Amos
said that he used a credit card linked to the business to pay most of his
personal expenses.

49 A single member LLC that has not elected to be treated as a corporation for tax
purposes reports its profit or loss on a Schedule C.

December 2023 DOJ Journal of Federal Law and Practice 33

 The revenue agent also asked Amos about how he tracked the cash
that came in for AU. Amos stated that while this business was almost
entirely cash, it was fairly easy to keep track of the money coming in
because he deposited the cash at the end of every workday. He would
ride down the boardwalk on his bike, stop by each rental attendant’s
station, and gather that day’s cash. He would then deposit the money at
a bank located not far from the oceanfront. Amos stated that he paid the
workers for both businesses in cash that he took from the cash receipts;
he figured this was no big deal because he would then be depositing less
into the bank and the payroll expenses were therefore already taken out.
The revenue agent asked Amos if he withheld employment taxes, filed
quarterly employment tax returns with the IRS, or gave Form W-2 to
the employees (and the Social Security Administration). Amos said no,
everybody running businesses in the beach town paid employees in cash
and did things this way, and he thought this was okay. Surprised by this
answer, the revenue agent told Amos that he should not be handling
payroll this way and asked Amos if he had run all this by an accountant.
Amos said “Yeah, I talked to an accountant years ago,” and said he would
go back to him to file recent tax returns. Based on the interview and the
history of non-filing, the revenue agent referred the case to IRS-CI.

B. Investigatory plan
1. Get complete civil files
Surely this case is a slam dunk—the target has not filed a tax return
since 2011! But to prove the crimes and establish a meaningful tax loss,
certain investigative steps need to be taken. Like this case, many legal
source income tax cases originate from a referral from the civil side of the
IRS. In any criminal tax investigation that involved previous civil activity,
you must get the complete civil files. This file typically contains a wealth
of fabulous evidence, particularly notice, knowledge, and willfulness evi-
dence. Either the target lied to the IRS, or he told the truth—which usu-
ally includes very significant admissions. Both scenarios provide strong
evidence in a criminal tax investigation. The other reason this step is
mandatory is that this evidence is subject to discovery. The civil files
need to be gathered, and often it can take a very long time to retrieve
them from the Federal Records Center or the civil agent that handled the
audit or collection activity, so they need to be requested very early in the
investigation. The files then need to be thoroughly reviewed, not just to
assess the potentially valuable incriminating evidence, but also to ensure
there is no Brady material—which sometimes there is. In addition, the
IRS might have issued a “no change” letter, said that a target was not

34 DOJ Journal of Federal Law and Practice December 2023

civilly a responsible party, or declared that a potential target was “not
willful.” Many such landmines can be dealt with, but it is far easier to
do so pre-indictment than in the weeks leading up to trial.

2. Develop a tax loss calculation

The next step is for the prosecution team to develop its tax loss theory.
It is extremely common for tax fraud targets to have spent business funds
on personal expenses. This is not inherently fraudulent conduct, nor does
it automatically result in any tax consequences if the personal expenses
were accounted for appropriately in the business books and records. Often
the special agent will have analyzed the various personal expenses and
will conclude that the target spent a particular quantity of money in
2020 out of the business accounts and did not report any or all of it on
his personal income tax return. Such a theory, however, runs into some
potential evidentiary issues or technical tax defenses.
a. Evidentiary issues
Some items are obviously personal, like using business funds to pay
for a child’s private school tuition. But even for these, the government
must present a witness to testify about the nature of the expense so
that it can be characterized as being for the defendant’s personal benefit.
In Greenberg v. United States, the First Circuit ruled that the special
agent’s opinion testimony as to the classification of checks as a business
or personal expense was inadmissible hearsay.50 Unless presented purely
for informational purposes, a special agent cannot unilaterally categorize
the purpose of payments or receipts as income or expense. There are a
variety of ways, however, to deal with the issue.
The special agent’s spreadsheet detailing the bank account will also
provide the investigative team with the ability to analyze which expen-
ditures to prioritize, either the largest expenditures or those that might
have the most straightforward proof. For example, if the target’s mort-
gage was paid out of the business account, a subpoena to the lender will
likely produce admissible documents that demonstrate the personal na-
ture of the mortgage payments. Other expenditures that typically benefit
the target personally and therefore can be characterized as part of his in-
come include residential utilities, payments for personal cars, and school
tuition. These types of expenses often have business record evidence that
contain admissions which will satisfy Greenberg.51

50 280 F.2d 472, 476 (1st Cir. 1960).

51 Id.

December 2023 DOJ Journal of Federal Law and Practice 35

(i) Credible third-party witness testimony
The special agent can interview a witness for each personal expense.
With the private school tuition example, the witness would be someone
from the private school who can testify that the check in question was
used to pay the tuition for the target’s child. Sometimes such evidence
gathering and potential use at trial may seem tedious, but many of these
witnesses will be excellent trial witnesses—the record custodian from the
Porsche dealership, the landscaping architect, or the swimming pool in-
staller can all be useful live witnesses at trial who are difficult for the
defense to impeach. These witnesses should also have business records,
such as school applications, purchase documents, or service contracts,
that will further establish and corroborate that the expense was for the
target’s personal benefit.
(ii) Employees of the target’s business
If the business has a secretary, bookkeeper, or someone else who can
credibly testify to the categorization of deposit or expenditure, such tes-
timony can also overcome the Greenberg issue. Assume that bank records
indicate that Amos’s business spent large amounts of funds on travel
to Hawaii, Orlando, and the Caribbean. Someone such as a secretary
or bookkeeper could testify that Amos’s businesses did not require any
business travel and that these must be personal.52 Similarly, a grand jury
subpoena to the hotel or airline could provide documentary evidence to
corroborate that the target’s spouse and children traveled.
(iii) Corroborated admissions by the subject or their
representative
If the agent (either the special agent or the revenue agent in the pre-
vious civil examination) interviews the target and he is willing to talk,
it is likely that he will either lie—by claiming the business pays no per-
sonal expenses—or, as with Amos, he will admit that personal expenses
are paid for out of the business bank account or on the business’s credit
card. Ideally, the agent will have shown specific expenses to Amos. His
admissions can then be used to treat the personal expenses he identified
as such. Such admissions need to be corroborated, but that is a low bar.
Consider the trip to Hawaii. Even without testimony from a secretary,
such an expense could be corroborated by the agent looking to see if ad-

52 United States v. Bonventre, 646 F.App’x. 73, 84 (2d. Cir. 2016) (nonprecedential)
(stating that the testimony of a cooperator that it was not the defendant’s job to
entertain clients meant that the personal nature of certain expenses could be inferred
from “the amount, vendor, and purchase location” and the names of family members
on many of the travel expenses).

36 DOJ Journal of Federal Law and Practice December 2023

ditional family members went on the trip, or checking credit card records
to see if there were any charges that appeared to be related to a business
meeting or convention.
b. Potential approaches for tax loss calculation
In many cases, there is not just “one right way” to calculate a criminal
tax loss. For instance, the IRS could recreate what would be an accurate
tax return. It could also focus on what Amos spent out of the businesses
on personal expenses. Both approaches have pros and cons.
(i) Calculate a correct tax return and an exact tax
loss
If the IRS agents have all the needed information, they could calculate
Amos’s tax loss by essentially recreating a correct tax return that includes
the omitted income or the disallowed deductions. The problem with this
approach is that it requires the government to have all the necessary tax-
related information, and having such information as it relates to business
expenses is often a difficult hurdle because Greenberg applies to business
expenses as well. Therefore, if the IRS intends to disallow an expense
deduction it would need to put a witness on to testify that the business did
not pay such an expense as part of its ordinary course of business. With
both of Amos’s businesses, it would be exceedingly difficult to calculate
the amounts paid to his workers since he did so in cash. If his paltry
records included the names of his employees and the hours they worked,
this hurdle might be overcome, but then there are other business expenses
to consider. Depending on the quality of the records, this approach might
be problematic as compared to the next.
(ii) Focus on the personal expenses
A common tax loss theory for this fact pattern is to focus on personal
expenses. Even considering the Greenberg issue discussed above, this ap-
proach often works in cases with a fact pattern analogous to that of Amos.
The Greenberg issue, however, can prove difficult to overcome when the
personal items are hundreds or thousands of comparatively small dol-
lar personal expenses. The most common approach is to focus on large
expenses or repeat expenses (that is, lawn care, pool maintenance, car
lease payments) that will involve just one witness. With a non-filer such
as Amos, the assumption is often that proof that the target used busi-
ness funds to pay for any significant amount of personal expenses will
demonstrate that the target had an obligation to file. Alas, that is not
necessarily the case, considering United States v. Boulware.53

53 552 U.S. 421 (2008). The particular facts of Boulware involved a corporate diversion

December 2023 DOJ Journal of Federal Law and Practice 37

 In Boulware, the Supreme Court held that a diverter of corporate
funds facing charges of criminal tax fraud may claim return-of-capital
treatment under 26 U.S.C. § 301 without producing evidence that either
he or the corporation intended the diversion to be a distribution with
respect to stock when the diversion occurred.54 This Boulware issue will
most often arise in tax-evasion prosecutions, given the tax due and ow-
ing element. It can, however, arise in prosecutions under sections 7206(1)
and even 7203. If someone filed a tax return that the prosecution team
believes does not report in “other income” or “total income” all the tar-
get’s income based on diversions from a corporation, Boulware could be
applicable. Even though a section 7203 violation does not require proof
of a tax due and owing, it does require the government to prove that the
target received more income than the filing threshold; although not a high
number, Boulware would still be applicable in cases involving corporate
diversions. The Court held that, consistent with the rules that apply to
civil tax, the defendant should be allowed to argue that the corporation
had no earnings and profits for the years at issue, and that therefore the
diverted funds were nontaxable returns of capital, up to his basis in his
stock.55 That is a lot of accounting lingo, but this can be broken down
into more understandable pieces. As Boulware involves technical tax is-
sues, much of the accounting analysis is best handled by the case agent
or the cooperating revenue agent. The Tax Division also stands ready to
assist any prosecutors who are dealing with such issues.
Assume that Amos put $250,000 into AU and $500,000 into AJI when
he started the businesses. Those amounts are called “paid-in capital” and
establish the initial basis in stock. In years where the businesses make
a profit, Amos should report such profit as flow-through income on a
Schedule K-156 from the Corporate Tax Return and Form 1120-S57 (to
show which amount increases stock basis), and then pay personal income
taxes on those amounts. If the entity is a C corporation, then the business
reports the profit or income on a Form 1120 and the business itself pays
tax. The calculation of current year Earnings and Profit (E & P) and
accumulated prior-year’s E & P can be complex, but for this discussion
it is sufficient to know that a corporate diversion that constitutes a dis-

and the calculation of earnings and profits. More generally, Boulware stands for the
proposition that civil tax rules apply to criminal tax prosecutions.
54 Boulware v. United States, 552 U.S. 421, 424 (2008).
55 Id. at 433.
56 A Schedule K-1 is the form that reports the amounts of income, losses, and divi-
dends for a business, financial entity’s partners, or S Corporation’s shareholders. IRS,
Schedule K-1 (Form 1065) (2022), https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf.
57 IRS, Form 1120-S (2022), https://www.irs.gov/pub/irs-pdf/f1120s.pdf.

38 DOJ Journal of Federal Law and Practice December 2023

tribution with respect to stock constitutes a taxable dividend up to the
amount of current E & P (that is, up to the amount of profit for the cur-
rent year) even if there is a deficit in accumulated E & P. A corporation’s
earnings and profits are a measure of the economic income of the corpo-
ration available for a distribution to its shareholders. The earnings and
profits determine the tax treatment of the distribution in the hands of the
shareholder. Thus, if the IRS can establish a profit for the current year
and thus positive current E & P, a corporate diversion that constitutes
a distribution with respect stock is taxable up to the amount of current
E & P. If the amount of taxable income from current E & P is sufficient
for the charges being contemplated, you have successfully avoided one of
the pitfalls of Boulware.
But if the IRS cannot prove current E & P or the amount of taxable
income from current E & P is insufficient for the contemplated prosecu-
tion, more analysis is required. There are two common situations where
a Boulware issue can affect your prosecution: (1) the business reports
losses, which are likely false but very hard to disprove due to poor or
incomplete records; or (2) the business does not file any tax return—like
Amos—and completing an E & P analysis is simply infeasible due to the
lack of records. On these facts, the target can assert that that the funds
diverted from the business are not taxable income to him but instead a
nontaxable return of the capital. Suppose, for example, someone puts $1
million of their money into a new business in January 2020; if the busi-
ness has no E & P in 2020 or 2021 and the person takes out $75,000 each
year to pay personal expenses, then that money is not taxable income—it
is a return of capital. While it is not uncommon for new businesses to
lose money at the beginning, a target’s claim that his business generated
losses for many years will likely not be viewed as credible by the jury:
Why continue to run a business for six years if it is always losing money,
and how can a business that has no earnings year after year provide funds
for the target to divert?
Assume that the IRS is focusing its investigation on Amos as to tax
years 2018 to 2020, and further assume that a hurricane hit Wrightsville
Beach in 2018, causing damage to Amos’s jet skis and prompting a large
decrease in tourism to the area in the following years. If AU and AJI
did not have any E & P in 2019 or 2020, then the business funds Amos
diverted to pay personal expenses are not taxable income but a return of
capital up to the amount of his stock basis. This is capped at the amount
of Amos’s capital account, but proving what that presently is—the busi-
nesses were opened long ago—could prove impossible. How can this Boul-
ware defense be attacked?
The facts state that Amos put around $750,000 of his own money

December 2023 DOJ Journal of Federal Law and Practice 39

into the businesses. Perhaps documents show this (such as a balance
sheet given to a bank to get a loan) or Amos told this to an IRS agent.
To defeat the Boulware defense, the prosecution team will need to show
that Amos had already used up the paid-in capital amount by tax year
2018 (if that will be the first year charged). This could require the IRS
to analyze additional tax years further back in time to determine Amos’s
personal diversions, but doing such can overcome the Boulware issue as
well as generally adding jury appeal to the case.

3. If you cannot show a tax loss and overcome the

Boulware issue
Another option with a target like Amos is to consider charging him
with tax obstruction under 26 U.S.C. § 7212(a) because this charge does
not require proof of a tax due and owing; the same is true of a Klein
conspiracy under 18 U.S.C. § 371. After the Supreme Court’s decision
in Marinello, the section 7212(a) charge has a “pending proceeding” re-
quirement.58 That element might be satisfied by finding a false statement
that the target made to the IRS, either on the civil or criminal side. This
charge is also viable if Amos committed any “corrupt endeavor” (which
is quite similar to an overt act or an affirmative act of evasion) after he
knew he was the subject of an IRS proceeding.
In the fact pattern, the revenue agent told Amos that paying his work-
ers in cash and under the table is not appropriate. If Amos has continued
to operate with that practice, the tax obstruction statute may be worth
considering. Or, if the revenue agent told Amos he had to account for his
personal expenditures as income and make the appropriate entries in the
companies’ books and records and he nevertheless continued this conduct,
this might also be considered a corrupt endeavor. These are examples of
where obtaining the civil case file provides knowledge and notice evidence.
Amos also told the revenue agent he would contact an accountant.
It is a common situation that after the IRS (civil or criminal) initiates
contact with the target, he or she will contact an accountant to assist with
“getting right” with the IRS. There is no accountant-client privilege, and
even if an attorney was involved, the attorney–client privilege does not
apply to tax return preparation.59 If there is such an accountant, he or
she should be subpoenaed for any relevant information, whether or not
the returns were filed. The subpoena should request any and all records,
documents, and correspondence provided by the target or her company to

58 United States v. Marinello, 138 S.Ct. 1101, 1109 (2018).

59 Sean Beaty & Wilson Stamm, A Taxing Dilemma: Navigating the Crime–Fraud
Exception in Criminal Tax Cases, 71 DOJ J. Fed. L. & Prac., no. 4, (2023).

40 DOJ Journal of Federal Law and Practice December 2023

be used in return preparation. Such information could provide other useful
information, such as gross receipts or expense amounts. A target may
have provided inculpatory statements to the accountant or acknowledged
his understanding of the consequences of the tax positions he or she is
taking. If the target provided inaccurate information to the accountant,
that could be important evidence in the case as well.

4. Assess the willfulness evidence

In the case of Amos, the willfulness evidence is primarily his complete
failure to file any tax returns over such a long period. In the typical legal
source income tax case, however, this element is where the battle will lie.
If the target lied to an IRS agent when there was IRS civil activity, that
will be very significant; a jury will be more likely to think that the target
had the chance to take care of this civilly but instead affirmatively chose
to evade taxes by lying. But if someone like Amos did not lie, the jury
will want to know what makes this the type of case that merits criminal
prosecution. Common actions taken to stymie the IRS include:
(1) Giving false information on IRS forms, for instance about assets on
Form 433;
(2) Putting assets in the name of nominees;
(3) Draining bank accounts to prevent IRS collections activity;
(4) Structuring bank activity to avoid reporting requirements;
(5) Closing bank accounts and opening new accounts after the IRS takes
lien or levy action.60
Assessing willfulness evidence can also involve evaluating the totality
of the conduct, as the whole can be greater than the sum of the parts.
Was the target a regular filer prior to the period when he stopped filing
returns which shows knowledge of her filing requirement and how to file
correctly? What return preparer did the target use in the years preceding
the non-filing? Did that accountant provide guidance or notice of the
target’s filing requirements? Did the target fail to report for a year or
two, and also lie to the IRS about other years? Did the target fail to
report 10 percent of his income, or 50 percent? If the tax fraud is based
on false deductions, are some dollar amounts small but egregious (like
treating the family dog’s health bills as business expenses)?61

60 Some of these actions are more likely to be affirmative acts of evasion of payments,
whereas Amos likely committed evasion of the assessment of his taxes.
61 Indictment, United States v. Scott, No. 7:13-cr-79 (E.D.N.C. July 23, 2013), ECF
No. 1; Press Release, U.S. Dep’t of Just., North Carolina Seafood Distributor
Pleads Guilty to Tax Evasion (May 14, 2014).

December 2023 DOJ Journal of Federal Law and Practice 41

5. Assess the affirmative act element
Where the target filed a tax return that is false, charging under
26 U.S.C. § 7206(1) is more straightforward than 26 U.S.C. § 7201 be-
cause it does not require proof that the taxpayer owed additional taxes,
but the filing of a false tax return is certainly an affirmative act of evasion
or an overt act if there is a conspiracy. In the case of a non-filer, how-
ever, the charge is more likely to be Spies evasion which requires proof
of one or more affirmative acts of evasion.62 In many cases, finding an
affirmative act can be a challenge, particularly where there was no prior
IRS civil activity. Sometimes, if there is no IRS activity, there is nothing
pressing the would-be tax evader to commit affirmative acts. In looking
at Amos, possible affirmative acts of evasion are his practice of paying his
workers under the table with cash that has not been deposited or paying
for personal expenses directly from his business account if he then made
false entries in the books and records. It is certainly legally sufficient, but
the jury appeal could be somewhat diminished by the “everyone is doing
it” argument. Often, the elements and their weight need to be assessed
together. For example, Amos’s affirmative act might not be particularly
appealing to a jury if he had filed returns, but that he has not filed for
such a long period is going to increase the likelihood that a jury finds
that the affirmative act element has been satisfied.

6. Defenses
a. Fact pattern
If we turn back to the fact pattern, after you review the information
you received from the civil side of the IRS, you determine that your
first step is to interview Ned Numbers, the accountant. You interview
Numbers, who stated that he prepared tax returns for both Amos and
his businesses up to 2011. Numbers stated that Amos would annually
bring him a box full of paper, and he would begin to prepare tax returns.
As to AJI, Numbers looked at the information provided by credit card
companies to determine gross receipts. To determine business expenses, he
would dig through the box and find expenses such as jet-ski maintenance,
parts, etc. Numbers said that he told Amos that Amos’s poor books
and records meant that he might not be deducting everything he could,
but Amos never gave him better records, and Numbers figured this was
costing Amos and not the IRS, so he did not push it. To figure out what
was income to Amos out of the profits of AJI, he would look at Amos’s
personal spending. He knew that Amos did not have a personal bank

62 Spies v. United States, 317 U.S. 492, 499 (1943).

42 DOJ Journal of Federal Law and Practice December 2023

account and told him to get one, but Amos never did. Numbers would look
at the AJI credit card and assumed that all the items on it were personal
expenses and treated that amount as compensation to Amos. He figured
some of the expenses on the credit card were probably legitimate business
expenses, but again Amos’s poor record keeping on this front would hurt
Amos and not the IRS. He also knew Amos paid for his mortgage out
of the AJI bank account, and he treated that personal expense item as
compensation to Amos.
Numbers also discussed how he prepared the Form 1040 for Amos.
Numbers said that although the books and records for AU were a night-
mare, like those for AJI, he could calculate reasonably accurate numbers
based on a few documents. He had the bank statements for the AU bank
account, so he could see the cash deposits into the account. Numbers said
that he repeatedly told Amos that Amos needed to deposit all the cash
proceeds from AU so that he could track the business’s gross receipts.
Numbers added up the cash deposits and treated this as total receipts for
AU. When asked how he calculated expenses, Numbers said it was essen-
tially the same as for AJI—he would dig through the box and look for
expenses such as new umbrellas or chairs. When asked about employees
or workers for AU, Numbers said he thought Amos did not have any. He
said he thought it was a small but profitable operation, and that Amos
and his wife could handle it while also running the jet-ski business. When
asked about records he maintained, Numbers said that since Amos has
not been in for a number of years, he long ago got rid of the records from
2010 and before. He said that his practice was to go over the return in
person with the client, which he thinks he did with Amos each year, but
he can’t be sure as it was more than five years ago. Once the return was
finalized, he gave it to the client to be signed and for the client to mail
to the IRS. He said that he did not start to e-file returns for his clients
until 2011.
An important aspect of any legal source tax investigation is consider-
ing the target’s defenses. As discussed above, Amos might assert a Boul-
ware defense. Tax cases can have technical defenses—can the defendant
defeat one of the elements (for example, tax due and owing) or can a
small tax loss be used to argue lack of materiality? Most often, however,
targets of tax investigations will claim some type of willfulness defense
such as reliance on a professional. Good faith can be a complete defense
to a tax charge.63 In interviewing accountants, attorneys, and other tax
professionals, it is important to evaluate and gather evidence of whether

63 Cheek v. United States, 498 U.S. 192, 202 (1991); United States v. Morris, 20 F.3d
1111, 1116 (11th Cir. 1994).

December 2023 DOJ Journal of Federal Law and Practice 43

the target, before acting, made a full and complete good faith report of
all material facts to an attorney; received the attorney’s advice as to the
specific course of conduct; and reasonably relied upon that advice in good
faith.64 If a defendant, in good faith, followed the advice of counsel, he
or she would not have willfully violated the tax laws. It is also common
for targets to claim that the role of a professional such as an accountant
defeats willfulness even if it does not rise to the level of a true “reliance
on professional” defense. For example, a target might have given incom-
plete, but not false, information to an accountant and argue that he or she
thought the accountant had all the information needed, and if not, then
the accountant should have asked for more. It is exceedingly common for
targets to acknowledge that there is an error on the return but that it is
either the accountant’s fault or that the target thought the accountant
had all the information necessary to complete an accurate return.
Here, some of the information from Numbers could be useful to estab-
lish that Amos acted willfully. For example, Numbers told Amos to get
a personal bank account to handle his personal spending. He also told
Amos that he needed to deposit all cash proceeds into the business bank
account to track the gross receipts of the business. The defense will not
claim a reliance defense as it will not be able to successfully shift the
blame to Numbers. But it will try to present facts that cast Amos in
a decent light. For example, Numbers never said that Amos must get a
bank account, and paying for personal expenses out of a business account
is not wrong per se if the expenses are categorized appropriately. Accord-
ing to Numbers, many of the assumptions he made likely went against
Amos’s interests, such as treating all the expenses on the AJI credit card
as personal expenses. The defense will try to use Numbers to negate will-
fulness by portraying Amos as a sloppy businessperson and not someone
who intentionally provided false information to his return preparer.
Issuing a narrowly drawn subpoena to the return preparer, even if
it was an attorney, is critical. Communications related to information
that is intended to be disclosed to a third party are not protected by
the privilege.65 The preparation of tax returns does not constitute le-

64 See United States v. Bush, 626 F.3d 527, 539–40 (9th Cir. 2010); Liss v. United
States, 915 F.2d 287, 291 (7th Cir. 1990).
65 See United States v. Lawless, 709 F.2d 485, 487 (7th Cir. 1983) (“When information
is transmitted to an attorney with the intent that the information will be transmitted
to a third party (in this case on a tax return), such information is not confidential.”);
Colton v. United States, 306 F.2d 633, 638 (2d Cir. 1962) (“[A] good deal of infor-
mation transmitted to an attorney by a client is not intended to be confidential, but
rather is given for transmittal by the attorney to others—for example, for inclusion in
the tax return. Such information is, of course, not privileged.”).

44 DOJ Journal of Federal Law and Practice December 2023

gal advice within the scope of the attorney–client privilege.66 A client
has no expectation that the factual information provided to an attor-
ney—with the intent that the information would be conveyed, in turn, to
the IRS—would remain confidential.67 Even documents and notes neces-
sary to prepare and file tax returns are not covered by the attorney–client
privilege simply because an attorney reviewed the return instead of an
accountant.68

IV. Conclusion
Legal-source income tax investigations have unique challenges in ad-
dition to the unpopularity of paying taxes. But most Americans do pay
their taxes. The Department needs to prosecute tax fraudsters to send
a strong, deterrent message to would-be tax evaders and promote confi-
dence in the tax system. In this article, we have examined some of the
strategic considerations common to tax prosecutions, including how to
develop an appropriate investigatory plan and how to establish a tax loss
amount. We have also discussed charging considerations and how to neu-
tralize potential defenses. Each case presents its own challenges. The Tax
Division stands ready to assist prosecutors with any tax case, but legal-
source cases are of special interest. If you are investigating a legal-source
tax case and have questions or would like assistance, please reach out to a
Tax Division attorney (or a Tax Division alumnus if your office has one)
for support.

66 In re Grand Jury Investigation, 842 F.2d 1223, 1224 (11th Cir. 1987) [here-
inafter Shroeder ]; see also Lawless, 709 F.2d at 487–88; United States v. El Paso Co.,
682 F.2d 530, 539 (5th Cir. 1982); United States v. Gurtner, 474 F.2d 297, 298–99
(9th Cir. 1973); Canaday v. United States, 354 F.2d 849, 857 (8th Cir. 1966).
67 See Lawless, 709 F.2d at 487.
68 See id. (holding that if a client transmits information so that it might be used on a
tax return—even if such information was not ultimately disclosed on a return—“such
a transmission destroys any expectation of confidentiality which might have otherwise
existed”); Schroeder, 842 F.2d at 1225–26 (citing United States v. Cote, 456 F.2d
142, 144–45 (8th Cir. 1972) (holding that where the taxpayer filed returns with the
IRS, “[t]his disclosure effectively waived the privilege not only to the transmitted
data but also as to the details underlying that information”)); see also In re Grand
Jury 83-2 John Doe No. 462, 748 F.2d 871, 875, n.7 (4th Cir. 1984) (noting that
when confidentiality does not exist because of disclosure, the waiver of the attorney–
client privilege extends to the “attorney’s notes containing material necessary to the
preparation of the document. Copies of other documents, the contents of which were
necessary to the preparation of the published document, will also lose the privilege.”).

December 2023 DOJ Journal of Federal Law and Practice 45

About the Authors
Todd Ellinwood is an attorney in the Tax Division’s Criminal Appeals
and Tax Enforcement Section. For 17 years, Todd was an attorney in the
Tax Division’s Southern Criminal Enforcement Section, where he prose-
cuted tax and related white-collar crimes. For over six years, he served
as an assistant chief in the Section. He also served as the Counsel to the
Deputy Assistant Attorney General for Criminal Tax Matters from 2013
to 2014.
Caryn Finley is as an Assistant U.S. Attorney in the Western District
of North Carolina where she prosecutes cases involving white-collar crime
(including tax, mail, wire, and bank fraud) and money laundering; she
has had more than twenty jury trials. Ms. Finley also serves as the U.S.
Attorney’s Office Tax Fraud Coordinator and the Suspicious Activity
Report-Team Coordinator. Prior to joining the U.S. Attorney’s Office in
September 2018, Ms. Finley spent 18 years at the Department of Justice
(Department), Tax Division, where her most recent position was Assis-
tant Chief in the Southern Criminal Enforcement Section. Ms. Finley
served as the Tax Division’s point-person on employment tax prosecu-
tions, training IRS civil and criminal personnel, as well as Department
prosecutors. In 2011, she served as Counsel to the Tax Division’s Deputy
Assistant Attorney General for Criminal Matters.

46 DOJ Journal of Federal Law and Practice December 2023

Follow That Lead! Obtaining
and Using Tax Information in
a Non-Tax Case1
Andrew H. Kahl
First Assistant United States Attorney
Southern District of Iowa

I. Introduction
In any criminal case where financial gain is the prominent motive, tax
returns and return information can provide some of the most significant
leads, corroborative evidence, and cross-examination material obtainable
from any source. Title 26, United States Code, section 6103 (section 6103),
enacted by Congress after the abuses of Watergate, continues to be the
principal instrument to protect the confidentiality of tax returns and re-
turn information.2 The statute recognizes, however, that tax information,
properly obtained and used, can play an important role in criminal inves-
tigations of non-tax crimes.
This article discusses some of the reasons for seeking disclosure of tax
information and the proper procedures for obtaining and using tax in-
formation under section 6103 for investigations, during discovery, and
at trial. It also discusses some strategic considerations in adding tax
charges to non-tax cases, and the procedures for doing so. Although this
article summarizes some of the relevant statutory authority, the reader
should become familiar with these provisions and with the Department
of Justice (Department) and Internal Revenue Service (IRS) publications
and policies on maintaining the confidentiality of tax records.3 Assistant
United States Attorneys (AUSAs) and federal agents must carefully fol-
low section 6103’s disclosure rules in order to avoid exposure to criminal

1 This article was originally published in the April 1998 edition of the United States
Attorneys’ Bulletin. It has been slightly updated and revised to reflect changes in law,
policy, and procedures, but the core message remains very much the same.
2 See Rueckert v. IRS, 775 F.2d 208, 210 (7th Cir. 1985) (citing legislative history).
3 E.g., U.S. Dep’t of Just., Justice Manual 3-15.120; IRS Pub. 1075 (Rev. 11-
2021), Tax Information Security Guidelines for Federal, State and Local Agencies. A
particularly useful and comprehensive reference source is IRS Pub. 4639 (Rev. 10-
2012), Disclosure and Privacy Law Reference Guide.

December 2023 DOJ Journal of Federal Law and Practice 47

and disciplinary sanctions.4

II. The statutory framework

A review of the section 6103(b) definitions of “return,” “return infor-
mation,” and “taxpayer return information” makes clear that, except as
expressly provided under the disclosure provisions, all information filed
with or provided by the taxpayer to the IRS is protected from disclosure
by section 6103.5 This includes all information relating to the taxpayer
received by the IRS from third parties (including informants) and all in-
formation derived from those submissions, including the work product of
the IRS in determining, assessing, and collecting taxes or investigating
the taxpayer criminally. “Disclosure” means “the making known to any
person in any manner whatever a return or return information.”6 Section
6103 is not implicated, however, when tax information is obtained from
other sources, such as from a financial institution, through the execution
of a search warrant, or via a grand jury subpoena to a tax preparer.7
Section 6103(i)(1)(A), in relevant part, permits the IRS, upon the
entry of an ex parte order by a federal district court judge or magistrate
judge, to disclose tax returns and return information to employees of any
federal agency personally and directly engaged in—
(i) preparation for any judicial . . . proceeding pertaining
to the enforcement of a specifically designated Federal

4 Unauthorized disclosure of tax return information is a felony and carries a maxi-

mum statutory penalty of five years’ incarceration, a $250,000 fine, and termination
of employment. 26 U.S.C. § 7213(a)(1); see also 18 U.S.C. § 3571(b)(3). Title 26,
United States Code, section 7431(a)(1) provides that the United States may be sued
for civil damages for unauthorized disclosure of tax returns and return information by
a federal employee.
5 Section 6103(b)(1) defines “return” as “any tax or information return, declaration
of estimated tax, or claim for refund . . . which is filed with the [IRS] . . . and any
amendment thereto, including supporting schedules, attachments” . . . which are made
a part of the return. Subsection (b)(2) defines “return information” to include all the
information on the return, any information regarding the examination or processing
or investigation of the return, and any data collected or received by the IRS from
any source with respect to “the determination of the existence, or possible existence,
of liability (or amount thereof) of any person . . . for any tax, penalty, interest,
fine, forfeiture, or other imposition or offense,” and background files “relating to such
determination.” Subsection (b)(3) defines “taxpayer return information” as taxpayer
information “filed with, or furnished to, the [IRS] by or on behalf of the taxpayer to
whom such return information relates.”
6 26 U.S.C. § 6103(b)(4)(A).
7 Baskin v. United States, 135 F.3d 338 (5th Cir. 1998); Ryan v. United States, 74
F.3d 1161 (11th Cir. 1996); Stokwitz v. United States, 831 F.2d 893 (9th Cir. 1987).

48 DOJ Journal of Federal Law and Practice December 2023

 criminal statute (not involving tax administration) to
which the United States . . . is or may be a party . . . ;
(ii) any investigation which may result in such a proceeding,
or
(iii) any Federal grand jury proceeding pertaining to enforce-
ment of such a criminal statute to which the United States
or such agency is or may be a party . . . ,
solely for the use of such officers and employees in such prepa-
ration, investigation, or grand jury proceeding.

As will be discussed below, the statute also addresses the use and redis-
closure of information so disclosed in judicial proceedings.8 A different
provision, which is largely beyond the scope of this article, addresses the
disclosure and use of tax information in matters involving tax adminis-
tration.9

III. Why obtain taxpayer return information?

In even the most straightforward fraud case, the usefulness of tax
returns should be apparent. For example, in a false bank loan applica-
tion prosecution under 18 U.S.C. § 1014, examination of the target’s filed
individual, partnership, or corporate tax returns may reveal a sharply
different picture of the target than the one she has painted in the loan
application. In this instance, the tax return information provides a state-
ment under penalty of perjury which may either serve as circumstantial
evidence of the target’s misrepresentations of her economic status or as
helpful cross-examination material. If the target submitted purported tax
returns with the loan application that do not match the filed returns, the
filed returns are direct evidence of the fraud.
Just as loan applications often exaggerate assets, bankruptcy petitions
often conceal them. An examination of filed returns from several prior
years may reveal substantial leads to concealed or recently transferred
assets. Tax disclosure may uncover interest income on concealed bank
accounts or depreciation schedules for equipment or rental property that
has been concealed or transferred. Disclosed transfers of property for the
exact amount of the depreciated basis may lead to discovery of assets
siphoned off to other companies controlled by the defendant. As is the
case with bank loan applications, purportedly filed tax returns submitted
to the bankruptcy court may turn out to be different from those actually

8 26 U.S.C. § 6103(i)(4).
9 26 U.S.C. § 6103(h); see generally Criminal Tax Manual § 42.05[3].

December 2023 DOJ Journal of Federal Law and Practice 49

filed with the IRS. Tax disclosure should, therefore, be an early part of
every bankruptcy fraud investigation.
It is common for the target of a financial, political corruption, or
even a narcotics investigation to argue that excess cash discovered during
the investigation is the “proceeds” of legitimate activity. For example,
a target may argue that kickbacks are “commissions,” political bribes
are “consulting fees,” or drug proceeds are profit from “jewelry sales.”
The failure to report the fact and purported source of those moneys on
the filed return will seriously undermine the defense. If the target is so
law-abiding and the source of funds so innocent, why wasn’t the income
declared on the appropriate returns and schedules?
Disclosure of tax returns may also provide critical leads and impeach-
ment material in a political corruption investigation. For example, a pub-
lic employee’s tax returns may show mounting yearly interest from an
increasing number of certificates of deposit (CDs), the purchase of which
is inconsistent with her slowly rising salary and other declared income.
Consider obtaining the requisite disclosure orders to pursue whether the
undeclared source of funds for the purchase of the CDs was taxable and
illegitimate. Similarly, if you have evidence of cash payments to a public
official, a tax return showing only Form W-2 income and small amounts of
interest may be used as evidence of cover-up and guilty knowledge of the
illicit source of the cash income. As a final example, a tax return showing
below market interest on claimed “loans” to a public official may support
the inference and corroborate the proof that the “loans” were extorted
under color of official right in violation of 18 U.S.C. § 1951(b)(2).
Sometimes, even when a potential defendant has declared substantial
income on the tax return to keep the IRS at bay, she will have misde-
scribed the income source on the filed return. For instance, a drug dealer
may report a jewelry business to explain the presence of large amounts
of cash. The Schedule C, or corporate tax returns, however, may show
the business operated over a substantial period without significant profit,
without a large cost of goods sold, or without a substantial business ex-
pense for insurance or other normal expenses of the type of business claim.
Consider, for example, a politician on the take who decides to declare her
bribes as “commissions” on her real estate sales but shows little expense
for advertising and no expense for a real estate license and professional
associations. Your ability to impeach the claimed legitimate business ex-
planation for the income may significantly improve your case.

50 DOJ Journal of Federal Law and Practice December 2023

IV. How to obtain disclosure of tax
information in a non-tax case
Applications for disclosure orders under section 6103(i)(1)(A) are made
ex parte, under seal, because of the grand jury secrecy requirements of
Rule 6(e) of the Federal Rules of Criminal Procedure and the general
proscription against disclosure of criminal investigations.10 Applications
must comply with the conditions set forth in section 6103(i)(1)(B), which
states that the application may be made by the Attorney General, Deputy
or Associate Attorney General, any Assistant Attorney General, or any
United States Attorney.11
The Department takes the view that ex parte applications should be
approved personally by the relevant United States Attorney, and that
this authority may not be redelegated.12 This ordinarily is documented
by having the United States Attorney’s signature included on the applica-
tion. Though cumbersome, supervisory review of tax disclosure applica-
tions assures compliance with the requirements of section 6103(i)(1)(B).
Supervisory review also provides a means for centralizing the tax disclo-
sure records to assure that the requirements of section 6103(p)(4) and the
Department for safeguarding tax materials are met.13
Sections 6103(i)(1)(B)(i) through (iii) require that each disclosure ap-
plication contain facts establishing (i) the reason to believe a violation
of a specific criminal statute has been committed, (ii) how the return
or return information “is or may be relevant to a matter relating to the
commission of such act,” and (iii) that “the return or return information
is sought exclusively for use in the federal criminal investigation or pro-
ceeding relating to such act” and cannot “reasonably be obtained . . .
from another source.”14
When crafting a section 6103(i)(1)(B)(i) application for a disclosure,
make sure the information provided on the alleged violation is substan-
tial and not conclusory. To the extent possible, provide concrete facts
describing the history of the crime and transactional relationships be-
tween your subjects. In this manner, the government will be in a better

10 Department policy requires that ex parte applications be filed under seal. U.S.
Dep’t of Just., Justice Manual 9-13.900.
11 Organized crime strike force chiefs and special prosecutors also may authorize ex
parte applications. 26 U.S.C. § 6103(i)(1)(B); see U.S. Dep’t of Just., Justice
Manual 9-13.900.
12 See Criminal Tax Manual § 42.05[3][c], at 17; see also IRS Pub. 4639 (10-2012),
5-II(B).
13 See U.S. Dep’t of Just., Justice Manual 3-15.120(B).
14 26 U.S.C. § 6103(i)(1)(B)(i).

December 2023 DOJ Journal of Federal Law and Practice 51

position to argue for broad disclosure of tax information under section
6103(i)(1)(B)(ii).
As stated, at this stage, the government need only show how the tax
returns and return information “[are] or may be relevant to a matter
relating to commission” of the non-tax criminal offense.15 Each applica-
tion turns on its own facts. Nevertheless, there are reasons common to
many cases that may be used to explain the need for returns and return
information. For example, if the investigation shows a target received ill-
gotten moneys, then your application can state that examination of the
tax returns may reveal whether those moneys have been declared and, if
so, how they have been described. Further, any omitted or misdescribed
information may be relevant as evidence of concealment and guilty knowl-
edge.
As further example, if the target has engaged in extravagant spending,
tax returns may show whether the declared sources of income, indepen-
dent of the alleged illicit source, support the documented expenditures.
If the target is spending cash, and bank account information reveals few
checks to “cash,” few ATM withdrawals, and no cash back on deposits,
you can explain that the tax returns may show whether there is a declared
source of cash.
Tax returns may also provide leads to the existence of the follow-
ing: interest-bearing accounts and stocks; partnerships; Schedule C busi-
nesses; Subchapter S corporations and trusts; real estate; and depreciable
business property. This information may reveal the disposition of illicit
proceeds. The returns likewise may suggest the existence of inflated or
concealed assets. Tax returns and return information may also provide
leads to business associates and loan officers who, in turn, may provide
historical context for the subject fraud and information about the tax
preparer.
In the disclosure application, explain that IRS examination or collec-
tion records are necessary because they may provide additional evidence
of false statements and help to identify assets relevant to the investiga-
tion. During an audit, the taxpayer may have made direct representations
about the amounts and sources of income, expenses, and the manner in
which her records were maintained. Examination records often provide
an account of a sustained, closely documented contact with the subject
or target by a revenue or collections officer. The records may also include
substantial third-party information, including financial records no longer
available from the financial institution or corporate source, and leads to
or reports of interviews with third parties.

15 26 U.S.C. § 6103(i)(1)(B)(ii) (emphasis added).

52 DOJ Journal of Federal Law and Practice December 2023

 Under section 6103(i)(1)(B)(ii), the more thorough your explanation
of the relevance of tax-related information, the broader the disclosure
allowance is likely to be. Ask for tax disclosure of all relevant returns
and related schedules for each year under investigation, including Form
1040, any corporate, partnership, and trust returns relating to the target
and her associates, and those returns relating to withholding and payroll
taxes. If the facts justify it, ask for tax returns and “return information”
for a sufficient number of years to provide a profile of the target’s declared
financial status and activity before and after the crime.
In your disclosure application, consider asking for all “information re-
turns,” which are the filings that the IRS requires third parties to make
to report financial transactions with a taxpayer. These include Form 1099
(dividends, interest, miscellaneous, pension distributions); Form 1098 (real
estate transactions, mortgage interest paid, etc.); Form W-2 (wages); and
Form K-1 (partnership, trust and Form 1120S distributions); all of which
carry over onto the individual income tax return. Also consider asking
for Form 8300, which are used to report cash transactions greater than
$10,000. Look in the various IRS publications describing filing require-
ments or consult with an IRS revenue agent for information about which
“information returns” might be relevant to your case.
Disclosure orders are strictly construed. If you want tax materials
which become available while the IRS is carrying out its search for re-
quested tax information, you must fashion your application and proposed
tax disclosure order to expressly cover that period. This step is particu-
larly important if you anticipate that the past year’s returns will be filed
or become due after your request. Remember too, that you may seek ad-
ditional tax disclosure orders if it “reasonably appears” that additional
materials are relevant, or you need to update prior disclosures.
The section 6103(i)(1)(B)(iii) requirement—that the tax information
sought “cannot reasonably be obtained, under the circumstances, from
another source”—is easily satisfied. You can state that the use of another
source (for instance, a direct subpoena to a cohort or employee) would
tip the target to the nature or scope of the investigation. You can add
that the information in the return is unique because it is a statement on
the relevant matter under penalty of perjury. Of course, you can state in
the application that the “return information” sought (the work papers
which the IRS has generated through its examination of the return and
contact with the taxpayer) necessarily can only be obtained from the IRS
because of the nondisclosure laws.
Section 6103(i)(1)(B) applications should specify the name of the
AUSA, agent, and any supervisor who will be receiving and using the dis-
closed tax materials in connection with the criminal investigation. This

December 2023 DOJ Journal of Federal Law and Practice 53

requirement, however, does not mean other AUSAs, employees, or agents
cannot have access to the materials without another order. If an AUSA,
agent, employee, or supervisor becomes “personally and directly engaged
in the preparation of the judicial proceeding, the investigation, or the
grand jury proceeding,” including co-counsel, supervisors, and colleagues
from whom guidance is routinely and regularly sought on tax issues, then
they are automatically covered by section 6103(i)(1)(B)(iii).16 It is a good
idea to keep a list of those to whom disclosure is made and, if challenged,
to be able to articulate the reasons for the disclosure. Finally, in writing,
caution those named in the disclosure orders of the statutory requirements
for handling return-related materials. Make sure that those handling tax
return information know that the gratuitous discussion of the tax infor-
mation (as contrasted with consultation in preparation of the case) is
forbidden.
One special word of caution is warranted here. Many AUSAs are in-
volved in “joint task force” investigations which may include the coop-
eration of state and local law enforcement authorities. It is critical to
note that section 6103(i) does not authorize tax disclosure to non-federal
investigators, even if they are formally assigned to a federal task force,
unless they qualify as federal employees. Relatedly, section 6103(i) does
not authorize disclosure to non-federal agents or investigators, even if
they are the sole agent working directly with the AUSA.17
Because of the general proscription against sharing tax information in
a joint federal-state investigation (or if you are working exclusively with
non-federal investigators) and the advantages of obtaining as much help-
ful tax information as possible outside the proscriptions of section 6103(i),
consider whether any cooperating witnesses have the power under section
6103(e) (“disclosure to persons having a material interest”) to obtain dis-
closure of the tax returns in which you are interested. Those same per-
sons, under the provisions of section 6103(c) (“disclosure of returns and
return information to designee of taxpayer”), can give written consent
for you and your agents to have access to the tax returns. Thus, under
section 6103(c), in combination with section 6103(e)(1)(B), a cooperating
estranged spouse can consent to disclosure of jointly filed returns because
she was a “taxpayer” on the return. Similarly, in a fraud investigation,

16 See also 26 C.F.R. § 301.6103(i)-1.

17 State revenue investigators participating in a joint task force may be able to have ac-
cess to the information under separate mutual, state-federal revenue assistance agree-
ments, provided for under section 6103(d). Smith v. United States, 964 F.2d 630,
633–37 (7th Cir. 1992) provides a helpful discussion of tax disclosure made possi-
ble among federal and state revenue department agents under provisions of section
6103(d).

54 DOJ Journal of Federal Law and Practice December 2023

under section 6103(c) and section 6103(e)(1)(C) or (F), a disenchanted
cooperating partner or trustee can describe to you the relevant partner-
ships or trusts through which the fraud operated and designate you, the
case agent, and others working under your direction on the investigation,
to receive the returns for purposes of the investigation.
You may also want to consider requesting section 6103(c) written con-
sent to disclosure as part of a proffer agreement with cooperating defen-
dant or witnesses. Consent, however, must be voluntary and not a con-
dition of the proffer, which might vitiate the consent.18 Once consent is
given and the return information disclosed, examine these materials as
part of your evaluation of the witness’s proffered testimony.
Tax returns disclosed to the government under section 6103(c) are
subject only to the conditions placed on the disclosure by the consenting
taxpayer. Of course, evidence which contains tax information, but which
has not been filed with the IRS, including retained copies of tax returns
and accountant work papers, may be obtained by grand jury subpoena
or directly from the taxpayer or a third-party witness (the preparer).
Tax information so obtained is not protected by section 6103, although
other confidentiality provisions such as Rule 6(e) of the Federal Rules
of Criminal Procedure may apply and limit the government’s disclosure
options.

V. Why add criminal tax charges to a

non-tax criminal case?
Expanding a grand jury investigation to include authority to investi-
gate Title 26 charges takes time and the efforts of IRS—Criminal Inves-
tigation agents, IRS Criminal Tax Counsel, and Tax Division attorneys.
Therefore, as soon as possible after receiving tax disclosure, determine
whether there are apparent tax violations and whether the evidence sup-
ports the addition of tax charges to the government’s case.
The decision to add tax charges is strategic. Because the government
has already received tax disclosure, consider meeting with the IRS agents
to discuss the significance of the information contained in the disclosed
returns. You can also get their advice on whether the information devel-
oped in the grand jury, in combination with the tax disclosure material,
suggests a viable tax prosecution.
In determining whether to add tax charges, consider not only the

18 See Tierney v. Schweiker, 718 F.2d 449 (D.C. Cir. 1983) (Social Security Admin-
istration’s obtaining disclosure by compelling SSI recipients to sign section 6103(c)
consents held invalid).

December 2023 DOJ Journal of Federal Law and Practice 55

strength of your proof but also whether these charges will add or detract
from the case. The most obvious case in which to add tax charges is
one where tax disclosure reveals that illicit proceeds were not reported.
Not only is this a significant tax crime worthy of prosecution, but this
evidence may enhance the prosecution of the underlying conduct because
the concealment of income can be argued as evidence of the defendant’s
knowledge of the illegal nature of that income. For example, in a political
corruption case, the amount of provable direct cash bribes may be small
and the tax loss smaller still. Nonetheless, if the evidence suggests that the
public official was spending undeclared cash with no other likely source
for that cash, the tax proof (using the cash expenditures method) will
corroborate your bribery testimony.19
In another example, the decision to add willful failure to file charges
to a continuing criminal narcotics enterprise prosecution in violation of
21 U.S.C. § 848 might seem odd since there would be no impact on the
length of the sentence. The failure to file charge, however, provides a ve-
hicle for introducing all evidence of expenditures in the relevant years and
all evidence showing the defendant’s relative poverty before the enterprise
began. Here, the use of summary testimony portraying the defendant’s
newly acquired wealth through her documented cash expenditures for
cars, jewelry, and other luxury goods significantly enhances the narcotics
trafficking evidence. It also allows you to argue that if the income was
from a legitimate source, it would have been declared.
The Seventh Circuit, in United States v. Wilson, upheld denial of a
motion to sever tax and narcotics counts, and discussed the mutually
reinforcing effect of tax and non-tax charges, stating:

The elements of proof for failure to file an income tax return

include that the defendant had sufficient income that filing
was necessary, and that the defendant failed to file a return.
Proof of a continuing criminal enterprise requires evidence of
substantial income therefrom. Clearly these offenses involved
introduction of common proofs.
Evidence of large expenditures tended to show that [the de-
fendant] had sufficient income to necessitate filing of a tax
return. Evidence that he failed to, under penalty of perjury,
omitted, misdescribed, or minimized file such a return led to
the permissible inference that he had no bona fide income

19 United States v. Hogan, 886 F.2d 1497, 1505–11 (7th Cir. 1989) provides an excel-
lent discussion of the cash expenditures method of proof and the interplay of tax and
non-tax charges.

56 DOJ Journal of Federal Law and Practice December 2023

 source to support these expenditures.20
Factors which might cause you to forego tax charges include the case
where the proof of the tax charges would bog down in legal issues as to
whether the funds received are “income.” For example, “loans” extorted
by a judge who never intended to repay them could be held to be income in
a civil tax case. Charging the loans as income in a criminal case, however,
could distract a jury from focusing on the corruption charges which were
the central purpose of your prosecution. Another example of a case in
which you would not want to add tax charges would be when severance
of the tax charges is likely.21 You certainly would not want two trials, and
you would not want to have the tax case take place first.
Once the decision is made to add tax charges to your criminal case, re-
member that it is almost always preferable to charge false statement under
26 U.S.C. § 7206(1) or (2), rather than tax evasion under 26 U.S.C. § 7201.
The use of false statement charges allows the jury to focus its attention
on the fact that the defendant, under penalty of perjury, omitted, misde-
scribed, or minimized income, or falsely described expenses on an under-
lying schedule, or lied about the source of her income. Conversely, the use
of tax evasion charges requires the government to prove all income (in-
cluding legitimate income), deductions, credits, and tax due, which may
distract the jury from the main purpose of the tax charges—to show that
the defendant is a liar.

VI. How to expand a non-tax grand jury

investigation to include authority to
investigate criminal tax charges
To the AUSA accustomed to receiving allegations of criminal con-
duct and immediately beginning a grand jury investigation, the proce-
dure for expanding a non-tax case to include Title 26 charges may ap-
pear mind-bending. Section 6103(h)(3) does not permit the investiga-

20 United States v. Wilson, 715 F.2d 1164, 1171 (7th Cir. 1983).
21 AUSAs thus should be cognizant of the law of joinder and severance in their circuit.
Obviously, the case for joinder is strongest when the “funds derived from non-tax vio-
lations either are or produce the unreported income.” United States v. Turoff, 853 F.2d
1037, 1043 (2d Cir. 1988); United States v. Uchimura, 23 F. App’x. 645 (9th Cir. 2001)
(not precedential); United States v. Brooks, 174 F.3d 950, 956–57 (8th Cir. 1999). Like-
wise, joinder may be appropriate where the tax fraud was perpetrated to cover up a
mail or wire fraud scheme. United States v. Hager, 879 F.3d 550, 557 (5th Cir. 2018).
But see United States v. Shellef, 507 F.3d 82, 98–100 (2d Cir. 2007) (finding inade-
quate nexus between tax and non-tax counts); United States v. Litwok, 678 F.3d 208,
216–18 (2d Cir. 2012).

December 2023 DOJ Journal of Federal Law and Practice 57

tion of tax charges unless the criminal case first has been referred to the
United States Attorney’s office (USAO) by the IRS. The expansion pro-
cess, therefore, requires the United States Attorney to write a letter to
the IRS Criminal Investigation Chief describing the non-tax investiga-
tion, explaining the basis to believe that tax charges may be appropriate,
and requesting IRS referral of the subject or subjects and assignment of
IRS-CI agents to assist in the investigation. A copy of this letter must
be sent to the Tax Division and a copy should be sent to Criminal Tax
Counsel as a courtesy.22
IRS participation brings significant benefits to the investigation. Once
Title 26 expansion is authorized, the IRS may disclose relevant tax infor-
mation without a court order. This includes not only information relating
to the particular taxpayer, but also third-party tax information if an item
on that return is relevant to a matter at issue or to a transactional rela-
tionship between the third party and the target.23
Your request for IRS assistance in a case involving non-tax charges
represents a solemn promise to pursue tax charges if the evidence supports
them. This means that you must coordinate the efforts of the IRS agents
with those of other agencies involved in the investigation to assure that
you will not be pressured to indict the non-tax charges before the tax
charges are ready. You should consider the time the agent will need to
prepare the Special Agent’s Report (SAR) and the time required for IRS
Criminal Tax Counsel and the Tax Division to review and approve the
proposed tax charges. This process can be streamlined by working with
the IRS-CI agent so that she understands what tax charges supported
by the evidence best relate to and enhance the non-tax charges in the
government’s case. Review a draft of the SAR before it is submitted for
agency review to be sure that it is consistent with your view of the case.
If necessary, provide the Tax Division with any supplementary materials
that show how the tax case fits with the non-tax case and explain the
USAO’s strategy for prosecuting the same. And in situations where it is
really necessary, the AUSA can request expedited review.

VII. Handling tax information during the

investigation
Like other sensitive information, whether it be national security in-
formation or contraband images in a child pornography case, tax infor-

22 See U.S. Dep’t of Just., Justice Manual 6-4.122; Tax Division Directive 86-
59.
23 See 26 U.S.C. § 6103(h)(2).

58 DOJ Journal of Federal Law and Practice December 2023

mation must be maintained in a manner that restricts access to autho-
rized personnel who have a legitimate need to access it. Generally speak-
ing, whether in physical or electronic formats, tax information should
be clearly marked and placed in a locked container, whether virtually or
physically. IRS rules require tax information to be double-locked, a re-
quirement which generally is satisfied if the tax information is in a locked
office or cabinet which, in turn, is within the secure perimeter of the par-
ticular USAO.24 If you have tax information from sources other than the
IRS, it makes sense to mark it in some distinguishing manner as to its
source.
When the case is complete, before closing the file for transmittal to
the Federal Records Center, all tax information obtained under sections
6103(h) or (i) must be extracted and a record made of its return to the
IRS or its destruction. Agents who have tax information in their working
files to carry out their investigatory responsibilities for the grand jury
must maintain the same strict security procedures and, at the end of a
case, return the materials to the AUSA for proper disposal.

VIII. Disclosure of return information in

discovery and at trial
In a case without tax charges, pre-indictment disclosure authority un-
der section 6103(i)(1) does not permit the post-indictment disclosure of
tax return(s) and return information during discovery proceedings or trial
without first meeting the separate requirements of section 6103(i)(4) (per-
taining to non-tax cases), whether in discovery, at trial, or in any related
judicial proceeding. The conditional language which allowed review of tax
material at the investigatory stage (that the return or return information
“may be relevant . . .”) becomes more commanding after indictment. Sec-
tion 6103(i)(4)(A) permits the disclosure of returns and taxpayer return
information “in any judicial or administrative proceeding” relating to a
specified non-tax crime or related civil forfeiture proceeding, but only
upon a specific finding or order from the court.25 Specifically, section
6103(i)(4)(A) permits disclosure

24 U.S. Dep’t of Just., Justice Manual 3-15.120; see also IRS Pub. 1075 2.B.2
(describing “two-barrier” rule).
25 For return information other than taxpayer return information—such as informa-
tion that the IRS generated itself or obtained from someone other than the taxpayer—a
separate disclosure order would not appear necessary, given the differing language set
forth in section 6103(i)(4)(B). As a practical matter, however, disclosure for use in a
non-tax prosecution typically will include either returns or taxpayer return informa-
tion. See also footnote 5, supra.

December 2023 DOJ Journal of Federal Law and Practice 59

 (i) if the court finds that such return or taxpayer return
information is probative of a matter in issue relevant in
establishing the commission of a crime or the guilt or
liability of a party, or
(ii) to the extent required by order of the court pursuant to
section 3500 of title 18 . . . or rule 16 . . . .26

The court is further directed, as least for orders under subsection (ii), to
“give due consideration to congressional policy favoring the confidentiality
of returns and return information . . . .”27
By the terms of the statute, the court must make its relevancy find-
ing under subsection (i) before the disclosure occurs, and any court order
under subsection (ii) must likewise be in place before the disclosure to de-
fense counsel. In some districts, the government files an in camera motion,
setting forth the facts that justify the disclosure. Such motions sometimes
are made ex parte where the disclosure involves returns and return in-
formation of persons or entities other than the defendant. Other districts
address disclosures under section 6103(i)(4) through more standard dis-
covery orders, although AUSAs should ensure that it is clear that the
order is specifically tailored to the case at hand. Once the tax disclosure
is authorized, tax information can be provided in accord with ordinary
rules of discovery.
When negotiating a plea in a non-tax criminal case, consider whether
it will be useful to include any defendant or third-party tax information
you have received as relevant evidence to the crimes being admitted in
the plea agreement. If so, craft a section 6103(i)(4)(A) motion to establish
the relevance of the tax information so it may be disclosed.
To assure that the probation officer in a non-tax case will have access
to accumulated tax returns and tax information relating to the defendant,
consider incorporating into the plea agreement the defendant’s voluntary
consent to disclosure under section 6103(c). Some probation officers rou-
tinely require defendants to sign section 6103(c) authorizations to allow
for a more complete profile of the defendant’s financial ability to pay
fines, restitution, and costs of confinement or supervision. But there is
some case law saying that such a requirement vitiates the consent re-
quired by section 6103(c).28 By contrast, in a case involving both Title
26 and non-tax crimes, the IRS is permitted under section 6103(h)(4) to

26 Different rules apply to the disclosure of return information in a tax case. See
26 U.S.C. § 6103(h)(4).
27 26 U.S.C. § 6103(i)(4)(D).
28 See Tierney v. Schweiker, 718 F.2d 449, 454–56 (D.C. Cir. 1983).

60 DOJ Journal of Federal Law and Practice December 2023

make disclosure to the probation officer because the disclosure relates to
“tax administration”—namely, the sentencing phase of the tax case.

IX. Obtaining state tax returns and return

information
One final area of tax disclosure is worth a brief mention. Many state
tax returns are also protected by anti-disclosure laws closely patterned
after 26 U.S.C. § 6103. Therefore, the state returns may not be easily
available through grand jury subpoenas and the access to them may not
be covered by exceptions to the state disclosure laws. This may be so
despite the general rule that the Supremacy Clause ordinarily trumps
state privacy laws.29
Nonetheless, access to state income tax, personal property, and sales
tax returns may significantly advance a federal criminal investigation and
result in additional Title 18 charges or provide relevant evidence of Title
26 charges. Consider making a motion to the federal district court for
a disclosure order under the All Writs Act, 28 U.S.C. § 1651, and the
Supremacy Clause, and carefully articulate your need for state tax returns
and return information. This effort may bring you what you need.

X. Conclusion
Section 6103 may seem daunting. However, it becomes easier to ex-
plain the illegal conduct of a defendant when you have more information
about the defendant’s handling of business and personal affairs. Once
you become familiar with the quirky procedures and forms, the investiga-
tive advantages of having tax returns and return information for use in a
criminal case make the disclosure process worthwhile.

29 See generally 1 Sara Sun Beale et al., Grand Jury Law and Practice § 6:9. District
courts generally (but not always) have followed this rule in the context of state tax
records. See, e.g.,In re Subpoena to Testify before Grand Jury, No. 07-1500, 2007
WL 1098884 (E.D. La. Apr. 10, 2007) (denying motion to quash grand jury subpoena
for production of state tax records protected by Louisiana law); In re Grand Jury
Subpoena for New York State Income Tax Records, 468 F. Supp. 575, 578 (N.D.N.Y.
1979) (mandating compliance with grand jury subpoena seeking New York state tax
records, conditioned “upon a written showing by the Justice Department, for review
in camera by the Court, that the subpoenaed information is relevant and necessary to
the grand jury investigation.”). But see, In re Grand Jury Subpoena, 485 F. Supp.2d
709 (E.D. Va. 2007) (requiring government to comply with strictures of section 6103(i)
to obtain disclosure of state tax returns).

December 2023 DOJ Journal of Federal Law and Practice 61

About the Author
Andrew H. Kahl, who began his Department career with the Tax Di-
vision in 1991, is the First Assistant U.S. Attorney and Appellate Chief
for the Southern District of Iowa.
This article was originally written by Joan Bainbridge Safford (retired),
who was the Deputy United States Attorney for the Northern District of
Illinois.

62 DOJ Journal of Federal Law and Practice December 2023

Tax Fraud Involving COVID-
Relief Provisions
David Zisserson
Assistant Chief
Criminal Enforcement Section
Tax Division

I. Introduction
In response to the COVID-19 pandemic, Congress authorized trillions
of dollars of spending on a variety of relief programs.1 A major compo-
nent of that spending was a series of a tax credits. As has been widely
reported, many COVID-relief programs have been targets of significant
fraud.2 The tax-related COVID-relief provisions have been no exception.
As of September 2023, the Internal Revenue Service’s (IRS) Criminal
Investigation Division had uncovered more than $8 billion in suspected
pandemic fraud.3
Due to the magnitude of the fraud, prosecutions of tax-related COVID
crime will likely occupy a substantial portion of the Department of Jus-
tice’s (Department’s) attention for years. Federal prosecutors, however,
should not be intimidated when handling such cases. While COVID tax
credits are new, the long-standing statutes available to address tax fraud
are just as effective as ever. In fact, after one gets past the novelty of the
COVID tax credits, prosecutions of those who abuse such credits are fun-
damentally the same as typical tax cases. This article will summarize the
tax-related COVID-relief provisions that have been subject to the most
fraud, discuss the statutes that can be used to charge such fraud, and

1 U.S. Gov’t Accountability Off., COVID-19 Relief: Funding and Spend-

ing as of Jan. 31, 2023.
2 See, e.g., Richard Lardner et al., The Great Grift: How Billions in COVID-19 Relief
Aid Was Stolen or Wasted, Assoc. Press, June 12, 2023; Ken Dilanian & Laura
Strickler, ‘Biggest fraud in a generation’: The Looting of the Covid Relief Plan Known
as PPP, NBC News, Mar. 28, 2022.
3 Press Release, Internal Revenue Service, To protect taxpayers from scams, IRS or-
ders immediate stop to new Employee Retention Credit processing amid surge of
questionable claims; concerns from tax pros (Sept. 14, 2023). According to the De-
partment of the Treasury, it manages over $1 trillion in COVID-related tax credits
and other programs. U.S. Dep’t of the Treasury, Covid-19 Economic Relief,
https://home.treasury.gov/policy-issues/coronavirus (last visited Aug. 30, 2023).

December 2023 DOJ Journal of Federal Law and Practice 63

review some of the Department procedures that apply to these cases.

II. COVID-related tax credits

Congress enacted a series of tax-related provisions to provide relief
during the COVID-19 pandemic.4 Some are technical or obscure and are
therefore unlikely to attract much criminal attention.5 Others, however,
due to their lenience and widespread availability, have gained higher lev-
els of awareness, spurred on by advertisements from a cottage indus-
try6 devoted to help taxpayers take advantage of them.7 These provi-
sions—specifically, the Economic Impact Payments (EIP), Employee Re-
tention Credits (ERCs), and sick and family leave credits—have been used
by a significant number of bad actors to collectively commit hundreds of
millions of dollars of fraud.8

A. Economic impact payments (stimulus payments)

One of the government’s COVID responses most noticeable to the
general public was to send taxpayers a series of three EIPs, or, as many
knew them, “stimulus payments.”9 These were actually tax credits.
The first, passed in March 2020 as part of the Coronavirus Aid, Re-
lief, and Economic Security (CARES) Act, provided for payments up to
$1,200 per eligible adult ($2,400 for those filing joint returns) and $500

4 See Internal Revenue Service, Coronavirus Tax Relief, https://www.irs.gov/

coronavirus-tax-relief-and-economic-impact-payments (last visited Aug. 30, 2023).
5 See, e.g., Internal Revenue Service, Coronavirus Relief for Retirement
Plans and IRAs, https://www.irs.gov/newsroom/coronavirus-relief-for-retirement-
plans-and-iras (last visited Aug. 30, 2023).
6 Merriam-Webster defines a “cottage industry” as “a limited but enthusiastically
pursued activity or subject.”
7 See, e.g., Susan Tompor, IRS Warns That a Tax Credit Everyone’s Heard About Def-
initely Isn’t for Everyone, Detroit Free Press (Mar. 11, 2023), https://www.free-
p.com/story/money/personal-finance/susan-tompor/2023/03/11/aggressive-ads-on-
employee-retention-credit-could-trigger-bad-claims/69981928007/; Jeremy Tanner,
Beware of Ads Promoting Employee Retention Credit Offers, IRS Warns, The Hill,
(Mar. 25, 2023), https://thehill.com/homenews/nexstar media wire/3914856-beware-
of-ads-promoting-employee-retention-credit-offers-irs-warns/.
8 IRS-CI has published that, as of July 31, 2023, it has initiated 252 investigations
involving over $2.8 billion of potentially fraudulent ERC claims. See Press Release,
Internal Revenue Service, To protect taxpayers from scams, IRS orders immediate
stop to new Employee Retention Credit processing amid surge of questionable claims;
concerns from tax pros.
9 See United States v. Ruiz, No. 19-CR-03035, 2021 WL 5235545, at *1 (W.D. Tex.
Nov. 10, 2021) (noting that the EIP is “more commonly known as the stimulus pay-
ment”).

64 DOJ Journal of Federal Law and Practice December 2023

per qualifying child.10
Congress, however, did not simply mandate that the Treasury De-
partment send people checks. Instead, Congress amended the Internal
Revenue Code to create a tax credit for 2020,11 and then directed the
Treasury to pay taxpayers that credit in advance, rather than wait until
taxpayers claimed it on their income tax returns.12 Although the term did
not stick in the public discourse, the statute refers to this as a “recovery
rebate.”
After the CARES Act, Congress provided for two additional EIPs,
again distributed as advanced payments of tax credits. The COVID-
Related Tax Relief Act of 2020 created a $600 tax credit per individual,
in addition to $600 per qualifying child.13 Finally, the American Rescue
Plan Act of 2021 created a tax credit of $1,400 per individual plus $1,400
per dependent.14
Congress directed the Secretary of the Treasury to pay all three EIPs
“as rapidly as possible.”15 To that end, most taxpayers did not have to do
anything to prompt the IRS to send their payments. Instead, the IRS paid
taxpayers automatically, based on the income reported on their previously
filed tax returns.16
Not all taxpayers, however, had a recent tax return on file. That is
because those who earn less than a specified threshold amount have no
filing requirement.17 In 2020, that threshold was generally $12,400 for
individuals and $24,800 for married couples.18 For those who had not
filed returns, the IRS established an online tool to report the information
necessary for the IRS to determine the payment a taxpayer was entitled

10 Pub. L. No. 116-136, § 2201, 134 Stat. 281, 335 (Mar. 27, 2020) (codified at
26 U.S.C. § 6428). The tax credit phased out for individuals with higher incomes.
Id. § 6428(c).
11 26 U.S.C. § 6428.
12 Id. § 6428(f).
13 Pub. L. No. 116-260 § 272, 134 Stat. 1182, 1965 (Dec. 27, 2020) (codified at
26 U.S.C. § 6428A).
14 Pub. L. No. 117-2 § 9601, 135 Stat. 4, 138 (Mar. 11, 2021) (codified at
26 U.S.C. § 6428B).
15 26 U.S.C. §§ 6428(f)(3)(A), 6428A(f)(3)(A)(i), and 6428B(g)(3).
16 26 U.S.C. §§ 6428(f), 6428A(f), and 6428B(g); see also Internal Rev-
enue Service, Economic Impact Payments: What You Need to Know,
https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
(last visited Aug. 30, 2023).
17 26 U.S.C. § 6012(a)(1)(A).
18 IRS Publication 501, Dependents, Standard Deduction, and Filing Information,
Jan. 26, 2021. These filing thresholds also differ depending on the taxpayer’s age and
filing status.

December 2023 DOJ Journal of Federal Law and Practice 65

to and where to send it.19 Whether or not taxpayers realized it, that tool
actually caused a tax return to be filed with the IRS, which would be
reflected on IRS transcripts as a Form 1040 reporting $1 of income.

B. The Employee Retention Credit (ERC)

Another major COVID-relief provision was tax credits for employers,
intended to ease the burden of paying employees during shutdowns in the
slowing economy. These tax credits included the ERC and the credit for
sick and family leave.
The ERC, first introduced as part of the CARES Act, is a refundable
tax credit designed to incentivize employers to keep employees on payroll
during the pandemic.20 Originally, it allowed eligible employers to claim
a credit against their employment tax liabilities equal to 50% of up to
$10,000 of each employee’s annual wages paid between March 12, 2020
and December 31, 2020.21 In general, for an employer to be eligible, its
business must have been at least partially suspended due to government
orders, or its quarterly gross receipts must have declined to less than 50%
of the gross receipts for the same quarter in the previous year.22
Congress altered the ERC several times. First, in December 2020, the
Consolidated Appropriations Act expanded the ERC to apply to wages
paid through June 30, 2021, and increased its value to 70% of up to
$10,000 in qualified wages per quarter, with a maximum quarterly benefit
per employee of $7,000.23 It also eased the requirements for employers to
claim the credit, making employers eligible if their gross receipts were less
than 80% of the same quarter in the previous year.24
Congress expanded the ERC again through the American Rescue Plan
Act in March 2021, this time extending it to wages paid through Decem-

19 See Internal Revenue Service, Non-Filers Enter Payment Here Tool is Closed,
https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here (last visited Aug.
30, 2023). That online tool is now closed.
20 Department of the Treasury, Employee Retention Tax Credit: What You
Need to Know, https://home.treasury.gov/system/files/136/Employee-Retention-Tax-
Credit.pdf (last visited Aug. 30, 2023).
21 Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 § 2301(a)
and (b), 134 Stat. 281, 347 (Mar. 27, 2020).
22 Id. at § 2301(c)(3).
23 Consolidation Appropriations Act, 2021, Pub. L. No. 116-260 § 207(a), 134
Stat. 1182, 1882 (Dec. 27, 2020); see also Internal Revenue Service, Employee
Retention Credit - 2020 vs 2021 Comparison Chart, https://www.irs.gov/newsro-
om/employee-retention-credit-2020-vs-2021-comparison-chart (last visited Aug. 30,
2023).
24 Pub. L. No. 116-260 § 207(d), 134 Stat. 1182, 1882 (Dec. 27, 2020).

66 DOJ Journal of Federal Law and Practice December 2023

ber 31, 2021.25 Later, however, Congress limited the credit to apply only
to wages paid through September 30, 2021.26 Congress also extended the
ERC to apply to “recovery startup businesses,” defined, in part, as those
beginning after February 15, 2020, and having average annual gross re-
ceipts of less than $1 million.27 The ERC, in its current form, is codified
at 26 U.S.C. § 3134.
Importantly, the ERC was a refundable tax credit, meaning that if the
amount of the credit available to an employer exceeded the employer’s tax
liability, the excess would be treated as an overpayment that would be
refunded.28 In other words, the IRS would send the employer a check for
the difference.29
Employers were able to claim ERCs in several ways. First, they could
claim the credit on their Employer’s Quarterly Tax Return, which is IRS
Form 941.30 Second, eligible employers who did not originally claim the
credit could amend their tax returns using Form 941-X.31
Alternatively, eligible employers could request that the IRS send them
an advanced payment of their ERC before they filed their quarterly tax re-
turn. The IRS issued a special form for this purpose, Form 7200, Advance
Payment of Employer Credits Due to COVID-19,32 which taxpayers could
fax to the IRS.33 The IRS stopped accepting those forms on January 31,
2022.

C. Sick and family leave credits

In addition to the ERC, Congress enacted tax credits to offset the em-
ployers’ provision of sick and family leave to employees. In March 2020,
Congress passed the Families First Coronavirus Response Act, which re-
quired employers to provide paid sick and family leave for certain COVID-

25 Codified at 26 U.S.C. § 3134.

26 Infrastructure Investment and Jobs Act, Pub. L. No. 117-58 § 80604, 135 Stat. 429,
1341 (Nov. 15, 2021) (codified at 26 U.S.C. § 3134).
27 26 U.S.C. § 3134.
28 26 U.S.C. § 3134(b)(3).
29 See Internal Revenue Service, Tax Credits for Individuals: What They Mean
and How They Can Help Refunds, https://www.irs.gov/newsroom/tax-credits-for-
individuals-what-they-mean-and-how-they-can-help-refunds (explaining differences
between refundable and non-refundable tax credits) (last visited Aug. 31, 2023).
30 Internal Revenue Service, Instructions for Form 941, https://www.irs.gov/
instructions/i941 (last visited Oct. 16, 2023).
31 Internal Revenue Service, Employee Retention Credit, https://www.irs.gov/
coronavirus/employee-retention-credit (last visited Aug. 31, 2023).
32 Historical form available at https://www.irs.gov/pub/irs-prior/f7200–2021.pdf.
33 Internal Revenue Service, Instructions for Form 7200, https://www.irs.gov/
pub/irs-prior/i7200–2021.pdf (last visited Sept. 1, 2023).

December 2023 DOJ Journal of Federal Law and Practice 67

related circumstances, such as experiencing symptoms or caring for family
members.34 At the same time, Congress provided tax credits to reimburse
employers for the cost of this mandated leave.35 These credits were equal
to 100% of the qualified wages paid: up to $200 per day, per employee,
for up to 10 days.36 In other words, the credits were worth as much as
$2,000 per employee. Like the ERC, this sick and family leave credit was
fully refundable. So, if the credit exceeded the employer’s employment
tax liability, the IRS would pay the employer the difference.37
Congress also extended a similar tax credit to self-employed individ-
uals.38 Generally, that credit was computed by multiplying the number
of sick days the self-employed individual was unable to work because of
COVID by the lesser of $200 or 67% of the average daily self-employment
income.39 Once again, this credit was refundable.40
Like for the ERC, employers could claim sick and family leave credits
on their original or amended quarterly tax returns.41 They could also
request advance payment of the credit on a Form 7200.42 Self-employed
individuals could claim the credit on a similar form published for this
specific purpose: Form 7202, Credits for Sick Leave and Family Leave for
Certain Self-Employed Individuals.43 Taxpayers did not file that form on
its own, but attached it to their individual income tax returns.44

III. Prosecuting COVID-related tax fraud

A. EIPs
Because EIPs are tax credits, schemes to fraudulently claim them
are tax crimes chargeable under Title 26 of the United States Code (in
addition to other provisions). At this point, however, opportunities to

34 Pub. L. No. 116-127 § 5102, 134 Stat. 178, 195 (Mar. 18, 2020).
35 Id. § 7001.
36 See id. § 7001(b)(1) (alternatively allowing qualified wages to be $511 when any
portion of the paid sick time was described in the Emergency Paid Sick Leave Act).
37 Id. § 7001(b)(4).
38 Id. § 7002.
39 Id. § 7002(c).
40 Id. § 7002(d).
41 See Internal Revenue Service, Paid Sick and Family Leave Credit – 2020 vs
2021 Comparison Chart, https://www.irs.gov/newsroom/paid-sick-and-family-leave-
credit-2020-vs-2021-comparison-chart (last visited Sept. 1, 2023).
42 Instructions for Form 7200, supra note 33.
43 Available at https://www.irs.gov/pub/irs-prior/f7202–2021.pdf.
44 Internal Revenue Service, Instructions for Form 7202, https://www.irs.gov/
pub/ irs-prior/i7202–2021.pdf (last visited Sept. 1, 2023).

68 DOJ Journal of Federal Law and Practice December 2023

prosecute EIP-related crimes, standing alone, are probably rare.
As an initial matter, the IRS is not automatically sending EIPs to
taxpayers anymore.45 So, crimes like stealing EIP checks out of the mail
can no longer be committed.46 EIP cases therefore will almost certainly
involve historical conduct, as opposed to ongoing schemes.
Historical schemes worth prosecuting will likely be Stolen Identity Re-
fund Fraud (SIRF) cases, where perpetrators file large numbers of claims
for EIPs in the names of other taxpayers.47 In such circumstances, ap-
propriate charges would include filing false claims,48 theft of government
funds,49 and aggravated identity theft.50 But now, more than three years
after the IRS paid the first round of EIPs, most of those crimes that will
be detected and prosecuted already have been. In addition, with EIPs
worth only a few thousand dollars each, prosecuting defendants solely for
fraudulently claiming a single EIP will likely not be worth the resources,
and will be better handled by the IRS’s civil function.
None of this means, however, that EIPs are irrelevant to criminal tax
cases. To the contrary, a defendant’s false EIP claim would be an excellent
piece of evidence in a larger tax fraud prosecution. For example, while
investigating taxpayers who have failed for years to file tax returns despite
earning substantial income, the Tax Division has discovered that these
same taxpayers submitted claims for EIPs through the IRS’s online tool
in which they lied about their income. Although a prosecutor may not
wish to pursue a charge directly addressing a small claim, it is damning
evidence of the taxpayer’s willfulness to commit tax fraud.51
Moreover, in a tax evasion prosecution under 26 U.S.C. § 7201, such
conduct can serve as a solid affirmative act of evasion, which is a key

45 Internal Revenue Service, Economic Impact Payments, https://www.irs.gov/

coronavirus/economic-impact-payments (last visited Sept. 1, 2023).
46 See Press Release, U.S. Attorney’s Office, Southern District of California, Defen-
dant Sentenced for Mail Theft and Possession of Stolen Mail, Including Stimulus
Checks (June 28, 2021).
47 See U.S. Dep’t of Just., Tax Division, Stolen Identity Refund Fraud,
https://www.justice.gov/tax/stolen-identity-refund-fraud; Internal Revenue Service,
IRS Issues Warning About Coronavirus-Related Scams; Watch Out for Schemes Tied
to Economic Impact Payments (Apr. 2, 2020).
48 18 U.S.C. § 287.
49 18 U.S.C. § 641.
50 18 U.S.C. § 1028A.
51 Willfulness is an element the government must prove in most tax crimes. See,
e.g., 26 U.S.C. §§ 7201 (tax evasion), 7202 (willful failure to collect or pay over tax),
7203 (willful failure to file return, supply information, of pay tax), 7206(1) (willfully
filing a false tax return), 7206(2) (willfully aiding or assisting in the preparation or
presentation of false tax returns).

December 2023 DOJ Journal of Federal Law and Practice 69

element of the crime.52 “[A]ny conduct, the likely effect of which would
be to mislead or to conceal” constitutes an affirmative act of evasion.”53
Claiming an EIP on a tax return or through the IRS’s online tool that
understates a taxpayer’s income would certainly qualify.54

B. ERCs and sick and family leave credits

The refundable nature of the ERCs and sick and family leave credits
have made them attractive targets for fraud. Indeed, that refundability
means that the credit does not simply decrease a taxpayer’s liabilities but
can trigger the IRS to pay taxpayers funds from the Treasury. This has
caused fraud involving the ERC in particular to proliferate.
Prosecutors should not be intimidated by the technical nature of these
tax credits. Although properly calculating the credits may seem complex,
the vast majority of crimes involving the credits will not be. Most cases
thus far have involved perpetrators claiming the credits on behalf of fab-
ricated entities with no real business operations or employees. In such
circumstances, of course, the entities are not entitled to any tax credits.
Therefore, what will primarily concern prosecutors and case agents will
not involve technical tax issues, but simply proving that the purported
business does not exist.
To be sure, cases have arisen of legitimate entities fraudulently claim-
ing COVID-related tax credits. But those cases do not revolve around
technical tax matters either. Rather, they involve filing claims that in-
flated the number of employees or the amount of wages. Therefore, pros-
ecution will focus on establishing the entity’s true number of employees
and wages.
In addition, prosecuting these cases does not require novel charging
theories. As discussed below, falsely claiming tax credits fits comfortably
into a variety of statues commonly used to prosecute tax crimes.55

52 See Sansone v. United States, 380 U.S. 343, 351 (1965) (stating the elements of
tax evasion as willfulness, the existence of a tax deficiency, and “and an affirmative
act constituting an evasion or attempted evasion of the tax”); Spies v. United States,
317 U.S. 492, 497–99 (1943) (a mere failure to file a return, standing alone, cannot
constitute an attempt to evade taxes).
53 Spies, 317 U.S. at 499.
54 Sansone, 380 U.S. at 351–52 (“it is undisputed that petitioner filed a tax return
and that the petitioner’s filing of a false tax return constituted a sufficient affirmative
commission to satisfy that requirement of § 7201”).
55 All of these tax crimes are comprehensively discussed in the Department of Justice’s
Criminal Tax Manual, available at https://www.justice.gov/tax/foia-library/criminal-
tax-manual-title-page-0. To provide better context for those new to tax prosecutions,
this article will briefly review some of the statutes’ primary elements and features.

70 DOJ Journal of Federal Law and Practice December 2023

1. Charging defendants with filing false claims and
false tax returns on their own behalf
The standard panoply of Title 26 crimes will be appropriate in most
cases involving false claims for payments resulting from ERCs and sick
and family leave credits. As explained above, a primary method for em-
ployers to receive these credits is to claim them on their quarterly employ-
ment tax returns, Forms 941. In those circumstances, simply charging de-
fendants with filing false tax returns, in violation of 26 U.S.C. § 7206(1),
is perfectly appropriate. To prove a violation of that statute, the gov-
ernment must generally establish: (1) the defendant made and signed a
return (or other document) which was false as to a material matter; (2)
the return was made under the penalties of perjury; (3) the defendant did
not believe the return to be true and correct as to every material matter;
and (4) the defendant’s conduct was willful.56
It should be noted, however, that although a Form 7200 looks like a tax
return, it is not. Unlike a tax return, it does not comprehensively report a
taxpayer’s income and deductions; it is simply used to request advanced
payment of the tax credits at issue. This is an important distinction for
charging purposes.
To be sure, section 7206(1) applies on its face not just to tax returns,
but to “any return, statement, or other document[.]” But the Fifth Cir-
cuit in United States v. Levy 57 (and by extension, the Eleventh Circuit)58
has limited the statute’s application to documents required either by the
Internal Revenue Code or regulations thereunder. Because businesses are
not required to file Forms 7200, they may not appear to fit those cat-
egories. Therefore, to be safe, prosecutions in the Fifth and Eleventh
Circuits should not charge defendants under section 7206(1) with filing a
false Form 7200.59
This issue is easily solved, however, by charging a defendant with
making a false claim in violation of 18 U.S.C. § 287, or even with making
a false statement in violation of 18 U.S.C. § 1001. In addition, although
other circuits have flatly rejected Levy,60 prosecutors outside the Fifth
and Eleventh Circuits should still be careful not to characterize a Form

56 See United States v. Bishop, 412 U.S. 346, 350 (1973).

57 United States v. Levy, 533 F.2d 969, 975 (5th Cir. 1976).
58 See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc)
(adopting as binding precedent all decisions of the former Fifth Circuit handed down
before October 1, 1981).
59 For a more in-depth discussion of this issue, see Criminal Tax Manual § 12.6.
60 United States v. Holroyd, 732 F.2d 1122, 1124 (2d Cir. 1984); United States v.
Franks, 723 F.2d 1482, 1485 (10th Cir. 1983).

December 2023 DOJ Journal of Federal Law and Practice 71

7200 as a “tax return.”
In addition, charging tax evasion in violation of 26 U.S.C. § 7201 may
be appropriate for defendants who file false claims for tax credits. If the
defendant does so in a manner to avoid paying their true tax liabilities,
section 7201 would fit the conduct well. To secure a conviction for tax
evasion, the government must prove: (1) an affirmative act constituting an
attempt to evade or defeat a tax; (2) an additional tax due and owing; and
(3) willfulness.61 This charge would work particularly well for businesses
or individuals that would have owed taxes had they not made a false
claim for tax credits.

2. Charging schemes to prepare false tax return for

others
Crimes involving false claims for ERCs or sick and family leave cred-
its have been perpetrated by those preparing false tax returns for others,
often for exorbitant fees or a percentage of the tax refund paid. Such
crimes closely resemble typical return preparer schemes discussed else-
where in this publication.62 The losses in COVID credit cases, however,
may be unusually large per tax return because of the high value of the
tax credits.
Like typical tax return preparer schemes, those involving COVID-
related tax credits have frequently involved the wholesale fabrication
of business entities with no real operations. Such crimes therefore can
be prosecuted like the run-of-the-mill return preparer schemes. These
schemes often involve multiple perpetrators. As a result, an appropriate
major count is often conspiracy to defraud the United States, in violation
of 18 U.S.C. § 371.63 Alternatively, charging a conspiracy to submit false
claims, in violation of 18 U.S.C. § 286, is appropriate as well.
Also like a typical return preparer case, individual counts for prepar-
ing specific false tax returns can be charged as aiding and assisting in
the preparation and presentation of false tax returns, in violation of
26 U.S.C. § 7206(2). Section 7206(2) has been described as the Internal
Revenue Code’s “aiding and abetting” provision.64 The statute “reaches
all knowing participants in the fraud.”65 Courts have held that anyone

61 See, e.g., Sansone v. United States, 380 U.S. 343, 351 (1965).
62 See the article, Prosecuting Fraudulent Tax Return Preparers, in this journal.
63 When the federal agency being defrauded out of money is the IRS, such a conspiracy
is known as a “Klein conspiracy,” after United States v. Klein, 247 F.2d 908, 920
(2d Cir. 1957), the first decision to recognize it.
64 United States v. Williams, 644 F.2d 696, 701 (8th Cir. 1981) (citing
United States v. Crum, 529 F.2d 1380, 1382 n.2 (9th Cir. 1976)).
65 United States v. Clark, 577 F.3d 273, 285 (5th Cir. 2009); United States v. Fletcher,

72 DOJ Journal of Federal Law and Practice December 2023

who causes a false return to be filed or furnishes information which leads
to the filing of a false return can be guilty of violating the statute.66 To
establish a violation of section 7206(2), the government must prove that:
(1) the defendant aided or assisted in the preparation or presentation of a
document in connection with a matter arising under the internal revenue
laws; (2) the document was false as to a material matter; and (3) the
defendant acted willfully.67
Once again, false claims charges under 18 U.S.C. § 287 will often
be appropriate. Such charges may be superior to section 7206(2) when
the defendant kept the refund proceeds, or a significant portion thereof,
because restitution and forfeiture is more readily available in Title 18
cases than Title 26.
Restitution in tax cases is more fully addressed in another article in
this publication.68 In brief, whereas restitution is mandatory for Title 18
offenses,69 it is not for Title 26 offenses, although it may be ordered as a
condition of supervised release or probation.70 In addition, the Tax Divi-
sion has delegated to U.S. Attorneys the authority to obtain a Title 18
restraining order or seizure warrant for personal property if the property
is to be forfeited and if the forfeiture arises from the commission of a crim-
inal tax or tax-related offense.71 This would allow U.S. Attorney’s Offices
to act quickly to restrain the proceeds of COVID tax credit schemes.
In any event, prosecutors should keep in mind that it is often not
worthwhile to charge individual taxpayers in return preparer schemes be-
cause, although the tax losses are high in the aggregate, they are often
relatively low per return. Nor is charging the taxpayer clients necessary.
The guilty knowledge of the taxpayer, or lack thereof, is irrelevant to a
section 7206(2) prosecution.72 Instead, the taxpayers are frequently will-
ing to cooperate and testify, which, with multiple witnesses, is useful to

322 F.3d 508, 514 (8th Cir. 2003).

66 See, e.g., United States v. Clark, 139 F.3d 485, 489–90 (5th Cir. 1998).
67 See, e.g., United States v. McLain, 646 F.3d 599, 604 (8th Cir. 2011);
United States v. Goosby, 523 F.3d 632, 637 (6th Cir. 2008); United States v. Smith,
424 F.3d 992, 1009 (9th Cir. 2005).
68 See the article, Restitution in Criminal Tax Cases: Common Pitfalls and Practical
Strategies, in this journal.
69 18 U.S.C. § 3663A.
70 18 U.S.C. §§ 3563(b), 3583(d). In addition, restitution may be ordered as an inde-
pendent part of the sentence if the defendant agrees to it. 18 U.S.C. § 3663(a)(3).
71 See Tax Division Directive No. 145, https://www.justice.gov/sites/default/files/us-
am/legacy/2014/10/17/tax00039.pdf.
72 United States v. Jennings, 51 F. App’x. 98,100 (4th Cir. 2002) (per curiam);
United States v. Jackson, 452 F.2d 144, 147 (7th Cir. 1971); United States v. Rowlee,
899 F.2d 1275, 1279 (2d Cir. 1990).

December 2023 DOJ Journal of Federal Law and Practice 73

establish the defendant’s standard practices or modus operandi.
3. Charging wire or mail fraud
To prosecute ERC or sick and family leave credit schemes, wire or
mail fraud charges may also be appropriate.73 Indeed, such charges can
help capture the full extent of a scheme and allow the admission at trial
of relevant evidence when a conspiracy count is unavailable. And, as dis-
cussed above, Title 18 charges have some advantages over Title 26 when
it comes to restitution and forfeiture. Wire or mail fraud counts may also
serve as predicates to charge money laundering.74

IV. Tax charges related to the Paycheck

Protection Program
The Paycheck Protection Program (PPP) does not involve taxes. Still,
intrepid prosecutors and IRS agents have endeavored to find tax crimes
in PPP fraud cases. Embarking on such a path, however, requires great
caution.
As most readers know, the PPP was enacted as part of the CARES
Act to provide forgivable loans to small businesses.75 Under the rules
of the program, businesses may use PPP loan proceeds only for certain
expenses, such as payroll, rent, and mortgage interest.76 Unfortunately,
many PPP loan recipients have fraudulently obtained funds by submit-
ting false loan applications, or have used loan proceeds to pay for personal
expenses, including luxury items.77 While much of that conduct is cer-
tainly criminal, questions have arisen as to whether the failure to report
the fraudulent receipt or misuse of PPP funds as income on tax returns
constitutes a crime.
Such a charging theory more than likely would take an otherwise
strong Title 18 prosecution of PPP fraud and squeeze a difficult tax case
into it. To be sure, taxpayers must report all income, including the pro-

73 18 U.S.C. §§ 1341, 1343.

74 See Tax Division Dir. No. 128, Charging Mail Fraud, Wire Fraud or Bank
Fraud Alone or as Predicate Offenses in Cases Involving Tax Administration,
https://www.justice.gov/archives/usam/tax-resource-manual-14-tax-division-
directive-no-128.
75 15 U.S.C. § 636(a). A second round of PPP spending was authorized as part of the
Consolidated Appropriations Act of 2021.
76 15 U.S.C. § 636(a)(36)(F).
77 See Small Business Administration, COVID-19 Pandemic EIDL and PPP Loan
Fraud Landscape, https://www.sba.gov/document/report-23-09-covid-19-pandemic-
eidl-ppp-loan-fraud-landscape.

74 DOJ Journal of Federal Law and Practice December 2023

ceeds of crime, on their tax returns.78 In that regard, it is a common
tactic to charge tax crimes in conjunction with fraud and embezzlement.
But in order to establish that the defendant willfully violated his tax
obligations, the government still must prove that the defendant knew his
criminal proceeds constituted reportable income.79
That is extraordinarily challenging when it comes to PPP loans. In
the first place, the receipt of loan proceeds in general does not ordinarily
constitute income because the taxpayer has to repay the money.80 Second,
although the forgiveness of debt usually does constitute taxable income,81
the forgiveness of PPP loans is expressly not considered income.82 In
other words, the program was intentionally structured so that the receipt
of funds creates no taxable event.
The IRS has taken the position that, from a civil tax perspective,
the failure to meet the conditions of PPP loan forgiveness, such as us-
ing the funds on proper expenditures, renders any loan forgiveness non-
qualifying, and therefore ineligible for the exception from forgiveness of
debt income.83 But in a criminal prosecution, the government would have
to prove that the defendant understood all of that.
In other words, to secure a conviction for a tax crime in this context,
the government would have to prove that even though the receipt of PPP
loan funds does not constitute taxable income, nor does the forgiveness of
a PPP loan, the defendant still knew that his receipt or use of PPP funds
was nonetheless reportable as taxable income because of the underlying
fraud. Although such a feat is technically possible, this author does not
suggest that prosecutors try it.
Nonetheless, there may still be some prosecutable tax fraud incidental
to, or as part of, a PPP scheme. The lending institution will typically re-
quire the PPP loan applicant to provide substantiation of its payroll. That
substantiation frequently consists of the business’s Form 941, showing the

78 See 26 U.S.C. § 61(a) (defining “gross income” as “all income from whatever source
derived”); James v. United States, 366 U.S. 213, 219–21 (1961) (embezzled funds
constitute taxable income to the recipient); United States v. Garcilaso de la Vega, 489
F.2d 761, 765 (2nd Cir. 1974) (“A taxpayer’s intentional nondisclosure of income is
not excused because it is derived from criminal activities.”)
79 See, e.g., United States v. Salerno, 902 F.2d 1429, 1433 (9th Cir. 1990) (section
7206(2) convictions reversed because government failed to show that employee knew
or understood that his embezzlement scheme would affect the business’s tax returns);
80 Comm’r of Internal Revenue v. Indianapolis Power & Light Co., 493 U.S. 203,
207–08 (1990) (“it is settled that receipt of a loan is not income to the borrower”).
81 26 U.S.C. § 61(a)(11).
82 15 U.S.C. § 636m(i).
83 IRS Office of Chief Counsel Memorandum, September 16, 2022,
https://www.irs.gov/ pub/irs-wd/202237010.pdf.

December 2023 DOJ Journal of Federal Law and Practice 75

compensation paid to its employees. In some circumstances, perpetrators
have actually filed a false Form 941 with the IRS in an apparent attempt
to better support their loan application. False tax return charges, in viola-
tion of 26 U.S.C. § 7206(1), would be appropriate in these circumstances.
It should be noted, however, that the false Form 941 would typically over-
state the business’s payroll and corresponding employment tax liability in
order to support an application for a larger loan. The utility of including
such a Title 26 charge, therefore, is questionable.
In short: PPP fraud prosecutions are not tax cases. In most situations,
shoehorning tax charges into them is fraught with peril and ill-advised.

V. Applicable Tax Division procedures

The Tax Division has supervisory authority over all criminal pro-
ceedings arising under the internal revenue laws, nationwide.84 In prac-
tical terms, this means that the Tax Division usually must authorize all
tax-related grand jury investigations and prosecutions.85 Matters falling
within the Tax Division’s authority are not limited to prosecutions of
Title 26 crimes, but to all tax cases, regardless of the criminal statute
charged.86 Such cases include those discussed herein that may include
Title 18 crimes like filing false claims, conspiracy to defraud the United
States, or wire fraud. In other words, one cannot avoid the Tax Division
approval process by charging a Title 18 crime instead of Title 26.
There are, however, several generally applicable abbreviated proce-
dures that U.S. Attorney’s Offices should keep in mind when dealing
with tax issues in COVID-fraud cases. The first is Tax Division Directive
86-59, which allows U.S. Attorneys to expand preexisting, non-tax grand
jury investigations to include potential tax crimes.87 Under that directive,
subject to a few exceptions, the Tax Division must only receive notice of
the expansion for an opportunity to object. That delegation of authority,
however, does not include the authority to charge a defendant without
prior authorization.88
Directive 86-59 can be especially useful in COVID-fraud investiga-
tions. There has been much overlap between criminals involved in things
like PPP loan fraud and those committing tax fraud. Indeed, many COVID-
fraud investigations have inadvertently uncovered completely unrelated

84 28 C.F.R. § 0.70.
85 See Justice Manual § 6-1.110.
86 Id.
87 Tax Division Directive 86-59, Delegation of Authority to Approve Grand Jury
Expansion Requests to Include Federal Criminal Tax Violations, Oct. 1, 1986.
88 Id.

76 DOJ Journal of Federal Law and Practice December 2023

tax fraud. Directive 86-59 can allow investigations of such tax fraud to
proceed efficiently and with minimal delay as part of a preexisting grand
jury investigation.
Another exception to the Tax Division’s ordinary review process ap-
plies in SIRF cases, as set forth in Tax Division Directive 144.89 The
directive defines SIRF cases generally as those “involving a fraudulent
claim (or attempted claim) for a tax refund wherein the fraudulent claim
for refund (that is, a tax return) is in the name of a person whose per-
sonal identification information appears to have been stolen or unlawfully
used to make the claim, and the claim is intended to benefit someone
other than the person to whom the personal identification belongs.”90
In such cases, the Tax Division has delegated its authority to the U.S.
Attorneys to authorize tax-related grand jury investigations, file criminal
complaints, and apply for seizure warrants for the forfeiture of criminally
derived proceeds.91 In addition, the Tax Division applies an expedited
review process for authorizing prosecutions of such cases. COVID-fraud
cases that qualify under Directive 144 as SIRF are subject to the same
delegation of authority as any other SIRF case.
Although the Tax Division has not enacted procedures like Directive
144 to cover tax-related COVID-fraud cases in general, the Division has
prioritized the review and authorization of such cases.

VI. Conclusion
When it comes to prosecuting tax crimes, the COVID-19 pandemic
has presented no need to reinvent the wheel. Although various COVID-
related tax credits are new, fraud involving those credits will look familiar
to experienced prosecutors of white-collar crime. Whether taxpayers re-
port fabricated items on their tax own returns or conspire to prepare
volumes of fraudulent tax returns for others, the statutes the Depart-
ment of Justice has reliably used for years to charge typical tax crimes
should be just as effective to combat COVID-related tax fraud.

About the Author

David Zisserson, the Tax Division’s COVID-fraud coordinator, is an
Assistant Chief in the Division’s Southern Criminal Enforcement Sec-
tion, where he has prosecuted a wide variety of cases. David has been

89 Tax Division Directive 144, Re: Delegation of Authority to Authorize Grand Jury
Investigations, Criminal Complaints, and Seizure Warrants for Certain Offenses Aris-
ing from Stolen Identity Refund Fraud, Jan. 30, 2014.
90 Id. ¶ 8.
91 Id. ¶ 1.

December 2023 DOJ Journal of Federal Law and Practice 77

at the Tax Division for 15 years where, before becoming a prosecutor,
he worked as a civil trial attorney. Before that, he was an associate at
a large, international law firm. David graduated magna cum laude from
American University, Washington College of Law in 2004, and graduated
magna cum laude from Boston University in 2001 with a B.S. in business
administration.

78 DOJ Journal of Federal Law and Practice December 2023

Attorney–Client Privilege in the
Context of Tax Preparation and
Tax Planning
Larry Wszalek
Chief
Western Criminal Enforcement Section
Tax Division

Stuart Wexler
Trial Attorney
Western Criminal Enforcement Section
Tax Division
Each year, millions of people in the United States seek assistance from
tax professionals to help them file their tax returns, respond to Internal
Revenue Service (IRS) audit inquiries, and navigate the complexities of
the tax code. That tax professional is often an attorney. Some attorney
tax work is simple. It entails little more than placing numbers on a tax
form lifted from information provided by the client. In this regard, the
tax work resembles accounting work, and most courts have held that the
preparation of a tax return by itself is primarily an accounting service that
should not be viewed as legal advice—even if performed by an attorney.1
But other attorney tax work is more complex; it involves interpret-
ing statutes, applying facts to those statutes, and rendering opinions and
advice to the client about what to include (and not include) on a tax re-
turn. Thus, the rendering of tax services may include a mix of accounting
and legal advice that affects the attorney–client privilege. For example,
a client may communicate the figures from his wage statements to his
lawyer—a non-privileged communication—but if he seeks legal advice on
what to claim on the return, that advice and related communications may
be privileged.2
This article discusses the scope and limits of the attorney–client priv-
ilege in tax preparation and tax controversy matters. It explores the priv-

1 United States v. Davis, 636 F.2d 1028, 1043 (5th Cir. 1981); In re Grand Jury
Investigation, 842 F.2d 1223, 1224–25 (11th Cir. 1987).
2 United States v. Abrahams, 905 F.2d 1276, 1284 (9th Cir. 1990), overruled on other
grounds by United States v. Jose, 131 F.3d 1325 (9th Cir. 1997).

December 2023 DOJ Journal of Federal Law and Practice 79

ilege nuances implicated when a client hires both an accountant and at-
torney to provide tax services. It reviews the challenge of drawing lines
when attorney–client communications include dual-purpose communica-
tions involving both (non-privileged) business advice and (privileged) le-
gal advice. Lastly, it considers the practicalities of narrowing information
demands, streamlining the filter process, and minimizing the risk of unau-
thorized exposure to potentially privileged communications.

I. Attorney–client privilege for tax

preparation and planning services
Typically, an eight-part test determines whether information is cov-
ered by the attorney–client privilege:

(1) Where legal advice of any kind is sought (2) from a profes-
sional legal adviser in his capacity as such, (3) the communi-
cations relating to that purpose, (4) made in confidence (5) by
the client, (6) are at his instance permanently protected (7)
from disclosure by himself or by the legal adviser, (8) unless
the protection be waived.3

The privilege protects communications, not facts. As the Supreme Court

has stated, the attorney–client privilege “protects disclosure of commu-
nications; it does not protect disclosure of the underlying facts by those
who communicated with the attorney[.]”4
Some privilege determinations are easy to make, others less so. But in
the context of tax preparation services performed by an attorney, courts
generally focus on two elements of the eight-part privilege test: confi-
dentiality and legal advice. These elements often determine whether a
communication is deemed privileged or not.

A. Pre-existing records
Pre-existing records such as bank records, business receipts, wage
statements, loan agreements, contracts, corporate financial records, tax
returns are documents that were never intended to remain confidential.5

3 In re Grand Jury Investigation, 974 F.2d 1068, 1071 n.2 (9th Cir. 1992) (quoting In
re Fischel, 557 F.2d 209, 211 (9th Cir. 1977)).
4 Upjohn Co. v. United States, 449 U.S. 383, 395 (1981).
5 See Fisher v. United States, 425 U.S. 391, 403–04 (1976) (“pre-existing documents
which could have been obtained by court process from the client when he was in
possession may also be obtained from the attorney by similar process following transfer
by the client in order to obtain more informed legal advice”).

80 DOJ Journal of Federal Law and Practice December 2023

Thus, simply copying a lawyer on an otherwise non-privileged commu-
nication or turning it over to one’s lawyer will not transform the non-
privileged document into a privileged one.6 Any other rule would allow
a person to prevent disclosure of documents simply by keeping them in
the possession of his attorney.7 Thus, a prosecutor seeking pre-existing
records from an attorney by subpoena should be sensitive to the distinc-
tion between a “fact” and a “communication”—the former not privileged,
the latter, perhaps privileged.

B. Records created by the client for tax preparation

purposes
A taxpayer seeking assistance from a tax professional to prepare and
file a tax return will often provide that professional with more than just
pre-existing records. The taxpayer may personally prepare and transmit
to the attorney spreadsheets, QuickBooks reports, or handwritten notes
to aid the professional in completing the tax return. The Supreme Court
has observed that “there can be little expectation of privacy where records
are handed to an accountant, knowing that mandatory disclosure of much
of the information therein is required in an income tax return.”8
The Seventh Circuit found no privilege where a client gave his attorney
a letter containing detailed financial information and a handwritten note
on an envelope relevant to the preparation of an estate tax return.9 The
court held, “[i]f the client transmitted the information so that it might
be used on the tax return, such a transmission destroys any expectation
of confidentiality which might otherwise have existed.”10 In that case,
the court did not find it necessary that the information appear on the
tax return to lose its confidentiality, rather any information that might
be used on a tax return loses its expectation of confidentiality.11 Other
courts have not been so generous. Some have found confidentiality lost
only as to those items placed on a tax return.12

6 See Colton v. United States, 306 F.2d 633, 639 (2d Cir. 1962). (“Insofar as the papers
include pre-existing documents and financial records not prepared by the [clients] for
the purpose of communicating with their lawyers in confidence, their contents have
acquired no special protection from the simple fact of being turned over to an attorney.
It is only if the client could have refused to produce such papers that the attorney
may do so when they have passed into his possession.”).
7 Id.
8 Couch v. United States, 409 U.S. 322, 335 (1973).
9 United States v. Lawless, 709 F.2d 485, 487–88 (7th Cir. 1983).
10 Id.
11 Id.
12 See United States v. Schlegel, 313 F. Supp. 177, 179–80 (D. Neb. 1970) (“[A]side

December 2023 DOJ Journal of Federal Law and Practice 81

 Courts have also found that a lawyer does not perform legal services
when preparing a tax return. Courts distinguish legal work from other
forms of advice, such as business advice.13 While “the preparation of a
tax return requires some knowledge of the law, and the manner in which
a tax return is prepared can be viewed as an implicit interpretation of
that law[, . . .] the preparation of a tax return should not be viewed as
legal advice.”14
The Fifth, Seventh, Eighth, Ninth, and Eleventh Circuits have held
that the preparation of a tax return, even if performed by an attorney,
constitutes an accounting service rather than a legal service.15 For ex-
ample, in United States v. Davis, the Fifth Circuit held that neither an
attorney’s work papers, produced in preparing the client’s tax returns,
nor the tax records on which those work papers were based, were privi-
leged, “because although preparation of tax returns by itself may require
some knowledge of the law, it is primarily an accounting service.”16 Sim-
ilarly, in In re Grand Jury Investigation, the Eleventh Circuit held that
“the preparation of a tax return should not be viewed as legal advice. . .
. A taxpayer should not be able to invoke a privilege simply because he
hires an attorney to prepare his tax returns. Thus, any information [the
target] transmitted to [the lawyer] for the purpose of preparing his tax
returns, including the sources of income, is not privileged information.”17
Situations in which an accountant serves as an attorney’s agent—a Kovel
accountant18 —and communications with that accountant may be covered

from the information incorporated in the income tax return which was sent to the
government, the oral conversations between the defendant and his attorney regarding
preparation of the return and any written materials prepared by the defendant solely
for the purpose of delivery to his attorney for the preparation of his return are within
the privilege . . . ”); In re Grand Jury Subpoena Duces Tecum, 566 F. Supp. 883, 884
(S.D.N.Y. 1983) (“By the mere filing of a tax return, the taxpayer does not agree to
disclose to all comers the documentation underlying the deductions claimed.”).
13 See In re Grand Jury Subpoena Duces Tecum, 731 F.2d 1032, 1037–38
(2d Cir. 1984).
14 In re Grand Jury Investigation, 842 F.2d 1223, 1225 (11th Cir. 1987).
15 United States v. Bornstein, 977 F.2d 112, 116–17 (4th Cir. 1992);
United States v. Davis, 636 F.2d 1028 (5th Cir. 1981); United States v. Lawless,
709 F.2d 485 (7th Cir. 1983); Canaday v. United States, 354 F.2d 849 (8th Cir. 1966);
Olender v. United States, 210 F.2d 795 (9th Cir. 1954); In re Grand Jury Investigation,
842 F.2d at 1223–24.
16 Davis, 636 F.2d at 1043; see also Colton v. United States, 306 F.2d 633, 638
(2d Cir. 1962).
17 In re Grand Jury Investigation, 842 F.2d at 1225. The court also held in that case
that the crime–fraud exception to the privilege applied. Id. at 1226–28.
18 United States v. Kovel, 296 F.2d 918, 921–22 (2d Cir. 1961); Cavallaro v. United
States, 284 F.3d 236, 248–49 (1st Cir. 2002) (“[T]he evidence is strong that Ernst &

82 DOJ Journal of Federal Law and Practice December 2023

by the attorney–client privilege are discussed in section E infra.
The Second Circuit, however, has suggested that tax preparation ser-
vices can constitute legal assistance.19 In an opinion from 1961, that
circuit stated that “[t]he giving of tax advice and the preparation of
tax returns . . . are basically matters sufficiently within the professional
competence of an attorney to make them prima facie subject to the at-
torney–client privilege.”20 That said, the court has also recognized that
not all communications between an attorney and clients are privileged
because a good deal of information transmitted to an attorney is not
intended to be confidential.21 The court also acknowledged that infor-
mation transmitted to an attorney for inclusion in the tax return is not
privileged.22 District courts in the Second Circuit routinely rely on this
principle to reject attorney–client privilege claims involving attorney tax
return preparers.23
But even when a court is unwilling to adopt a per se rule against
attorney–client privilege in tax preparation services, the burden remains
on the person claiming the privilege to establish that the communication
was made in confidence and to obtain legal advice—not merely financial
or business advice—from a lawyer.24 Failure to do so should result in a
finding of non-privilege, as courts strictly confine privilege calls to the

Young acted to provide accounting advice rather than to assist [law firm] in providing
legal advice.”); Bornstein, 977 F.2d at 117 (4th Cir. 1992) (“On remand, the appro-
priate inquiry [. . .] is whether the accountant’s workpapers were produced more for
the benefit of Bornstein the lawyer or more for the benefit of Bornstein the accoun-
tant/tax preparer, that is, whether the accounting services were performed primarily
to allow Bornstein to give legal advice.”).
19 Colton, 306 F.2d at 633.
20 Id. at 637.
21 Id. at 638.
22 Id. (citing 8 Wigmore, Evidence § 2311 (McNaughton rev. 1961)).
23 See, e.g., United States v. Merrell, 303 F. Supp. 490, 492–93 (N.D.N.Y. 1969)
(applying Colton and concluding that this non-confidentiality principle extended to
“workpapers” of an attorney tax return preparer, because they “by definition, con-
sisted of information that was intended to be transcribed onto the tax returns, and
cannot be of a confidential nature”); United States v. Schenectady Sav. Bank, 525 F.
Supp. 647, 653 (N.D.N.Y. 1981); Bria v. United States, 2002 WL 663862, at *2 (D.
Conn. Mar. 26, 2002) (concluding that information transmitted to attorneys for pur-
pose of tax return preparation was not privileged even if the attorneys did not prepare
the return) (citing United States v. Lawless, 709 F.2d 485, 487 (7th Cir. 1983)).
24 See United States v. Millman, 822 F.2d 305, 310 (2d Cir. 1987) (documents sought
by the IRS are not protected by the attorney–client privilege because “Millman has
not sustained his burden of showing that the communications in question were related
to his status as an attorney rather than as a business advisor or accountant.”).

December 2023 DOJ Journal of Federal Law and Practice 83

narrowest possible limits.25 This is because the attorney–client privilege,
like any privilege, is “in derogation of the search for truth,”26 and thus
should be narrowly construed and applied only to the extent “necessary
to achieve its purpose.”27

C. Attorney work papers

A federal prosecutor or an IRS agent may issue legal process, such as a
grand jury subpoena or summons, to the taxpayer’s attorney and accoun-
tant seeking work papers generated in preparing the client’s tax returns.28
As a reminder, the Department of Justice (Department) exercises close
control over the issuance of subpoenas to attorneys. The Justice Manual
provides guidance about the approval procedures for attorney subpoe-
nas.29 For all matters arising principally under the internal revenue laws,
Tax Division authorization is required for all attorney subpoenas.
An attorney or client may resist the subpoena or summons by invok-
ing the work-product doctrine, which is distinct from the attorney–client
privilege.30 The work-product doctrine applies to materials “obtained or
prepared by an adversary’s counsel” in the course of his legal duties,
as long as the work was done “with an eye toward litigation.”31 It is
premised on the notion that lawyers preparing for litigation must be free
to record their theories, impressions, strategies, and evaluations secure
in the knowledge that these will not be disclosed to opposing counsel.32
Unlike the attorney–client privilege, the attorney holds the work-product

25 8 Wigmore, Evidence § 2291 (McNaughton rev. 1961); United States v. Int’l Bd.
of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., AFL-CIO, 119 F.3d 210,
214 (2d Cir. 1997).
26 United States v. Nixon, 418 U.S. 683, 710 (1974).
27 Fisher v. United States, 425 U.S. 391, 402 (1976).
28 See, e.g., United States v. Davis, 636 F.2d 1028 (1981) (attorney work papers);
United States v. Bornstein, 977 F.2d 112 (1992) (accountant worksheets).
29 U.S. Dep’t of Just., Justice Manual 9-13.410.
30 “Work product consists of the tangible and intangible material which reflects an
attorney’s efforts at investigating and preparing a case, including one’s pattern of
investigation, assembling of information, determination of the relevant facts, prepara-
tion of legal theories, planning of strategy, and recording of mental impressions.” In
re Grand Jury Subpoenas, 622 F.2d 933, 935 (6th Cir. 1980).
31 In re Sealed Case, 676 F.2d 793, 809 (D.C. Cir. 1982) (quoting Hickman v. Tay-
lor, 329 U.S. 495, 511 (1947)). Generally, litigation need not be imminent if the pri-
mary motivation behind the creation of the document was to aid in future litigation.
United States v. El Paso Co., 682 F.2d 530, 542 (5th Cir. 1982) (citing Davis, 636
F.2d at 1040).
32 Hickman, 329 U.S. at 510–11.

84 DOJ Journal of Federal Law and Practice December 2023

privilege along with his or her clients.33 The work-product doctrine also
extends to some work product created by nonlawyers, such as accountants
and investigators, acting at the direction of counsel.34
A party seeking material that qualifies as work product must show
both substantial need and an inability to secure the substantial equiva-
lent of the materials by alternative means without due hardship.35 The
hardship requirement is not easily met, especially in the grand jury con-
text, because the government can use its subpoena power to obtain in-
formation.36
The crime–fraud exception, however, provides a separate avenue for
compelling production of both fact and opinion work product without a
companion showing of need and hardship.37 While a more detailed dis-
cussion of the crime–fraud exception is set forth in another article of this
publication, one principle bears repeating: Not all work product is treated
the same.38 Fact work product is a “‘transaction of the factual events
involved.’”39 “[O]pinion work product, which reveals ‘the mental impres-
sions, conclusions, opinions, or legal theories of a party’s attorney or other
representative concerning the litigation’” is afforded greater protection.40
“‘[O]pinion work product enjoys a nearly absolute immunity and can be
discovered only in very rare and extraordinary circumstances.’”41
When an attorney asserts privilege over her opinion work product, the
party seeking disclosure based on the crime–fraud exception must make
a prima facie showing that the attorney “‘was aware of or a knowing

33 See In re Naranjo, 768 F.3d 332, 345 (4th Cir. 2014).

34 United States v. Nobles, 422 U.S. 225, 238–39 (1975).
35 Some cases take a simpler approach by combining “need” and “hardship” into a
larger analysis dubbed “good cause.” In re Grand Jury Subpoena, 622 F.2d at 936
n.3.
36 In re Grand Jury Investigation, 599 F.2d 1224, 1231–33 (3d Cir. 1979).
37 In re Grand Jury Subpoena, 870 F.3d 312, 316 (4th Cir. 2017);In re Sealed Case,
676 F.2d 793, 812 n.74 (D.C. Cir. 1982). (“Once a sufficient showing of crime or
fraud has been made, the privilege vanishes as to all material related to the ongoing
violation.”).
38 Sean Beaty & Wilson Stamm, A Taxing Dilemma: Navigating the Crime–Fraud
Exception in Criminal Tax Cases, 71 DOJ J. FED. L. & PRAC., no. 4, (2023).
39 In re Grand Jury Subpoena, 870 F.3d at 316 (quoting In re Grand Jury Proceed-
ings, 33 F.3d 342, 348 (4th Cir. 1994)). In that case, the government planned to ask
the attorney three questions: “(1) Who gave you the fraudulent documents? (2) How
did they give them to you, specifically? (3) What did [a specific party under investi-
gation] tell you?” The Fourth Circuit held that the first two questions were directed
at fact work product while the latter sought opinion work product. Id. at 315–17.
40 F.T.C. v. Boehringer Ingelheim Pharms., Inc., 778 F.3d 142, 151 (D.C. Cir. 2015).
41 In re Grand Jury Subpoena, 870 F.3d at 316 (quoting In re John Doe, 662 F.2d
1073, 1080 (4th Cir. 1981)).

December 2023 DOJ Journal of Federal Law and Practice 85

participant in the criminal conduct,’”42 or the reach of the grand jury
subpoena is limited to fact work product only.43 Most courts, however,
have concluded that a client’s assertion of privilege over opinion work
product can be defeated by a showing that the client used the attorney
to further a crime or fraud, even if the attorney’s participation in that
crime or fraud was unknowing.44

D. Attorney testimony
Attorney testimony directed at the preparation of a tax return is not
privileged, based on the same governing principles of “confidentiality” and
“legal advice” that disqualify tax records and work papers from privilege
consideration. As discussed, the Fourth, Fifth, Seventh, Eighth, Ninth,
and Eleventh Circuits have held that the preparation of a tax return, even
if performed by an attorney, constitutes an accounting service rather than
a legal service.45 Courts have thus upheld demands for attorney testimony
in the form of an IRS summons, grand jury testimony, and trial testimony

42 In re Grand Jury Proceedings, 401 F.3d 247, 254 (4th Cir. 2005) (quoting In re
Grand Jury Subpoena, 884 F.2d 124, 127 (4th Cir. 1989)).
43 See, e.g., In re Green Grand Jury Proceedings, 492 F.3d 976, 979–81 (8th Cir. 2007)
(collecting cases). The Fourth Circuit has stated this principle more broadly, asserting
that “while the attorney–client privilege may be vitiated without showing that the
attorney knew of the fraud or crime, those seeking to overcome the opinion work
product privilege must make a prima facie showing that the ‘attorney in question
was aware of or a knowing participant in the criminal conduct.’” In re Grand Jury
Proceedings, 401 F.3d at 252 (quoting In re Grand Jury Proceedings, 33 F.3d at 349).
The reported Fourth Circuit opinions addressing this issue, however, have involved
opinion work product assertions by attorneys. See In re Grand Jury Subpoena, 870
F.3d at 315 (addressing work product claim of criminal defense team); In re Grand
Jury Proceedings, 401 F.3d at 255–56 (“Because the attorney has asserted the work-
product privilege, we must also determine the application of the crime–fraud exception
to this privilege.”); In re Grand Jury Proceedings, 33 F.3d at 344 (case involved an
“[a]ttorney’s assertion of the opinion work product privilege”).
44 See In re Green, 492 F.3d at 981; In re Special September 1978 Grand Jury (II),
640 F.2d 49, 63 (3d Cir. 1978) (Although “the client cannot assert the work product
doctrine any more than he can assert the attorney–client privilege when there has
been a showing of ongoing client fraud[,] . . . the work product doctrine is waived for
client fraud even when asserted by the attorney except that it is assertable to protect
the attorney’s mental impressions, conclusions, opinions, and legal theories about the
case.”); In re Sealed Case, 676 F.2d 793, 812 n.75 (D.C. Cir. 1982) (“[T]here is no
need to accord a guilty client standing to assert the claims of its innocent attorney.”).
45 United States v. Bornstein, 977 F.2d 112, 116–17 (4th Cir. 1992);
United States v. Davis, 636 F.2d 1028 (5th Cir. 1981); United States v. Lawless,
709 F.2d 485 (7th Cir. 1983); Canaday v. United States, 354 F.2d 849 (8th Cir. 1966);
Olender v. United States, 210 F.2d 795 (9th Cir. 1954); In re Grand Jury Investigation,
842 F.2d 1223 (11th Cir. 1987).

86 DOJ Journal of Federal Law and Practice December 2023

on these same grounds. “There is no magic in a law license that would
prevent a lawyer from being required to testify to acts” akin to those
performed by other professionals, like non-lawyer tax preparers.46
But the case law makes equally clear that any communications stray-
ing from the tax preparation context may implicate the attorney–client
privilege. For example, a client may communicate the figures from his
Forms W-2 to an attorney, and this information is not privileged, but
communications about what to claim on a tax return may enlist legal ad-
vice and be privileged.47 So too, some communications might have more
than one purpose, especially in the tax law context, where an attorney’s
advice may involve both legal and non-legal analyses.48 Dual-purpose
communications are discussed in section F infra.

E. Communications with an accountant and the Kovel

doctrine
Federal law does not recognize an accountant–client privilege in crim-
inal matters.49 In most instances, a federal prosecutor may subpoena an
accountant to the grand jury and elicit testimony about the discussions
the accountant had with a client concerning tax matters, including the
preparation of a tax return and any advice or warnings the accountant
provided to the client.
There is, however, one exception that a prosecutor must be mindful
of when seeking information from an accountant. In the 1960s, the Sec-
ond Circuit held that attorney–client privilege and work-product doctrine
may extend to non-attorney third parties, such as accountants, in some
cases, when “the communication [either to the accountant or from the
accountant to the client or attorney] be made in confidence for the pur-
pose of obtaining legal advice from the lawyer.”50 On the other hand, no
privilege exists where “what is sought is not legal advice but only ac-
counting service, . . . or if the advice sought is the accountant’s rather
than the lawyer’s.”51 In what has become known as the Kovel doctrine,

46 Pollock v. United States, 202 F.2d 281, 286 (5th Cir. 1953).
47 See United States v. Abrahams, 905 F.2d 1276, 1283 (9th Cir. 1990).
48 In re Grand Jury Subpoena, 23 F.4th 1088, 1093 (9th Cir. 2021).
49 Couch v. United States, 409 U.S. 322, 335 (1973). A statutory privilege exists for
communications between a taxpayer and a federally authorized tax practitioner, but
this privilege only applies to noncriminal tax matters before the IRS, or noncrim-
inal tax proceedings in federal court brought by or against the United States. See
26 U.S.C. §§ 7525(a)(1), 7525(a)(2); Evergreen Trading, LLC v. United States, 80
Fed. Cl. 122, 134 (2007).
50 United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961).
51 Id .

December 2023 DOJ Journal of Federal Law and Practice 87

every federal circuit has extended attorney–client privilege in some cases
to third-party professionals, such as accountants, acting as agents of at-
torneys.
Courts apply the Kovel doctrine narrowly and restrict its use to when
the accountant is translating or repackaging complex tax information into
a form understandable and useable by counsel for the express purpose of
helping counsel provide legal advice.52
The most common scenarios in which the Kovel doctrine arises in a
tax case involve a client hiring both an attorney and an accountant for
tax planning, representing him in a civil matter before the IRS, or rep-
resenting him during a criminal investigation. A federal prosecutor must
be mindful of any potential Kovel relationship an accountant has, or may
have had, with a client. The best practice is to ask the accountant about
any such relationship before eliciting information about communications
the accountant had with the client or the client’s attorney.

F. Dual-purpose communications
It is common for an individual taxpayer or business to hire a lawyer
who provides both business and legal advice. For example, a business
may employ in-house counsel to assist in the day-to-day operations of
the company, and this counsel may opine on both legal and business
matters. In such cases, it is important that prosecutors and filter teams
are aware of the possibility of dual-purpose communications and recognize
the difference between business advice and legal advice when reviewing
evidence obtained in the investigation.
When dual-purpose communications are involved, most courts apply
the “primary purpose” test, which considers whether the primary purpose
of the communication is to give or receive legal advice, rather than busi-

52 See Cavallaro v. United States, 284 F.3d 236, 250 (1st Cir. 2002) (“[T]he accoun-
tant’s presence will destroy the privilege if the accountant is not ‘necessary, or at
least highly useful, for the effective consultation between the client and the lawyer.’”)
(quoting Kovel, 296 F.2d at 922); In re Grand Jury Proc. Under Seal v. United States,
947 F.2d 1188, 1191 (4th Cir. 1991) (“This limitation better ensures that the com-
munications privileged from disclosure were made for the purpose of the accountant
assisting appellant in the rendition of legal services rather than merely for the pur-
pose of receiving accounting advice.”); In re Grand Jury Proceedings, 220 F.3d 568,
571 (7th Cir. 2000) (“[I]nformation transmitted to an attorney or to the attorney’s
agent is privileged if it was not intended for subsequent appearance on a tax re-
turn and was given to the attorney for the sole purpose of seeking legal advice.”);
United States v. Ackert, 169 F.3d 136, 139 (2d Cir. 1999) (“[A] communication be-
tween an attorney and a third party does not become shielded by the attorney–client
privilege solely because the communication proves important to the attorney’s ability
to represent the client.”).

88 DOJ Journal of Federal Law and Practice December 2023

ness or tax advice.53 For example, the Second Circuit held that, when a
communication involves both legal and non-legal matters, it “consider[s]
whether the predominant purpose of the communication is to render or
solicit legal advice.”54 Several other courts of appeals have adopted the
same rule.55
In In re Grand Jury, the Ninth Circuit adopted the primary purpose
test, rejecting a broader alternative “because of” test that some district
courts in the circuit had employed.56 But the court “left open” the possi-
bility of adopting a refinement to the primary purpose test, under which
a communication with multiple primary purposes would be privileged so
long as one of its purposes was legal.57 The District of Columbia Circuit
endorsed a version of this approach in In re Kellogg Brown & Root, Inc., in
the context of a corporate internal investigation, formulating the test as:
“Was obtaining or providing legal advice a primary purpose of the com-
munication, meaning one of the significant purposes of the communica-
tion?”58 The In re Grand Jury court passed on deciding this issue because
it was not presented on its facts, and also observed that Kellogg’s “rea-
soning does not apply with equal force in the tax context,” where “normal
tax return preparation assistance—even coming from lawyers—is gener-
ally not privileged.”59 Nonetheless, the privilege claimants in In re Grand
Jury petitioned the Supreme Court to decide the issue, arguing for a
broad “significant purpose” test inspired by Kellogg. The Supreme Court
initially agreed to hear the issue, but later dismissed the writ of certiorari

53 In re Grand Jury, 23 F.4th 1088, 1091–92 (9th Cir. 2021).

54 In re Cnty of Erie, 473 F.3d 413, 420 (2d Cir. 2007).
55 See Taylor Lohmeyer Law Firm P.L.L.C. v. United States, 957 F.3d 505, 510
(5th Cir. 2020) (explaining that the privilege applies to communications “made with
the client’s primary purpose having been securing either a legal opinion or legal ser-
vices, or assistance in some legal proceeding”) (internal quotation marks omitted); In
re Spalding Sports Worldwide, Inc., 203 F.3d 800, 805 (Fed. Cir. 2000) (deeming a com-
munication privileged “as long as” it was made “‘for the purpose of securing primarily
legal opinion, or legal services, or assistance in a legal proceeding’”); In re Allen, 106
F.3d 582, 602 n.10 (4th Cir. 1997) (acknowledging that “attorney-created documents
whose primary purpose was business negotiations rather than legal advice were not
privileged”) (internal quotation marks omitted); Diversified Indus., Inc. v. Meredith,
572 F.2d 596, 601 (8th Cir. 1977) (explaining that the privilege applies “only if” the
communication is made “for the purpose of securing primarily” legal advice or assis-
tance); Alomari v. Ohio Dep’t of Pub. Safety, 626 F.App’x 558, 570 (6th Cir. 2015)
(explaining that the test is “whether the predominant purpose of the communication
is to render or solicit legal advice”) (quoting In re Cnty of Erie, 473 F.3d at 420).
56 23 F.4th at 1091–94.
57 Id. at 1094–95.
58 In re Kellogg Brown & Root, Inc., 756 F.3d 754, 760 (D.C. Cir. 2014).
59 23 F.4th at 1094–95 n.5.

December 2023 DOJ Journal of Federal Law and Practice 89

as improvidently granted after merits briefing and argument.60
Generally, when a communication contains both legal and non-legal
aspects, the privilege applies only to those parts of the communication
that address legal matters if the materials are “sufficiently separate” to
enable effective redaction.61 In the tax preparation context, however, the
Seventh Circuit has held that if a document is created for use in preparing
a tax return and for use in litigation, the document is not privileged.62
In United States v. Fredrick, an attorney–accountant prepared his client’s
tax returns, while also representing the client before the IRS, which was
investigating the client on separate tax years.63 The court observed that,
by using the same attorney for both matters, the client “ran the risk
that his legal cogitations born out of his legal representation of them
would creep into his worksheets and so become discoverable by the gov-
ernment.”64 There may be a benefit to having an attorney prepare the
tax returns, but “they must take the bad with the good; if his legal think-
ing infects his worksheets[,] . . . they are still accountants’ worksheets,
unprotected no matter who prepares them.”65
In assessing whether the privilege applies, most courts “grant the priv-
ilege’s protection to those portions of particular communications [seeking
or providing legal advice] that can be segregated according to purpose,”
even if the communication viewed in its entirety would not be consid-
ered legal.66 But where redaction is impossible, most courts agree that
the attorney–client privilege “applies only if the primary or predominant
purpose” of the communication “is to seek legal advice or assistance.”67

60 Brief for the United States at 8, 31, 37, In re Kellogg Brown & Root, Inc., 756
F.3d 754, 760 (D.C. Cir. 2014) No. 21-1397.
61 United States v. Ivers, 967 F.3d 709, 717 (8th Cir. 2020) (explaining that the court
will “segregate privileged and non-privileged communications in particular conversa-
tions or documents”).
62 United States v. Frederick, 182 F.3d 496, 501 (7th Cir. 1999); In re Grand Jury
Proceedings, 220 F.3d 568, 571 (7th Cir. 2000).
63 Frederick, 182 F.3d at 501.
64 Id .
65 Id .
66 Paul R. Rice, Attorney Client Privilege in the United States § 7:9, at
1374 (2d ed. 1999).
67 Rice § 7:6, at 1341–1342; see Restatement (Third) of the Law Governing
Lawyers § 72 cmt. c (2000).

90 DOJ Journal of Federal Law and Practice December 2023

II. Minimizing the risk of a privilege spill in
tax cases
The overcollection of evidence is almost inherent to the electronic
search process. Certainly, it is far more common than in the days of pa-
per records.68 Large swaths of electronically stored information (ESI) can
be imaged from a laptop hard drive or cell phone or obtained by search
warrant from an email account under the Stored Communications Act.
With it comes an increased risk of exposing investigative team members
and prosecutors to potentially privileged information, especially when
there may be both legal and non-legal communications related to tax
planning and preparation. For prosecutors, collecting and managing vo-
luminous ESI can feel overwhelming. It is also fraught with legal hazards
and practical discovery concerns. Below are several useful tips to help
prosecutors manage the ESI minefields. In all cases, the primary goal is
to provide the prosecution team with a narrow band of relevant evidence
culled from the ESI in an expeditious manner. The tips also aim to limit
the risk of exposing investigators and prosecutors to potentially privileged
information.

A. Smartly draft subpoenas and search warrants

Most tax prosecutions are successfully completed without any evi-
dence of communications between a client and an attorney or a Kovel
accountant. If your case does not require it, do not ask for it.
Prosecutors should pay close attention to information demands in sub-
poenas and in search warrant Attachments B, which describe the items
to be seized. Relying on casually drafted, boilerplate language, or rou-
tinely seeking “all communications and correspondence, written, oral, or
otherwise,” risks unintentionally placing potentially privileged communi-
cations at the center of an information demand. The prosecution team
should make a reasoned decision about whether to seek attorney–client
communications before serving legal process, and it should tailor its de-
mands accordingly. Most tax investigations require only a narrow demand
for pre-existing records (for example, income items, receipts, bank state-
ments, canceled checks, deposit tickets, financial statements, business and
accounting records, formation records, and business and financial trans-
actions). A properly drafted subpoena or search warrant Attachment B
will keep unwanted potentially protected attorney–client communications
outside the scope of responsive information.

68 United States v. Comprehensive Drug Testing, Inc., 621 F.3d 1162, 1177
(9th Cir. 2010).

December 2023 DOJ Journal of Federal Law and Practice 91

 If a prosecutor does choose to seek attorney correspondence, work pa-
pers, or communications related to tax preparation services, the informa-
tion demand should limit the communications to business and accounting
advice only. The demand may specifically exclude communications con-
stituting legal advice.

B. Use robust search-term lists to conduct in-scope

and privilege filter reviews of ESI
Because the law permits the government to collect ESI storage devices,
courts have trained their attention on “how” the government searches ESI,
evaluating the government’s search practice for reasonableness under the
Fourth Amendment. After executing a search warrant, investigative teams
should promptly review ESI for relevant in-scope evidence to avoid these
challenges. Courts are understandably critical when large volumes of ESI
are collected but no review is done.69 The prosecution and investigative
teams should compile a robust Attachment B search-term list to expe-
dite the initial sorting of ESI for in-scope evidence. These lists will aid
computer specialists in expeditiously separating in-scope evidence from
out-of-scope ESI and quicken the process of getting relevant, filtered evi-
dence into the hands of the prosecution team.
If, before a search of a location other than an attorney’s office, there is
reason to believe that potentially privileged materials will be encountered,
the prosecution team should consider employing a filter team at the start.
At a minimum, the prosecution team should instruct agents about the
possibility of encountering potentially privileged materials and detail the
steps agents should take if such material is found.
For search warrants that involve locations or items belonging to an
attorney, prosecutors must strictly adhere to the Department guidance70
issued after the Fourth Circuit’s decision in In re Search Warrant Issued
June 13, 2019.71 The guidance requires: (i) establishing and memorializ-
ing filter procedures to govern the search and, if required, presenting the
procedures for approval to the Magistrate Judge authorizing the search;

69 See, e.g., United States v. Metter, 860 F. Supp. 2d 205, 212, 215 (E.D.N.Y. 2012)
(government’s more than 15-month “retention of all imaged electronic documents,
including personal emails, without any review whatsoever to determine not only their
relevance to this case, but also to determine whether any recognized legal privileges
attached to them, is unreasonable and disturbing”).
70 U.S. Dep’t of Just., Guidance on Attorney–Client Privilege and Attorney Work
Product Filter Protocols for Search Warrants (July 2020). See also U.S. Dep’t of
Just., Justice Manual 9-13.420; Memorandum for the Assistant Attorney General,
Criminal Division (Dec. 30, 2020).
71 942 F.3d 159 (4th Cir. 2019).

92 DOJ Journal of Federal Law and Practice December 2023

(ii) forming a filter team whose responsibilities included executing the
search warrant; (iii) instructing the filter team to conduct in-scope re-
views of the seized evidence to be followed by a filter review of the rele-
vant evidence; and (iv) seeking agreement with counsel or rulings from the
court before disclosing potentially privileged materials to the prosecution
team.
Again, the use of search-term lists for both the Attachment B in-scope
relevancy review and the privilege filter review will expedite, narrow, and
manage the seizure of large amounts of ESI. As always, prosecutors are re-
quired to abide by Department guidance. Consultation and authorization
from local supervisors and Department agencies, including the Policy and
Statutory Enforcement Unit (PSEU) in the Office of Enforcement Oper-
ations (OEO) and Professional Responsibility Advisory Office (PRAO)
is crucial for ensuring full compliance with legal and ethical obligations
when conducting searches of locations and items that belong to an attor-
ney.

C. Plan ahead—and memorialize your plan

Pre-indictment challenges to the government’s search warrant prac-
tices are growing due to the seizure of voluminous ESI. Prosecutors can
expect immediate legal challenges to the manner and methods of execu-
tion of the search warrant and the search protocol, as well as demands for
restraining orders, the return of property, and the appointment of a spe-
cial master.72 The primary takeaway from the relevant cases is the need
for a well-designed filter protocol that protects against general warrant
concerns and the improper disclosure of potentially privileged information
to the investigative and prosecution team.
At a minimum, the Tax Division encourages the following five prac-
tices to ensure the integrity of a filter practice in cases involving the
collection of potentially privileged materials.

1. Privilege issues should be evaluated as early in the investigation as

possible. The prosecution team is encouraged to draft a memoran-
dum documenting any potential spill or when anticipating the re-
ceipt of potentially privileged information by subpoena or warrant.
The memorandum is useful in providing background information to
the filter team and identifying the scope of potentially privileged
information.

72 See, e.g., id.; In re Sealed Search Warrant and Application for a Warrant by Tele-
phone or Other Reliable Electronic Means, 11 F.4th 1235 (11th Cir. 2021); In re
O’Donovan, 635 F. Supp. 3d 40 (D. Mass. 2022).

December 2023 DOJ Journal of Federal Law and Practice 93

 2. The filter team should draft a filter memorandum documenting the
members of the filter team and any meetings the filter team had with
the prosecution team discussing the circumstances of the materials
required to be filtered and appropriate filter procedures.
3. In its filter memorandum, the filter team, after consultation with
their supervisors, the prosecuting U.S. Attorney’s Office, and, if
necessary, the PSEU and the PRAO, will include a protocol outlin-
ing the filter review practices and procedures. The search warrant
affiant may need to include the filter protocol in a search warrant
affidavit depending on Department policy and the local practices of
the district.
4. The filter and prosecution teams must provide the filter agents with
the necessary guidance to conduct a sound filter review. Filter at-
torneys should evaluate what tasks the filter agents will perform,
recognizing that legal and ethical issues will likely limit an agent’s
role to sorting information only. Final legal decisions about privilege
calls must be made by filter attorneys.
5. It is paramount that the filter team maintain a detailed privilege
log, especially in large filter projects involving many tranches of
ESI. The log must detail, with specificity, all documents reviewed
and all documents disclosed to the prosecution team. The log should
include the date of the disclosure and the rationale for disclosure:
a determination that the document is not privileged, an agreement
with the target’s counsel, or a court order. This forensic account-
ing will ensure the integrity of the filter team practices and aid in
defending against any future challenges to that practice.

III. Conclusion
Criminal tax investigations often require the lawful collection of vo-
luminous ESI through grand jury subpoena or search warrant from tax
professionals. This can include information demands to attorneys respon-
sible for preparing client tax returns, as well as accountants working in
tandem with attorneys. Prosecutors making these demands must under-
stand the scope and limits of the attorney–client privilege in tax cases.
This includes understanding the dynamics of a Kovel relationship between
an attorney and accountant, the nuances of dual-purpose communications
between an attorney and a client, and the protection afforded to attorney
work product.
Prosecutors must also be thoughtful in managing the seizure of large
amounts of ESI. The aim is to provide the prosecution team with relevant

94 DOJ Journal of Federal Law and Practice December 2023

in-scope evidence in a safe and expeditious manner. This requires making
smart information demands. It also requires compiling robust search-term
lists to aid computer specialists in culling in-scope ESI from out-of-scope
ESI. A prosecutor cannot do this alone. It takes a team of professionals
working toward a common goal who are organized, well-informed, and
committed to advancing the interests of criminal law enforcement while
rigorously adhering to the privacy interests and privileges of those affected
by the collection of ESI.

About the Authors

Larry J. Wszalek is the Chief of the Tax Division’s Western Criminal
Enforcement Section. He began his career in 1990 as an Assistant U.S.
Attorney for the Western District of Wisconsin and joined the Tax Divi-
sion as a Trial Attorney in 2001. Mr. Wszalek was named Section Chief in
2014. He received a Bachelor of Arts degree from the University of Texas
(Austin) and a J.D. from the University of Wisconsin (Madison).
Stuart Wexler is a trial attorney and Filter Team Coordinator in the
Tax Division’s Western Criminal Enforcement Section. Since he joined
the Tax Division in 2008, Mr. Wexler has specialized in the investigation
and prosecution of sovereign citizen tax defier cases, as well as privilege
issues and filter reviews. He received a Bachelor of Arts degree from the
State University of New York at Albany and a J.D. from the University
of Pittsburgh.

December 2023 DOJ Journal of Federal Law and Practice 95

Page Intentionally Left Blank

96 DOJ Journal of Federal Law and Practice December 2023

Prosecuting Tax Obstruction
Under 26 U.S.C. § 7212(a)
Gregory S. Knapp
Joseph B. Syverson
Attorneys, Department of Justice, Tax Division
Criminal Appeals and Tax Enforcement Policy Section
For as long as there have been federal courts, there has been the
federal crime of obstruction of justice.1 And today, Title 18 contains an
entire chapter of “Obstruction of Justice” offenses that are well-known to
prosecutors.2
The Tax Code contains a similar obstruction statute, 26 U.S.C. §
7212(a) (section 7212(a)), nearly as historic as its Title 18 counterpart.3
Section 7212(a) provides that, “Whoever . . . in any other way corruptly
or by force or threats of force (including any threatening letter or com-
munication) obstructs or impedes, or endeavors to obstruct or impede,
the due administration of this title, shall [be guilty of a felony].”4
Per the statutory language, section 7212(a) makes it a crime to ob-
struct “the due administration of [the Tax Code].”5 The meaning of this
language has been the subject of extensive litigation, culminating in the
Supreme Court’s 2018 decision in Marinello v. United States.6
In Marinello, the Court interpreted “due administration of [the Tax
Code],” within the meaning of section 7212(a), as requiring a “nexus” be-
tween obstructive conduct and “a particular administrative proceeding.”7
This article considers what conduct will satisfy Marinello’s “nexus” re-

1 See, e.g., United States v. Reed, 773 F.2d 477, 485 (2d Cir. 1985) (noting the origins
of the modern obstruction-of-justice statute, 18 U.S.C. § 1503, in the Judiciary Act of
1789).
2 Obstruction of Justice, 18 U.S.C., Chapter 73 (§§ 1501-1521).
3 See Internal Revenue Service Act of 1864, ch. 173, § 38, 13 Stat. 223, 238 (making
it a crime to “forcibly obstruct or hinder any assessor . . . collector . . . revenue agent
or inspector, in the execution of this act”).
4 Section 7212(a) contains two clauses. The clause quoted above, often referred to as
the “Omnibus Clause,” is the subject of this article. The other clause, often referred
to as the “Officer Clause,” reaches attempts to intimidate or impede any U.S. officer
or employee acting pursuant to Title 26. 26 U.S.C. § 7212(a).
5 Id.
6 Marinello v. United States, 138 S. Ct. 1101 (2018).
7 Id. at 1109.

December 2023 DOJ Journal of Federal Law and Practice 97

quirement, as well as unresolved questions about the scope of section
7212(a).8

I. The holding and rationale of Marinello

Carlo Marinello, a freight service operator, systemically destroyed his
business records, dealt in cash, and failed to file tax returns. Tax profes-
sionals advised Marinello that he needed to maintain adequate records in
order to file accurate tax returns, but Marinello ignored that advice. The
Internal Revenue Service (IRS) received an anonymous tip that Marinello
was evading his taxes—however, there was no evidence that Marinello
knew that the IRS was investigating him.9
Marinello was charged with, and ultimately convicted of, corrupt en-
deavor to obstruct the due administration of the tax laws, in violation of
26 U.S.C. § 7212(a). The Second Circuit affirmed, rejecting Marinello’s
argument that a section 7212(a) conviction requires proof that the de-
fendant was aware of a “pending IRS action,” such as an audit or crimi-
nal tax investigation.10 The Second Circuit’s decision conflicted with the
Sixth Circuit’s prior decision in United States v. Kassouf, which had in-
terpreted section 7212(a) to require knowledge of a pending IRS action.11
The Supreme Court took Marinello’s case to resolve the circuit split
on whether section 7212(a) requires proof of a particular IRS proceeding.
The Court concluded that:

“due administration” of [the Tax Code] [within the meaning of

section 7212(a)] does not cover routine administrative proce-
dures that are near-universally applied to all taxpayers, such
as the ordinary processing of income tax returns. Rather, the
clause as a whole refers to specific interference with targeted
governmental tax-related proceedings, such as a particular in-
vestigation or audit.12

The Court accordingly held that, “to secure a conviction under the
Omnibus Clause [of section 7212(a)], the [g]overnment must show (among
other things) that there is a “nexus” between the defendant’s conduct and
a particular administrative proceeding, such as an investigation, an audit,

8 For a discussion of the other elements of a section 7212(a) offense—including the

“corruptly” mens rea—see the Tax Division’s Criminal Tax Manual.
9 United States v. Marinello, 839 F.3d 209, 211-12 (2d Cir. 2016).
10 Id. at 216.
11 Id. at 218-23 (citing United States v. Kassouf, 144 F.3d 952 (6th Cir. 1998)).
12 Marinello, 138 S. Ct. at 1104.

98 DOJ Journal of Federal Law and Practice December 2023

or other targeted administrative action.”13
The Court additionally held that the government must show that the
required proceeding “was pending at the time the defendant engaged in
the obstructive conduct or, at the least, was then reasonably foreseeable
by the defendant.”14
The Court analogized section 7212(a) to the similarly worded obstru-
ction-of-justice statute, 18 U.S.C. § 1503(a), which reaches corrupt en-
deavors to obstruct “the due administration of justice.”15 In its 1995
decision in United States v. Aguilar, the Supreme Court held that section
1503(a) requires a “nexus”—that is, “a relationship in time, causation
or logic” between the defendant’s obstructive conduct and a judicial pro-
ceeding.16 Following Aguilar, the Marinello Court concluded that section
7212(a) likewise requires a nexus between obstructive conduct and a par-
ticular tax-related proceeding.17
Though Marinello offered several reasons for its narrow reading of
section 7212(a), it was particularly concerned that a broader reading of
the statute—under which it would apply to anything the IRS does to ad-
minister the Tax Code—would violate due process because it would fail
to give the public “fair warning” of the conduct the statute proscribes.18
The Marinello Court reasoned that, absent a “nexus” requirement, sec-
tion 7212(a) could apply to an overly broad range of conduct, including
a person who pays a babysitter $41 per week in cash without
withholding taxes, leaves a large cash tip in a restaurant, fails
to keep donation receipts from every charity to which he or she
contributes, or fails to provide every record to an accountant.
Such an individual may sometimes believe that, in doing so,
he is running the risk of having violated an IRS rule, but we
sincerely doubt he would believe he is facing a potential felony
prosecution for tax obstruction.19
Marinello also expressed concern that a broad reading of the statute
would create too much “overlap and redundancy” with the “numerous
misdemeanors” in Title 26, including failure to pay or to keep required
records in violation of section 7203, failure to furnish a statement of with-
holding in violation of section 7204, and willfully misrepresenting the

13 Id. at 1109 (emphasis added).

14 Id. at 1110.
15 Id. at 1105-06.
16 Id. at 1106 (quoting United States v. Aguilar, 515 U.S. 593, 599 (1995)).
17 Id.
18 Id. at 1108.
19 Id. (cleaned up).

December 2023 DOJ Journal of Federal Law and Practice 99

number of exemptions to which one is entitled on a Form W-4, in viola-
tion of section 7205.20

II. The scope of section 7212(a) after

Marinello
The dissent in Marinello criticized the majority’s “nexus-to-a-pending-
proceeding requirement” for section 7212(a) as hopelessly vague. “It is
hard to see how the Court’s statute is less vague than the one Congress
drafted . . . .”21 Whatever the merit of this criticism, courts and prose-
cutors continue to grapple with unresolved questions about the scope of
section 7212(a), more than five years after the Marinello decision.

A. Itemizing the tax-related proceedings that satisfy

Marinello
The first question that jumps off the pages of Marinello is which “par-
ticular administrative proceedings” may be the object of section 7212(a)
obstruction?22 The Marinello Court expressly declined to resolve that
question, stating, “we need not here exhaustively itemize the types of
administrative conduct that fall within the scope of the statute . . . .”23
The Court did provide three categories of tax-related proceedings that
are covered by section 7212(a): “an investigation, an audit, or other tar-
geted administrative action.”24 But while the terms “investigation” and
“audit” are fairly clear, the Court did not explain what it meant by
“targeted administrative action.”25 The Court also described certain IRS
activity that is not covered by section 7212(a): “routine, day-to-day work
carried out in the ordinary course by the IRS, such as the review of tax
returns.”26
But between these two extremes of a full-blown audit on the one hand,
and the day-to-day processing of tax returns on the other hand, a vast ex-
panse of IRS “procedures” exist that may or may not satisfy Marinello.27
The dividing line, post-Marinello appellate decisions indicate, is whether

20 Id. at 1107.
21 Id. at 1117 (Thomas, J., dissenting).
22 Id. at 1109.
23 Id. at 1110.
24 Id. at 1109.
25 See id.
26 Id. at 1110.
27 See, for example, Subtitle F of Title 26 (§§ 6001 through 7874), which contains
hundreds of statutes governing IRS “procedure and administration.”

100 DOJ Journal of Federal Law and Practice December 2023

the administrative action was “targeted” as opposed to one that generally
applies to all or most taxpayers.28
In United States v. Graham, the Eleventh Circuit held that Marinello
was satisfied where the IRS had “regular and persistent contact” with
the defendant over several years in an attempt to collect unpaid taxes.29
The court declined to interpret Marinello’s “proceeding” requirement so
narrowly as to apply only to “a quasi-judicial proceeding.”30 Instead, the
court reasoned Marinello’s concern “was to exclude relatively innocuous
conduct from prosecution under the Omnibus Clause.”31
In United States v. Prelogar, the Eighth Circuit, following Graham,
concluded that IRS collection activity satisfied Marinello’s administrative-
proceeding requirement.32 In Prelogar, as in Graham, the IRS for several
years had issued liens and levies against Prelogar’s property in an attempt
to collect unpaid taxes.33
Likewise, in United States v. Jackson, the Fourth Circuit found a
Marinello-compliant proceeding where “the IRS was not simply review-
ing Jackson’s tax returns” but “conducted a years-long investigation in
an attempt to ascertain the exact amount Jackson owed after she filed
fraudulent tax returns.”34 “Additionally, there was regular communica-
tion between Jackson and the IRS leading up to Jackson’s attempt to
discharge her tax liability through the use of fraudulent checks.”35 Sub-
sequently, in United States v. Reed, the Fourth Circuit found a “targeted
administrative action” where an IRS collections agent issued a notice of
levy to Reed’s employer and personally visited the employer to serve a fi-
nal demand to garnish Reed’s wages.36 The Fourth Circuit rejected Reed’s
argument that such IRS levies and wage garnishments were “routine” for
purposes of Marinello.37 Although the IRS sends hundreds of thousands
of notices of levy each year, that figure pales in comparison to the millions
of tax returns received each year.38 “The vast disparity between the total

28 See United States v. Graham, 981 F.3d 1254, 1257 (11th Cir. 2020); United States v.
Prelogar, 996 F.3d 526, 531 (8th Cir. 2021); United States v. Jackson, 796 F. App’x
186, 187 (4th Cir. 2020); United States v. Reed, 75 F.4th 396, 403 (4th Cir. 2023).
29 Graham, 981 F.3d at 1254, 1259.
30 Id.
31 Id.
32 Pelogar, 996 F.3d at 526, 533-34.
33 Id.
34 United States v. Jackson, 796 F. App’x 186, 187 (4th Cir. 2020).
35 Id.
36 United States v. Reed, 75 F.4th 396, 403 (4th Cir. 2023).
37 Id. at 404.
38 Id.

December 2023 DOJ Journal of Federal Law and Practice 101

numbers of individual returns and notices of levy rebuts Reed’s argument
that garnishments are akin to ‘routine administrative procedures that are
near-universally applied to all taxpayers.’”39 These cases illustrate that
Marinello’s “proceeding” requirement is satisfied where the defendant is
aware of an administrative action that was targeted.
But what of computer notices not requiring human intervention? Do
they constitute administrative action that is targeted? In some cases,
Marinello’s allowance that a proceeding need only be “reasonably fore-
seeable”—if not currently pending—may avoid the need to draw bright
lines over which IRS procedures are covered by section 7212(a).40 If the
IRS, based on the matching of information reporting, sends a computer
automated notice that the taxpayer has failed to file a required tax re-
turn and the taxpayer then falsifies documents to conceal his receipt of
income, a jury can reasonably find that a targeted examination is reason-
ably foreseeable, even if the automatic computer notice itself was deemed
to not be sufficiently targeted.

B. How much proceeding is too much?

An entirely different question arises when the government’s tax en-
forcement efforts have moved beyond the agency level and entered into
federal court. If the government initiates a criminal tax prosecution or
civil enforcement action, and the defendant attempts to obstruct that
court proceeding (by, for example, tampering with witnesses or destroy-
ing evidence), is the defendant guilty of tax obstruction under 26 U.S.C. §
7212(a)?
Arguably, a tax-related court case is not an “administrative proceed-
ing,” as required by Marinello, because it is not within the jurisdiction
of the “administrative” agency (that is, the IRS).41 Moreover, applying
section 7212(a) to obstruction of judicial proceedings could create overlap
between the conduct covered by section 7212(a) and the conduct covered
by other criminal obstruction statutes.42 And, as noted, the Marinello
Court cautioned that section 7212(a) should not be interpreted in a way
that creates excessive “overlap and redundancy” with other statutes.43
On the other hand, a section 7212(a) charge based on attempts to
obstruct a known, tax-related court proceeding would not raise the “fair

39 Id. (quoting Marinello v. United States, 138 S. Ct. 1101, 1104 (2018)).
40 Marinello, 138 S. Ct. at 1110.
41 Id. at 1109.
42 See 18 U.S.C. §§ 1503, 1512.
43 Marinello, 138 S. Ct. at 1107-08.

102 DOJ Journal of Federal Law and Practice December 2023

warning” concerns that motivated the Marinello decision.44 The Marinello
Court, as noted, was persuaded that a narrow reading of the statute was
necessary to avoid the parade of horrible events it imagined would oth-
erwise ensure, including the felony prosecution of “a person who pays
a babysitter $41 per week in cash.”45 But a defendant who tries to ob-
struct a known, tax-related court case cannot plausibly be compared to
an unsuspecting parent who pays the babysitter in cash. For this reason,
a tax-related judicial proceeding, though not technically “administrative”
in nature, probably satisfies Marinello.
Ultimately, the question may be avoided by prosecutorial discretion.
If a defendant’s attempt to obstruct a tax-related judicial proceeding is
covered by the Title 18 obstruction statutes, those statutes—which carry
relatively stiff penalties—may be preferable to a section 7212(a) charge.46

C. What conduct establishes a “nexus” to a pending

or “reasonably foreseeable” proceeding?
Marinello requires a “nexus” between obstructive conduct and a par-
ticular administrative proceeding, further defined as “a relationship in
time, causation, or logic with the [administrative] proceeding.”47
It should be easy to establish a nexus where the evidence shows that
the defendant attempted to obstruct a particular IRS action through
lies or concealment. For example, in the Prelogar case cited above, the
defendant, in response to IRS levies on his bank accounts, diverted funds
away from those accounts to hinder the IRS’s collection efforts.48
But what of facts where the line between the obstructive act and the
pending IRS administrative action is not as straightforward. For exam-
ple, a taxpayer contacted by the IRS regarding deductions in year one
could accept that determination with the hope that IRS does not take
interest in subsequent years with significant unreported income, and then
falsify documents in an attempt to conceal that income just in case. The
taxpayer has not tried to obstruct the particular audit of which he had
knowledge; nevertheless, since the taxpayer’s evasive conduct was moti-
vated by the audit, that conduct arguably has the required “nexus” to
an IRS proceeding.

44 Id. at 1108.
45 Id.
46 E.g., 18 U.S.C. § 1512(c) (providing a 20-year maximum penalty for corrupt at-
tempts to obstruct an official proceeding).
47 Marinello, 138 S. Ct. at 1109 (quoting United States v. Aguilar, 515 U.S. 593, 599
(1995)).
48 United States v. Prelogar, 996 F.3d 526, 530 (8th Cir. 2021).

December 2023 DOJ Journal of Federal Law and Practice 103

 In Aguilar, the 1995 decision on which Marinello relied, the Court
held that the government failed to prove the “nexus” required for an
obstruction-of-justice offense, 18 U.S.C. § 1503(a), because the defen-
dant’s false statements to FBI agents did not have the “natural and proba-
ble effect” of interfering with a separate grand jury investigation to which
the agents were not assigned.49 Notably, however, the Marinello Court
did not expressly adopt—or even mention—the “natural and probable ef-
fect” standard applied in Aguilar.50 The Court simply held that “nexus”
requires “a relationship in time, causation, or logic with the [administra-
tive] proceeding.”51 Where an act intended to obstruct the administration
of Title 26 is committed in reaction to a targeted administrative action,
that should be sufficient under Marinello.
Additionally, Marinello allows that an IRS proceeding need only be
“reasonably foreseeable,” even if not currently pending.52 According to
Marinello, to prove that an IRS proceeding is reasonably foreseeable, “It
is not enough for the [g]overnment to claim that the defendant knew the
IRS may catch on to his unlawful scheme eventually. To use a maritime
analogy, the proceeding must at least be in the offing.”53
In the example of the taxpayer who commits future, evasive acts in
response to a prior-year audit, a jury could find that the prior audit
made future audits “reasonably foreseeable”; thus, the taxpayer’s evasive
conduct was intended to obstruct a future, reasonably foreseeable audit.
For example, in United States v. Takesian, the First Circuit concluded
that an investigation of the defendant’s taxes was “reasonably foresee-
able” where the IRS, as part of a separate investigation, “was investi-
gating the money trail that could lead to him.”54 The defendant had
received some $1 million in unreported income from a company that was
under investigation for health-care fraud.55 Because the defendant knew
that the IRS was examining the company’s cashflow as part of the health-
care-fraud investigation, that investigation “would foreseeably cast a very
bright spotlight on the $1 million payout” to the defendant.56

49 Aguilar, 515 U.S. at 597, 601.

50 But see Marinello, 138 S. Ct. at 1106 (citing the requirement, stated in Aguilar,
that there be “an intent to influence judicial or grand jury proceedings”).
51 Id. at 1109.
52 Id. at 1110.
53 Id.
54 United States v. Takesian, 945 F.3d 553, 566 (1st Cir. 2019).
55 Id. at 556.
56 Id.

104 DOJ Journal of Federal Law and Practice December 2023

D. Multiple IRS proceedings
In some criminal tax cases, there is evidence of long-term obstruc-
tive conduct that continued during the course of multiple IRS proceed-
ings—for example, audits and collection actions related to separate tax
years or a criminal investigation. In such a case, the question arises
whether to charge a single section 7212(a) offense covering all of the
obstructive conduct, or multiple offenses for each proceeding that the
defendant attempted to obstruct.
Here, there is room for prosecutorial discretion. Although the gov-
ernment potentially could charge multiple section 7212(a) offenses for
obstructive acts directed at different IRS proceedings, it may not be nec-
essary (or advisable) to do so. The text of section 7212(a) defines the unit
of prosecution as a “corrupt endeavor” to obstruct the administration of
the tax laws; accordingly, the government may charge, in a single count,
all corrupt acts that form a “continuing course of conduct.”57
For example, a taxpayer’s obstructive conduct could begin during an
IRS civil audit. Subsequently, the civil auditor refers the case for criminal
investigation, and the taxpayer’s obstruction continues during the crimi-
nal investigation. Although there have been two distinct IRS proceedings
(the civil audit and the criminal investigation), those proceedings are re-
lated in time and subject-matter. In such a case, it probably makes more
sense to charge a single section 7212(a) offense.
On the other hand, separate section 7212(a) charges may be preferable
where there is greater separation between two or more IRS proceedings.
For example, a dishonest return preparer could attempt to interfere with
multiple IRS audits of several of the preparer’s clients, which occur at
different times and relate to different tax years. In such a case, it may be
advisable to charge separate section 7212(a) offenses for each of the tax-
payer audits that the defendant attempted to obstruct, which avoids the
question of whether the interference in these audits is part of a continuing
course of conduct.

57 United States v. Armstrong, 974 F. Supp. 528, 535, 539 (E.D. Va. 1997). See also
United States v. Daugerdas, 837 F.3d. 212, 225-26 (2d Cir. 2016) (Section 7212(a)
count not duplicitous where it charged multiple corrupt acts relating to a tax shelter
that defendant both set up for his clients and for himself); United States v. Murphy,
824 F.3d 1197, 1206 (9th Cir. 2016) (no duplicity because “the nine discrete acts
of interference alleged in the indictment merely stated multiple ways of committing
the same offense” (cleaned up)); United States v. Toliver, 972 F. Supp. 1030, 1040
(W.D. Va. 1997) (“multiple acts alleged [in Section 7212(a) count] amount to a single
continuous offense” because “[e]ach act was focused on achieving the same objective”).

December 2023 DOJ Journal of Federal Law and Practice 105

E. Specific unanimity and the statute of limitations
Marinello also did not address whether the general requirement that
jurors return a unanimous verdict requires that jurors be instructed that
they must unanimously agree on a particular corrupt act when an in-
dictment charging a violation of section 7212(a) alleges more than one
such act. Marinello merely noted, without passing on the issue, that the
district court had instructed the jury that although “it must find unan-
imously that [Marinello corruptly] engaged in at least one of the eight”
corrupt acts alleged in the indictment, it “need not agree on which one”
he committed.58
Existing caselaw, however, supports the conclusion that there is no
need for a jury to unanimously agree that a defendant corruptly com-
mitted a specific act alleged in a multi-act section 7212(a) charge. It is
generally well-settled that the requirement that a verdict be “unanimous”
requires jurors to unanimously agree that each element of an offense has
been proven but does not require unanimity with regards to the partic-
ular means by which an offense is committed. In Schad v. Arizona, a
four-Justice plurality stated that “there is no general requirement that
the jury reach agreement on the preliminary factual issues which under-
lie the verdict.”59 Justice Scalia agreed with the plurality in a concur-
ring opinion, stating that “it has long been the general rule that when
a single crime can be committed in various ways, jurors need not agree
upon the mode of commission.”60 And in Richardson v. United States,
the Supreme Court confirmed that “a federal jury need not always de-
cide unanimously which of several possible sets of underlying brute facts
make up a particular element, say, which of several possible means the
defendant used to commit an element of the crime.”61
Pre-Marinello cases have applied Schad and Richardson to hold that
an instruction requiring the jury to unanimously agree on a specific cor-
rupt endeavor alleged in a section 7212(a) charge was unnecessary. For
instance, the Tenth Circuit so held in United States v. Sorensen, where the
defense challenged on appeal the district court’s sua sponte specific una-
nimity instruction.62 This instruction, Sorensen concluded, mistakenly
“took the novel course of requiring the jury’s unanimity on at least one
means listed in the indictment.”63 Sorensen, however, found no grounds

58 Marinello v. United States, 138 S. Ct. 1101, 1105 (2018).

59 501 U.S. 624, 631-32 (1991).
60 Id. at 649 (Scalia, J., concurring).
61 Richardson v. United States, 526 U.S. 813, 817 (1999).
62 United States v. Sorenson, 801 F.3d 1217, 1235, 1237 (10th Cir. 2015).
63 Id. at 1237 (emphasis added).

106 DOJ Journal of Federal Law and Practice December 2023

for relief on account of this error, because “the instruction effectively
increased the government’s burden in proving its case.”64
The statute of limitations for a section 7212(a) offense is six years from
the last act that constitutes a corrupt endeavor to impede and impair the
due administration of the Tax Code.65 When a section 7212(a) charge
alleges multiple corrupt acts, it is common that some of the charged
or proved acts occurred more than six years prior to the return of the
indictment. When the statute of limitations is at issue, the jury instruc-
tions should require the jury, in order to convict, to find an obstructive
act within the limitations period, though the jury need not unanimously
agree as to which act was committed within the limitations period.

F. Pleading a section 7212(a) charge

Following the Marinello decision, a question arose whether an in-
dictment charging section 7212(a) must allege, as a separate element of
the offense, the required “nexus” to a tax-related proceeding. Although
Marinello did not address this question, some post-Marinello decisions
contained dicta describing the nexus requirement as an additional “el-
ement,” providing fodder for the argument that this new element must
be pleaded in an indictment.66 Marinello’s reasoning, however, suggests
that “nexus” is not a pleading requirement but rather a description of
what the government “must show” at trial to prove a section 7212(a)
violation.67
This view was adopted by the Eighth Circuit in Prelogar, which con-
cluded that “Marinello clarifies what must be proven to sustain a convic-
tion under [section] 7212(a) but does not require that nexus and knowl-
edge [of a tax-related proceeding] be charged in the indictment.”68 The
court reasoned that section 7212(a)’s nexus requirement is “implicit” in
the statutory language requiring a “corrupt endeavor to obstruct and

64 Id. Accord United States v. Adams, 150 F. Supp. 3d 32, 37-38 (D.D.C. 2015)
(following Sorensen); cf. United States v. Kozeny, 667 F.3d 122, 131-32 (2d Cir. 2011)
(jury need not unanimously agree on which overt act was taken in furtherance of a
conspiracy); United States v. Griggs, 569 F.3d 341, 343 (7th Cir. 2009) (same).
65 26 U.S.C. § 6531(6); United States v. Adams, 955 F.3d 238, 251 (2d Cir. 2020)
(“Violations of 26 U.S.C. § 7212(a) are subject to a six-year limitations period that
does not start to run until the last act in furtherance of the scheme.”).
66 See United States v. Beckham, 917 F.3d 1059, 1064 (8th Cir. 2019) (stating that
“Marinello . . . added two elements—a nexus and knowledge of a currently-pending
or reasonably foreseeable proceeding”); United States v. Graham, 981 F.3d 1254, 1257
(11th Cir. 2020) (claiming that “recently the Supreme Court added a third element”
to § 7212(a)).
67 Marinello v. United States, 138 S. Ct. 1101, 1109 (2018).
68 United States v. Prelogar, 996 F.3d 526, 532 (8th Cir. 2021).

December 2023 DOJ Journal of Federal Law and Practice 107

impede the due administration” of the tax laws.69
That said, it is good practice—and relatively easy—to include in the
indictment an express allegation of a nexus between the defendant’s ob-
structive conduct and a particular administrative proceeding known or
reasonably foreseen by the defendant. Doing so avoids the possibility of
litigation over the sufficiency of the indictment.70 Model charging lan-
guage containing these allegations can be found in the Tax Division’s
Criminal Tax Manual, which also includes model jury instructions for
section 7212(a) that incorporate Marinello’s requirement of proof of a
nexus to a known pending or reasonably foreseeable particular adminis-
trative proceeding.71

About the Authors

Greg Knapp has been with the Tax Division since 2010. Prior to join-
ing the Justice Department, he clerked for the Seventh Circuit Court of
Appeals.
Joe Syverson is currently the Section Reviewer in the Tax Division’s
Criminal Appeals and Tax Enforcement Policy Section, which he joined
in 2011. Previously, he was a Trial Attorney in the Tax Division’s Court
of Federal Claims Section.

69 Id. (cleaned up).

70 See United States v. Rankin, 929 F.3d 399, 405-06 (6th Cir. 2019) (considering
the defendant’s argument that the indictment failed to allege a nexus between the
defendant’s conduct and an IRS action).
71 U.S. Department of Justice, Tax Division, Criminal Tax Manual (S. Robert Lyons
et al. eds., 2022).

108 DOJ Journal of Federal Law and Practice December 2023

Sentencing Advocacy in
Criminal Tax Cases—Making
the Government’s Case for the
Appropriate Sentence
Stanley J. Okula, Jr.
Senior Litigation Counsel
Criminal Appeals & Tax Enforcement Policy Section
Tax Division

Matthew Hicks
Trial Attorney
Southern Criminal Enforcement Section
Tax Division

I. Introduction
As a result of a conviction rate over 90% in federal criminal tax cases,1
the overwhelming majority of such cases involve sentencing proceedings,
where the sentencing judge is tasked with imposing a sentence that is
“sufficient, but not greater than necessary” to achieve the purposes of
the federal sentencing statutes.2 Helping the sentencing judge arrive at
an appropriate sentence—that is, one that properly takes into account the
seriousness of the charged criminal conduct and other misconduct, pro-
motes respect for the law, and affords adequate deterrence—is a vital part
of the government’s role in enforcing the criminal tax laws. This article
will summarize the steps that should be taken to maximize the chances
of achieving a just—and impactful—sentence in criminal tax cases.

1 John Gramlich, Fewer than 1% of federal criminal defendants were acquitted in 2022,
Pew Research Center, June 14, 2023.
2 18 U.S.C. § 3553(a).

December 2023 DOJ Journal of Federal Law and Practice 109

II. Basic sentencing principles
A. No limits on information the sentencing court may
consider
The Supreme Court has long recognized that the selection of an appro-
priate sentence requires judges to have “the fullest information possible
concerning the defendant’s life and characteristics.”3 Indeed, as one judge
aptly observed:
Indispensable [to sentencing] is a thorough search for all de-
tails having even the slightest bearing on a defendant’s char-
acter, past and present. Often such an inquiry proves reward-
ing, for it supplies insights into strengths and weaknesses not
theretofore revealed and furnishes enlightenment as to how
best to write the sentence prescription. This approach is im-
perative and has long been encouraged and approved.4
Consistent with the foregoing principles, the statutory sentencing fra-
mework makes clear that “no limitation shall be placed on the information
concerning the background, character, and conduct” that the sentencing
judge may consider when fashioning an appropriate sentence.5 The pur-
pose for allowing a sentencing court to consider any and all information
at sentencing is plain: Such a process serves to facilitate a fuller assess-
ment of the defendant, which, in turn, assists the judge in making sure
that the punishment will “fit the offender and not merely the crime.”6

B. Statutory sentencing factors

In addition to the ability to consider any and all facts concerning the
defendant’s conduct and character, the sentencing judge must take into
consideration certain statutory factors in arriving at the ultimate sen-
tence. In particular, the judge must consider, among other things: (1) the
nature and circumstances of the offense and the history and characteris-
tics of the defendant; (2) the need for the sentence imposed to reflect the
seriousness of the offense, to promote respect for the law, and to provide
just punishment for the offense; (3) the need to afford adequate deter-

3 Williams v. New York, 337 U.S. 241, 247 (1949).

4 United States v. Ochs, 548 F. Supp. 502, 507 (S.D.N.Y. 1982); see Williams, 337
U.S. at 245 (sentencing judge may “consider information about the convicted person’s
past life, health, habits, conduct, and mental and moral propensities”).
5 18 U.S.C. § 3661.
6 North Carolina v. Pearce, 395 U.S. 711, 723 (1969) (quoting Williams, 337 U.S. at
247).

110 DOJ Journal of Federal Law and Practice December 2023

rence to criminal conduct; (4) the need to protect the public from further
crimes of the defendant; (5) the kinds of sentences available; (6) the U.S.
Sentencing Guidelines, including any policy statement; (7) the need to
avoid unwarranted sentencing disparities; and (8) the need to provide
restitution to victims.7
In the wake of the Supreme Court’s ruling in United States v. Booker,
sentencing courts typically consider and weigh the foregoing factors as
the third and final step of the sentencing procedure, following the court’s
initial determination of the applicable range under the U.S. Sentencing
Guidelines (the Guidelines) and due consideration of whether any depar-
tures from those Guidelines are appropriate.8

III. Developing and presenting all the facts

and arguments pertinent to sentencing
There are several discrete opportunities in the timeline of a tax pros-
ecution for government attorneys to develop and present to the court all
the facts relevant to sentencing, together with the legal and other argu-
ments in support of an appropriate sentence. The opportunities include:
the investigation of the case; the negotiation and execution of any plea
agreement; working with the probation officer to craft the language of the
Presentence Investigation Report and properly determine the Sentencing
Guidelines; filing a comprehensive and compelling sentencing memoran-
dum with the court; and arguing for the appropriate sentence on the
day of sentencing. Making the most of each of those opportunities, and
avoiding mistakes at each turn, can go a long way toward achieving a
meaningful sentence.

A. The investigation
A thorough investigation—that is, one that allows you to obtain a
full picture of the target and all his or her misconduct—is essential to
paint the proper picture for the court at sentencing. So, to the extent
possible, make sure you have examined the full scope of the target’s tax
crimes and other misconduct, including not only the harm caused to the
Internal Revenue Service (IRS) but also the harm caused to state and
local tax authorities. Most tax fraud schemes victimize states that have
income taxes, as it is a rare case where a fraudster will cheat the IRS

7 18 U.S.C. § 3553(a).
8 Gall v. United States, 552 U.S. 38, 49–50 (2007); Cf. United States v. Loving, 22
F.4th 630, 634–36 (7th Cir. 2022) (guideline range must be calculated prior to consid-
ering departure; district court erred in incorporating departure in initial range).

December 2023 DOJ Journal of Federal Law and Practice 111

yet decide to faithfully pay his state taxes. The IRS typically has com-
pacts with state taxing authorities allowing prosecutors to obtain state
tax records upon request, which is accomplished through the IRS agent.
Those records can also be obtained via grand jury subpoena or other
mechanisms, such as the All Writs Act.9 Keep in mind that the six-year
statute of limitations should not serve as a bar to examining earlier years.
Proof of a tax fraud scheme lasting several years tends to show the need
not only for general deterrence, which is present in all tax prosecutions,
but also specific deterrence.10
Relatedly, resist the temptation to quickly effectuate a resolution in-
volving the one or two years of tax misconduct that you or your agent may
initially have focused on, unless you can be reasonably assured that you
understand the full nature and duration of the tax fraud scheme. Pressure
from agents (who may be under pressure to avoid having over-aged cases
in their inventory) and lobbying by defense lawyers (who are looking to
have their clients held responsible for the lowest amount of tax loss and
smallest restitution payment possible) should not prevent you from gain-
ing an understanding of the full scope of the criminal scheme—and thus
the defendant as an offender.
Finally, to the extent your examination of tax crimes reveals other
types of criminal conduct, such as insurance, bank, healthcare, or in-
vestment fraud, you should not hesitate to make that part of your in-
vestigation. Although you may not ultimately charge this other criminal
conduct, being able to gather the pertinent facts and use them to prop-
erly depict the defendant as one who will lie and cheat at every turn can
be invaluable in showing the defendant’s true colors at sentencing.
The facts relating to the prosecution of former Morgan Stanley invest-
ment banker Morris Zukerman illustrate this point. Zukerman initially
came under investigation by the IRS as a result of his evasion of taxes,
in a single tax year, stemming from the sale of a significant corporate as-
set. The investigation quickly expanded to examine Zukerman’s personal
returns and those of his grown children, all of which were falsified by
Zukerman over several tax years. But further examination revealed that
Zukerman used the monies from the corporate evasion scheme to purchase
$45 million of Old Master paintings from various auction houses, which
he had illicitly sent to out-of-state addresses and then smuggled back into
New York to evade New York sales and use tax on the art. Examination
of that sales tax scheme, in turn, revealed that Zukerman had done the

9 See generally In re Hampers, 651 F.2d 19 (1st Cir. 1981).

10 U.S.S.G. “Introductory Commentary” to Chapter 2, Part T, Section 1 (deterrence
is “a primary consideration” underlying Sentencing Guidelines).

112 DOJ Journal of Federal Law and Practice December 2023

precise same thing a decade earlier and had been caught by the New York
tax authorities—making him, in effect, a recidivist. Further investigation
showed that Zukerman’s cheating extended to a health care fraud scheme
(by listing his domestic employee for several years on his corporate health
insurance) and defrauding his car insurer out of $800 annually by falsely
telling the insurer that his five motor vehicles were garaged in subur-
ban Westchester County (where insurance rates were lower) rather than
Manhattan where they were actually garaged. The ability to ultimately
show that a man who wove an elaborate tapestry of federal and state
tax fraud, resulting in over $37 million in losses, would stoop so low to
defraud his car insurer out of $800 a year was instrumental in showing
that Zukerman’s appetite for fraud was boundless.11
In sum, the advice given to renowned biographer (and investigative
reporter) Robert Caro by one of his first editors—“Turn every page. Never
assume anything. Turn every f—— page”12 —is equally applicable to
tax prosecutors and IRS agents alike as a mantra that can lead dogged
investigators to the discovery of many criminal and disreputable acts
committed by your offenders. As noted, those acts, together with your
core “offense conduct” facts, can serve as powerful ammo at sentencing.

B. The plea agreement

In connection with its review and authorization of tax charges, the
Tax Division designates at least one authorized charge as the “major
count,” which is typically the most serious charge. As explained in the
Tax Division’s Criminal Tax Manual (CTM), the designation of the major
count is based on various considerations, including: felony counts taking
priority over misdemeanors; tax evasion counts taking priority over other
substantive tax counts; the count charged in the indictment or informa-
tion carrying the longest prison sentence is the major count; as between
counts under the same statute, the count involving the greatest tax harm
(namely, the greatest tax loss) will be considered the major count; and
when there is little or no difference in financial harm between counts un-
der the same statute, the determining factor will be the severity of the
conduct.13 Absent unusual circumstances and approval from the Tax Di-
vision, plea agreements involving tax charges must include a plea to the

11 United States v. Zukerman, Brief for the United States, 2017 WL 4693960, at
*15–17 (Oct. 17, 2017) (detailing additional frauds); United States v. Zukerman, 897
F.3d 423, 433 (2d Cir. 2018) (affirming sentence on 74-year-old defendant that included
70 months’ imprisonment and above-Guidelines fine of $10 million).
12 See Excerpt from “Working” by Robert A. Caro, found at
https://www.bookreporter.com/reviews/working/excerpt.
13 See U.S. Dep’t of Just., Criminal Tax Manual, 5.01[1].

December 2023 DOJ Journal of Federal Law and Practice 113

major count. This “major count” policy in tax cases, which is consistent
with the Department of Justice’s general plea policy that requires dis-
positions by guilty plea to include the most serious charge,14 is vitally
important in connection with sentencing. By requiring a plea to the most
serious charge, it serves to “promote deterrence, ensure that a defendant
will be held accountable at sentencing for the most serious readily prov-
able offense, and eliminate the defendant’s ability to contest the criminal
conduct in any subsequent civil tax proceeding.”15
The requirement that the plea agreement holds the defendant respon-
sible for the full measure of tax harm caused by the criminal conduct
goes hand-in-hand with the major count policy. This means that, consis-
tent with the relevant conduct provisions in the Sentencing Guidelines,
the Guidelines calculation in the plea agreement must consider the tax
harm stemming from not only the count or counts of conviction, but also
the harm from any counts the government agrees to dismiss as well as
tax losses for any other tax years (including those barred by the statutes
of limitations) and those losses suffered by other victims. In short, “all
conduct violating the tax laws” should be considered in the plea agree-
ment, and prosecutors should not agree to disregard readily provable tax
losses from other years.16 To be sure, there will be occasions when tax
losses stemming from other tax misconduct are less clear, particularly if
those losses involve a different type of tax misconduct where willfulness
may legitimately be an issue. In such cases it might be appropriate to
compromise the amounts at issue. But the fundamental point here is an
important one: Do not agree to disregard readily provable tax harm com-
mitted as part of the defendant’s scheme. Likewise, prosecutors should
demonstrate a fidelity to the Guidelines with respect to specific offense
characteristics, such as “sophisticated means,” “abuse of trust,”17 and any
supervisory adjustments. Consistently and faithfully applying the Guide-
lines serves to present the clearest—and most comprehensive—picture of
the defendant’s conduct to the court.
What is the best way to implement these policy mandates? First,

14 U.S. Dep’t of Just., Justice Manual, 9-27.430 & Comment 1.

15 U.S. Dep’t of Just., Criminal Tax Manual, 5.01[1].
16 U.S.S.G. § 2T1.1, cmt., application note 2.
17 Although “abuse of trust” pursuant to U.S.S.G. §3B1.3 is frequently not applied
in tax cases because the position of trust that is breached must be viewed from the
prospective of the victim, several circuits have applied the adjustment where the un-
reported income stems from relevant conduct in the form of an embezzlement or other
scheme that indisputably involves a breach of trust by employees and others. See
United States v. Friedberg, 558 F.3d 131, 135–36 (2d Cir. 2009) (discussing circuit
split on the issue).

114 DOJ Journal of Federal Law and Practice December 2023

when the Sentencing Guidelines calculation yields a sentencing range that
exceeds the statutory maximum sentence for the “major count,” counsel
should insist on a plea to an additional count or counts to avoid the
capping of the Sentencing Guidelines by the statutory maximum. Put
simply, the operative Guidelines range should not be reduced by a plea
to one count, even if it is the major count. After all, the policy is a “major
count” policy, not an only count policy. Even in those cases where a plea to
the major count will not cap the Guidelines, it may be appropriate to seek
a multi-count plea, particularly where egregious facts are involved, and
the overwhelming nature of the proof gives leverage to do so. Prosecutors
should not be saddled with the mindset that a single-count disposition is
always appropriate, so long as the Guidelines are not being capped. More
fundamentally, any effort to cap the defendant’s Guidelines exposure has
the potential to send the wrong message to the sentencing judge, saying, in
effect, that notwithstanding the harm caused by the defendant’s conduct,
he should not be held responsible for the full measure of that harm. In
short, prosecutors should not be prevented, by terms of the plea, from
asking for a sentencing within the properly calculated Guidelines range,
when appropriate.
Relatedly, prosecutors should refrain from committing, in the plea
agreement, to seek a sentence at the bottom of the properly calculated
Guidelines range. For example, if the operative Guidelines range is 24
to 30 months in prison, agreeing to argue for a sentence no higher than
24 months would generally be a mistake. To be sure, the prosecutor may
think that justice could be done with a 24 month sentence, but by agreeing
to ask for nothing greater than 24 months, you seriously risk signaling
to the sentencing judge that a sentence between 0 months (which the
defendant will always be asking for) and 24 is appropriate. Because few if
any judges will impose a sentence at the top of the government’s requested
range, such an approach operatively changes the court’s calculus to 0 to
24 months, rather than 0 to 30 months—which is self-defeating. In sum,
retaining the ability to ask for a sentence within the Guidelines range is
most likely to help you achieve such a sentence, where appropriate.
Next, in those districts that employ a written statement of facts as part
of the plea process, making sure that the statement of facts is thorough
and complete can be of enormous assistance in conveying the seriousness
of the defendant’s conduct to a judge who will sentence the defendant
based upon a cold record, without the benefit of the emotional impact
of a trial. In addition, if local practice allows, requiring the defendant
to admit to the full range of tax misconduct—even beyond the counts
of conviction—can help build a factual record with respect to “relevant
conduct,” which can serve as the basis for a meaningful sentence.

December 2023 DOJ Journal of Federal Law and Practice 115

 Finally, ensuring that the plea agreement includes an explicit agree-
ment that the defendant will pay restitution for all of the harm caused by
the defendant’s criminal conduct can provide invaluable assistance at sen-
tencing. Such a practice demonstrates to the court the actual harm caused
to the victims of the criminal conduct, thus establishing the groundwork
for sentencing arguments based on that harm. To avoid any ambiguity in
the plea agreement, use the Tax Division’s form plea language whenever
possible.18

C. The probation officer and the Presentence

Investigation Report
Playing a proactive role in providing full and complete information to
the probation officer is critical to ensure that the Presentence Investiga-
tion Report (PSR) contains all the essential information for the sentencing
of the defendant, as well as the correct Guidelines calculations. This is
another important step in establishing a firm factual and legal foundation
for sentencing.
Although local practices by probation offices may differ, almost all al-
low prosecutors to provide unlimited information concerning the offense
conduct, relevant conduct, the defendant’s background, as well as any
other pertinent facts. Controlling the narrative that you want to emerge
in the final PSR can best be achieved by drafting a detailed sentencing
submission for the probation officer, which should include a factual state-
ment laying out the background of the case, the offense conduct, and all
of the relevant conduct. This submission will go a long way to ensure that
the PSR is not limited to barebones allegations of a charging instrument
or even a statement of facts contained in a plea agreement—which rarely
contain all of the facts we would like to emerge in the PSR. In some
districts, it is the practice to copy defense counsel on these submissions.
Find out what the probation officer expects, or what the local practice
is, so you know whether you are required to do this.
The submission to the probation officer should also contain a detailed
analysis of the Sentencing Guidelines and discuss the evidence supporting
any and all applicable enhancements. Although most probation officers
are well-attuned to the general “relevant conduct” provisions of the Sen-
tencing Guidelines contained in section 1B1.3, many may be unaware of
the separate “relevant conduct” provision of the Guidelines governing tax
offenses in section 2T1.1, which mandates that “all conduct violative of
the tax laws” be considered as part of the same course of conduct or

18 This form language is provided in U.S. Dep’t of Just., Criminal Tax Manual,
44.10.

116 DOJ Journal of Federal Law and Practice December 2023

scheme. Educating the probation officer on that provision, and even pro-
viding supportive caselaw for any circuit-specific rules, can go a long way
in making sure that the PSR ultimately gets all the background facts,
offense conduct, and the Guidelines correct. Providing the probation of-
ficer with critical pieces of evidence, either in the form of exhibits or
transcripts, can also prove effective in having that evidence cited in the
PSR.

D. The sentencing memorandum

There are several reasons why the filing of a sentencing memoran-
dum is indispensable to effective sentencing advocacy by the government.
First, sentencings in white-collar cases in general and tax cases in par-
ticular frequently yield downward variances.19 It is therefore essential
to demonstrate to the sentencing judges—who routinely are required to
impose lengthy sentences for recidivist defendants in narcotics, terror-
ism, and violent crime cases—why meaningful sentences are warranted
in criminal tax cases which typically involve a defendant with no prior
criminal record and do not involve flesh-and-blood victims.
Second, skillful defense counsel almost invariably file a sentencing
memo that attempts to downplay the criminal conduct and humanize the
defendant through the submission of lengthy letters in support, together
with an explanation of the defendant’s often spotless criminal record and
charitable and other good deeds. The government’s sentencing memoran-
dum can and should explain in detail the duration and breadth of the
defendant’s criminal conduct, and that unlike most other defendants the
court sentences, the tax offender committed his crime because of greed
and with deliberation.20 It is only though a thorough a compelling sen-
tencing memorandum that the government can adequately address the
section 3553(a) factors and thus demonstrate why a meaningful sentence
that includes incarceration is essential for general deterrence, among other
reasons.
What follows are some of the core arguments, grounded in the sec-
tion 3553(a) factors, that should be advanced by the government, and the
responses that should be leveled as rebuttal to the arguments typically
raised by criminal tax defendants. In crafting your sentencing memoran-
dum, it is unnecessary to reinvent the wheel. Tax Division attorneys file a

19 The Sentencing Commission reports that for fiscal year 2022, more than half of tax
offenders received a downward variance. See U.S. Sentencing Commission Quick Facts
(Tax Fraud Offenses), found at https://www.ussc.gov/ research/quick-facts/tax-fraud.
20 According to the Sentencing Commission’s Quick Facts for 2022, supra note 17,
the average age of a tax offender for 2022 was 52 years and 73% were men.

December 2023 DOJ Journal of Federal Law and Practice 117

sentencing memorandum in almost all cases and the Tax Division attor-
ney identified on the case referral can assist in obtaining the most relevant
sample.

1. Government arguments
a. Policy arguments
The task of convincing a sentencing judge why a tax case calls for
a term of imprisonment should start with two basic policy arguments.
First, the Sentencing Guidelines themselves—which, although not bind-
ing, serve as the starting point in arriving at the appropriate sentence—
reflect the consensus that those convicted of economic crimes should not
be able to avoid incarceration. Indeed, the legislative history of the Sen-
tencing Reform Act of 1984, which created the U.S. Sentencing Com-
mission, made clear that one of the Act’s goals was to rectify a serious
problem in the criminal justice system: “some major offenders, particu-
larly white-collar offenders . . . frequently do not receive sentences that
reflect the seriousness of their offenses.”21
Indeed, the tax Guideline itself, in its introductory commentary, em-
phasizes that “[b]ecause of the limited number of criminal tax prose-
cutions relative to the estimated incidence of such violations, deterring
others from violating the tax laws is a primary consideration underly-
ing these guidelines.”22 Consequently, the tax Guidelines make clear that
one of its goals was to “increase average sentence length” in tax cases
and correspondingly “reduce[]” the number of probationary sentences.23

21 U.S.C.C.A.N., 98th Cong., 2nd Sess. (1984) at 3260, available at

https://www.ojp.gov/ncjrs/virtual-library/abstracts/comprehensive-crime-control-
act-1983-report-senate-committee. As retired Supreme Court Justice Breyer, an
original member of the Sentencing Commission, explained:
The Commission found in its data significant discrepancies between pre-
Guideline punishment of certain white-collar crimes, such as fraud, and
other similar common law crimes, such as theft. The Commission’s statis-
tics indicated that where white-collar fraud was involved, courts granted
probation to offenders more frequently than in situations involving anal-
ogous common law crimes; furthermore, prison terms were less [severe]
for white-collar criminals who did not receive probation. To mitigate
the inequities of these discrepancies, the Commission decided to require
short but certain terms of confinement for many white-collar offenders,
including tax, insider trading, and antitrust offenders, who previously
would have likely received only probation.
See Stephen Breyer, The Federal Sentencing Guidelines and the Key Compromises
Upon Which They Rest, 17 Hofstra L. Rev. 1, 20–21 (1988).
22 U.S.S.G. “Introductory Commentary” to Chapter 2, Part T, Section 1.
23 U.S.S.G. § 2T1.1, Commentary.

118 DOJ Journal of Federal Law and Practice December 2023

These Guideline-based policy arguments support the notion that both
Congress and the Sentencing Commission viewed jail sentences in tax
cases as more the rule than the exception.
The second policy argument should point to the “tax gap,” which is
the amount of tax liability that is not paid voluntarily and timely by
U. S. taxpayers on an annual basis—estimated to be over $480 billion
difference in 2019.24 This argument should emphasize that although any
single tax prosecution is a very small fraction of the tax gap, the existence
of the tax gap illustrates why criminal tax prosecutions, and their related
consequences to the defendants, are necessary to encourage overall tax
compliance, which, in turn, will help pay for the roads we drive on, the
schools we attend, the military and the police, and all the other things
that tax revenues go towards.25
b. The nature of the offense and the importance of
criminal tax cases
In addressing the nature and circumstances of the offense, it is im-
portant to drive home the notion that tax fraud involves, at its core,
the unlawful taking of funds by the defendant from the pockets of every
taxpaying citizen of this nation. Citation to the many transcripts of tax
sentencings that have emphasized this notion should be utilized to show
how offensive and pernicious the criminal conduct is to the orderly op-
eration of our government.26 Moreover, the fact that many judges have
expressed such views frequently helps the sentencing judges in the next
cases echo those views and hopefully make those judges more comfortable
in imposing meaningful sentences—that is, ones involving incarceration.27

24 See Chuck Rettig, “A Closer Look: Impacting the Tax Gap,” at 1–3, available at
https://www.irs.gov/pub/foia/ig/cl/tax-gap-for-web.pdf (last visited Sept. 21, 2023).
25 This argument, of course, cannot be made to the jury. See, e.g.,
United States v. Hunte, 559 F. App’x. 825, 832–34 (11th Cir. 2014) (closing argu-
ment that invited the jury to place themselves in the position of American taxpayers
held to be an improper “Golden Rule” argument).
26 United States v. Zukerman, 897 F.3d 423, 428 (affirming finding of district court
that tax crimes represented “an especially damaging category of criminal offenses”
that strike “at the foundation of a functioning government”).
27 See, e.g., United States v. Ciccarella, 16 Cr. 738 (AKH) (S.D.N.Y. March 3, 2017)
(Doc. 32 at 22-23) (“In order to have a society, you must have money. You must be able
to pay what society requires. And its basic functions of policing and other functions
of making sure there is a safety net under people. If people don’t pay their taxes, they
cheat each other. Your not paying taxes cheats me. If I don’t pay my taxes, I cheat
you.”).

December 2023 DOJ Journal of Federal Law and Practice 119

c. Deterrence
As noted, deterrence is one of the specific section 3553(a) factors that
the sentencing court must consider in fashioning its sentence. It is also
one that should be expansively covered in your sentencing memo, as it is
arguably one of the most important factors. That coverage should include
citations to academic papers that have noted the importance of general
deterrence in white-collar cases.28 Moreover, your discussion of general
deterrence should include citation to, and discussion of, the numerous
published cases and sentencing transcripts where judges have thoughtfully
and persuasively explained the central role of deterrence in both white-
collar cases in general and tax cases in particular.
For instance, one court thoughtfully pointed out that “[c]onsiderations
of (general) deterrence argue for punishing more heavily those offenses
that either are lucrative or are difficult to detect and punish, since both
attributes go to increase the expected benefits of a crime and hence the
punishment required to deter it.”29 Likewise, another court stressed the
“particularly important role” played by general deterrence in tax cases
because of the “significant resources required to monitor and prosecute
tax crimes.”30 And yet another court put the concept of general deterrence
in a more colloquial, but no less compelling way:
What is general deterrence? It is to say to other people similarly sit-
uated to [the defendant], “Here is the cost. If you do this, you are going
to pay for it.” And that is fairly important in the white-collar context.
This is a crime of calculation over an extended duration. This is not a
one-off. This is not, “Gee, I would like that car or this car, or maybe I
will take a little extra to get that.” This is creating his own piggybank.
Other people, good businessmen, with appropriate and maybe even gen-
erous civic values would look at a sentence and say, “Probation? Maybe
this is one that really does not get punished very hard. Maybe I can take
over $1,000,000 from my fellow citizens and use it on my own. Maybe it
is worth the risk.”
General deterrence is hard to calculate in terms of double-entry book-
keeping, [but because swift and certain punishment is impossible to at-
tain] we start looking at terms of years or months as a way of saying to
those who might be influenced by such matters, rather than their own

28 E.g., Joshua D. Blank, In Defense of Individual Tax Privacy, 61 Emory L. J.

265, 321 (2011–2012) (“Studies have shown that salient examples of tax-enforcement
actions against specific taxpayers, especially those that involve criminal sanctions,
have a significant and positive deterrent effect.”).
29 United States v. Heffernan, 43 F.3d 1144, 1149 (7th Cir. 1994).
30 Zukerman, 897 F.3d at 428–29.

120 DOJ Journal of Federal Law and Practice December 2023

personal morality, “This is what it is going to cost you.”31
In sum, a compelling general deterrence argument can go a long way in
convincing the sentencing judge that a term of incarceration is “sufficient
but not greater than necessary” to achieve the purposes of the federal
sentencing statutes.
d. Avoiding disparities
In order to demonstrate that a Guidelines sentence for your tax of-
fender would not be wildly inconsistent with the types of sentences im-
posed by other judges involving similar conduct—and thus not produce
a “disparity” that runs afoul of section 3553(a)—it is frequently helpful
to present the sentencing judge with examples of cases where similarly
situated defendants received meaningful sentences. To do this effectively,
it is imperative to present the basic facts in those other cases to give
the court the comfort that apples are being compared to apples. So, for
instance, you should present—either through discussion of the facts or in-
clusion of a detailed chart—basic sentencing data, including a summary
of the offense conduct, the final Sentencing Guidelines range, the ulti-
mate sentence imposed, and any other highly relevant sentencing. This
approach has been helpful in convincing sentencing judges that meaning-
ful sentences, particularly involving tax offenders of advanced years, are
not only well grounded in the facts and Sentencing Guidelines, but would
not be inconsistent with the sentences imposed on similar offenders.32

2. Defense arguments
Defendants will frequently advance numerous arguments in support
of their efforts to avoid jail. Chief among them are arguments based on
charitable and other good works, full payment of restitution, letters of
support from loved ones and colleagues, age and health concerns, and the
reputational harm and other collateral consequences of a jail sentence.
Being able to respond effectively to these arguments is important in con-
vincing the sentencing court that the section 3553(a) factors nonetheless
weigh strongly in the government’s favor, thus meriting a meaningful sen-
tence of incarceration. What follows are examples of responses that have
frequently served to counter the defense arguments.

31 United States v. Ventola, 15 Cr. 10356-DPW (D. Mass., June 7, 2017) (Doc. 157
at 54-55) (imposing 24 month prison term on 71-year-old defendant).
32 See United States v. Mary Boone, 18-cr-634 (AKH) (S.D.N.Y. 2019) (“Age Chart”
attached to sentencing memo, resulting in 30 month sentence imposed on 67-year-old
defendant); United States v. Zukerman, 16-cr-194, 2017 WL 11571805 (S.D.N.Y, Feb.
14, 2017) (“Age Chart” attached to sentencing memo, resulting in 70 month sentence
for 74-year-old defendant).

December 2023 DOJ Journal of Federal Law and Practice 121

a. Charitable works
While it is certainly appropriate for a sentencing judge to consider
a defendant’s charitable and other good acts, such acts generally should
not be given significant credit at sentencing, absent truly extraordinary
circumstances. First, a tax defendant’s ability to make significant chari-
table contributions oftentimes is facilitated by the offense conduct—that
is, the tax scheme that put extra funds in the defendant’s pocket. More
fundamentally, it is hardly unusual for the well-to-do (an apt description
of many tax defendants) to make gifts to charity, even significant ones.
But, as one court aptly noted, those gifts, although commendable, should
not be treated “as a get-out-of-jail-free card.”33
b. Payment of restitution
The defendant’s payment of restitution prior to sentencing should not
merit significant consideration when the court weighs all the sentencing
factors. Such an act, after all, is merely a return of the ill-gotten gains.
And those gains, as noted above, were effectively taken from the pockets
of those taxpayers who faithfully and timely complied with their tax
obligations. To paraphrase one sentencing court, a defendant deserves no
good citizenship or other award for paying taxes that were long ago due
and owing, particularly when done as a naked attempt to cast oneself in
a better light at sentencing.34
c. Letters of support
Although it is entirely appropriate for a sentencing judge to take let-
ters of support from family and friends into account at sentencing, pros-
ecutors should ask the court to consider two points when doing so. First,
attestations to the defendant’s good character do not distinguish the tax
offender from the typical white-collar defendant. Instead, as one sentenc-
ing judge astutely observed, such a collection of letters—
falls into a pattern advanced by a subset of the white-collar crimi-
nal. This category encompasses a select class: distinguished, reputable,

33 United States v. Vrdolyak, 593 F.3d 676, 682 (7th Cir. 2010); see also id. at 683
(“To allow any affluent offender to point to the good his money has performed and
to receive a downward departure from the calculated offense level on that basis is
to make a mockery of the Guidelines”); United States v. Haversat, 22 F.3d 790, 796
(8th Cir. 1994) (defendant’s charitable and volunteer activities did not make him
atypical).
34 See Zukerman, 16 Cr. 194 (AT), (02/27/17 Sent, Tr. at 17-19) (“So do you think
[the defendant] should get a good citizenship reward for paying back taxes?”). It is
worth noting that, in calculating tax loss for Sentencing Guidelines purposes, the loss
figure is “not reduced by any payment of the tax subsequent to the commission of the
offense.” U.S.S.G. § 2T1.1(c)(5).

122 DOJ Journal of Federal Law and Practice December 2023

highly esteemed model citizens such as this defendant. The list of their
achievements and virtues is long and impressive. Let us count the ways.
At home, they are good family men and women, caring spouses, loving
parents, loyal and reliable to friends. At work, they are looked up to as
outstanding professionals and business partners. To their community’s
charities and public causes they are generous patrons and sponsors.35
Second, while there certainly are cases where it can be said that a de-
fendant’s offense conduct was wildly aberrant or representative of so brief
and isolated a lapse in judgment that it is appropriate to give significant
weight to an otherwise blameless or even praiseworthy life (as attested to
by the letters), most criminal tax cases do not involve “isolated lapses in
judgment.” Rather, almost every authorized tax case involves multi-year
conduct and significant losses that could not have been accomplished ab-
sent multiple acts designed to cheat and steal—frequently for no reason
other than pure greed. Accordingly, even crediting any testimonials sub-
mitted by tax defendants in connection with sentencing, the sincerity of
which typically need not be questioned—the prolonged and greed-driven
criminal conduct of the defendants usually make clear that they are not
individuals deserving any benefit of the doubt with respect to this sen-
tencing court’s judgment of their character.
d. Age and health concerns
Part H of the Sentencing Guidelines provide that departures based
upon a defendant’s age, medical health, and mental status “may be rel-
evant” in imposing a sentence, but only when those characteristics “are
present to an unusual degree and distinguish the case from the typical
cases covered by the guidelines.”36 Consequently, absent extraordinary
facts, age and health typically should not serve as the impediment to
the imposition of Guidelines or otherwise meaningful sentences. As noted
above, demonstrating to sentencing courts that significant sentences have
been imposed on those in their 60s, 70s, and even 80s goes a long way in
achieving those sentences. Moreover, to the extent that the offense con-
duct actually continued into advanced age, highlighting those facts to the
court in your sentencing memorandum will go a long way in supporting
the common-sense argument that a sentence of jail should hardly be un-
expected for one who decided to engage in criminal behavior at that age.

35 United States v. Regensberg, 635 F. Supp. 2d 306 (S.D.N.Y. 2009); see also
United States v. McClatchey, 316 F.3d 1122, 1135 (10th Cir. 2003) (“excellent char-
acter references are not out of the ordinary for an executive who commits white-collar
crime; one would be surprised to see a person rise to an elevated position in business
if people did not think highly of him or her”).
36 U.S.S.G. §§ 5H1.2, 1.3, 1.4.

December 2023 DOJ Journal of Federal Law and Practice 123

e. Reputational harm and other consequences
Any argument or suggestion that a criminal tax defendant has been
punished enough by the loss of reputation or occupational standing should
be vigorously attacked. According to this logic, abundantly credentialed
and well-heeled business executives or professionals should not be sent
to prison for committing the same crime that would justify a sentence
of imprisonment for a less well-heeled and less well-educated defendant
or one who enjoys a smaller standing in the community. Courts have
routinely held that it is “impermissible for a court to impose a lighter
sentence on white-collar defendants than on blue-collar defendants be-
cause it reasons that white-collar offenders suffer greater reputational
harm or have more to lose by conviction.”37 Similarly, the loss of pro-
fessional licenses or standing, the legal fees a defendant incurs, and the
felony convictions associated with the defendant’s name are typically not
factors sentencing courts should typically take into account. The reason
for this is plain: “None of these things are [the defendant’s] sentence.
Nor are they consequences of his sentence; a diminished sentence based
on these considerations does not reflect the seriousness of his offense or
effect just punishment.”38

IV. Other sentencing considerations

As noted, effective sentencing advocacy must include a detailed discus-
sion of restitution owed by the defendant. When a defendant has agreed
to pay restitution as part of a plea agreement, the sentencing court may
order restitution for a Title 26 offense as an independent part of the sen-
tence, and prosecutors should seek restitution as an independent part
of the sentence.39 If a defendant convicted of a Title 26 offense has not
agreed to pay restitution, prosecutors should seek restitution as a condi-
tion of supervised release.40 Presenting the sentencing court with accurate
restitution computations in a proposed restitution order, including inter-

37 United States v. Prosperi, 686 F.3d 32, 47 (1st Cir. 2012).

38 United States v. Musgrave, 761 F.3d 602, 608 (6th Cir. 2014) (quotations omitted);
see United States v. Kuhlman, 711 F.3d 1321, 1329 (11th Cir. 2013) (“The Sentencing
Guidelines authorize no special sentencing discounts on account of economic or social
status.”); United States v. Stefonek, 179 F.3d 1030, 1038 (7th Cir. 1999) (“[N]o ‘middle
class’ sentencing discounts are authorized. Business criminals are not to be treated
more leniently than members of the ‘criminal class’ just by virtue of being regularly
employed or otherwise productively engaged in lawful economic activity.”).
39 See 18 U.S.C. § 3663(a)(3).
40 See 18 U.S.C. §§ 3563(b)(2), 3583(d); see also U.S.S.G. § 5E1.1(a)(2).

124 DOJ Journal of Federal Law and Practice December 2023

est calculated to the date of sentencing, can be an effective way to ensure
that restitution is correctly imposed.
In addition to seeking restitution, prosecutors in most tax cases are
typically permitted to seek, as a mandatory component of the sentence,
the “costs of prosecution.”41 Consequently, the Justice Manual advises,
and the Tax Division strongly recommends, that prosecutors seek recovery
of the costs of prosecution in criminal tax cases.42
Because the Internal Revenue Code does not define “costs of prose-
cution,” courts have generally looked to sections 1918 and 1920 of Title
28.43 Those statutes, and the cases interpreting them, allow the recoup-
ment of the following costs and fees that are typically incurred in tax
cases: witness costs incurred for travel, lodging, and appearance in court;
fees for printed or electronically recorded transcripts necessarily obtained
for use in the case; and the costs of making copies of any materials where
the copies are necessarily obtained for use in the case.
Courts have interpreted the words “necessarily obtained for use in
the case” in section 1920(2) and section 1920(4) to mean “reasonably
expected to be used for trial or trial preparation” at the time transcripts
or copies were obtained.44 This means that fees for transcripts of trial
witnesses’ grand jury testimony are recoverable as costs of prosecution
under section 1920(2) because those transcripts are reasonably expected
to be used at trial to refresh recollection or impeach, to prepare the
witness and help the party calling that witness prepare for trial, and to
allow the government to comply with its obligations under Rule 26.2 of
the Federal Rules of Criminal Procedure and the Jencks Act.45 The costs

41 See 26 U.S.C. §§ 7201, 7202, 7203, 7206(1), 7206(2); see also U.S.S.G. § 5E1.5
(providing that “[c]osts of prosecution shall be imposed on a defendant as required
by statute” and identifying §§ 7201, 7202, 7203, and 7206, among others, as statutes
that “require the court to impose the costs of prosecution”); United States v. Kock,
66 F.4th 695, 706–07 (8th Cir. 2023) (costs of prosecution mandatory for failure-to-file
conviction).
42 See U.S. Dep’t of Just., Justice Manual, 6-4.350; U.S. Dep’t of Just.,
Criminal Tax Manual, 43.12[2].
43 See, e.g., United States v. Stefonek, 179 F.3d 1030, 1037 (7th Cir. 1999) (“In
the absence of any elucidation in either the Internal Revenue Code or the legislative
history, the term ‘costs of prosecution’ is most naturally understood as referring to
section 1920 costs incurred by the government in successfully prosecuting a criminal
defendant.”).
44 See 28 U.S.C. § 1920(2) (costs of prosecution include “[f]ees for . . . transcripts
necessarily obtained for use in the case”); see also United States ex rel King v. Solvay
Pharms., Inc., 871 F.3d 318, 335 (5th Cir. 2017) (“we have interpreted ‘necessarily
obtained for use in the case’ to include documents ‘reasonably expected to be used for
trial or trial preparation’ at the time [they were] obtained”).
45 18 U.S.C. § 3500; United States v. Pommerening, 500 F.2d 92, 102 (10th Cir. 1974)

December 2023 DOJ Journal of Federal Law and Practice 125

of printing and copying enough sets of trial-exhibit binders can also be
recovered under section 1920(3)–(4).46 And the attendance fees, travel
expenses, and subsistence expenses of witnesses who testified at trial are
recoverable under section 1920(3).47 This includes government employees
called to testify on behalf of the United States.48 Because government
employees testifying for the prosecution are statutorily prohibited from
receiving attendance fees, only their travel and subsistence expenses may
be recovered.49 Costs of prosecution generally do not include costs of
investigation.50

V. Conclusion
Effective sentencing advocacy is critical to obtain impactful sentences
in tax cases—that is, ones that properly consider the seriousness of the
criminal conduct, promote respect for the law, and afford adequate de-
terrence. Building a powerful record using the steps described above will
aid immeasurably in achieving such sentences. Moreover, taking the ap-
propriate steps to hold tax defendants fully accountable for restitution
and costs of prosecution is an essential part of that effort.

About the Authors

Stanley J. Okula, Jr. is a Senior Litigation Counsel in the Criminal Ap-
peals & Tax Enforcement Policy Section (CATEPS) of the Tax Division.
He previously served as the Assistant Chief of CATEPS and, between 1995
and 2016, as an Assistant United States Attorney in the United States

(grand jury transcripts, including for witnesses that did not testify at trial, “were
properly obtained for use in the case and hence their costs may be taxed” under
section 1920).
46 See 28 U.S.C. § 1920(3)–(4) (costs of prosecution include “[f]ees and disbursements
for printing” and “[f]ees for . . . the costs of making copies of any materials where the
copies are necessarily obtained for use in the case”); Fogleman v. ARAMCO (Arabian
Am. Oil Co.), 920 F.2d 278, 286 (5th Cir. 1991) (costs of reproducing trial exhibits
are recoverable costs of prosecution).
47 See 28 U.S.C. § 1920(3) (costs of prosecution include “[f]ees and disbursements for
. . . witnesses”); 28 U.S.C. § 1821 (requiring payment to witnesses of daily attendance
fee, travel expenses, and subsistence expenses).
48 See Pommerening, 500 F.2d at 102 (upholding award of costs for travel and sub-
sistence of FBI agent from Washington, D.C., to authenticate blown-up photographs
of records);
49 5 U.S.C. § 5537 (federal employees “may not receive fees for service . . . as a witness
on behalf of the United States”).
50 United States v. Vaughn, 636 F.2d 921, 922 (4th Cir. 1980) (“The parties are agreed
(and we concur) that assessment of the ‘costs of prosecution’ against a defendant
under § 7201 or § 1920 does not include investigation expenses.”).

126 DOJ Journal of Federal Law and Practice December 2023

Attorney’s Office for the Southern District of New York, where he served
as Tax Coordinator and tried complex tax cases. He also served as an
Assistant United States Attorney in the Eastern District of New York,
where he was a Deputy Chief of the General Crimes Unit. Before joining
the Department of Justice, Stan was an associate at a large New York
law firm, which he joined after clerking for United States District Judge
Raymond J. Dearie in the Eastern District of New York. Stan graduated
with honors from the State University of New York, College at Cortland,
and St. John’s Law School, where he was an editor of the Law Review.
Matthew Hicks has been a prosecutor in the Tax Division’s Southern
Criminal Enforcement Section since 2019. In the 12 years before that, he
worked at a prominent tax boutique in the District of Columbia, first as
an associate and then as a member. From 2003 to 2007, Matt served as
a trial attorney on the civil side of the Tax Division. He graduated from
Georgetown University Law Center in 2002 and the University of Chicago
in 1993.

December 2023 DOJ Journal of Federal Law and Practice 127

Page Intentionally Left Blank

128 DOJ Journal of Federal Law and Practice December 2023

A Fool for a Client: Legal and
Practical Considerations When
Facing Pro Se Defendants
Katie Bagley
Assistant Chief
Criminal Appeals and Tax Enforcement Section
Tax Division

Melissa Siskind
Trial Attorney
Northern Criminal Enforcement Section
Tax Division

“Your Honor, I’d like to represent myself.”

Those words often prompt an internal sigh. Most prosecutors and

judges prefer to deal with defense counsel rather than with a pro se defen-
dant. Representing oneself is, of course, a defendant’s constitutional right,
but facing a pro se defendant in court is always challenging. These chal-
lenges are more acute when the defendant deploys tax defier or sovereign-
citizen rhetoric questioning the court’s jurisdiction, the government’s au-
thority to prosecute, and the legitimacy of the tax laws, or otherwise
engages in conduct designed to delay and obstruct proceedings and com-
plicate and confuse the record.
This article aims to help prosecutors prepare for the legal and logistical
obstacles presented by these pro se litigants. We will first review why
issues like those in Faretta v. California (Faretta issues) pose heightened
litigation risk on appeal. Then we will review the issues that may arise
when sovereign citizens attempt to waive their right to counsel. We will
cover the role and limits of standby counsel, and we will also discuss the
limits of the right to self-representation based on a defendant’s conduct.
And finally, we will offer some practical tips for litigating against a pro
se defendant.

December 2023 DOJ Journal of Federal Law and Practice 129

I. United States v. Hakim: A cautionary tale
Many of the additional challenges posed by sovereign-citizen defen-
dants are illustrated in a recent case, United States v. Hakim.1 The de-
fendant, Saleem Hakim, identified by the court as a sovereign citizen, was
charged with three counts of willfully failing to file tax returns, in viola-
tion of 26 U.S.C. § 7203. At arraignment, an attorney from the Federal
Public Defender’s Office was assigned to represent Hakim. The attorney
told the magistrate judge that Hakim wished to represent himself, and
the magistrate judge attempted to conduct a Faretta 2 colloquy.3
Unfortunately, Hakim was uncooperative, repeating “frivolous and in-
coherent arguments” rather than answering questions.4 He would not an-
swer questions about his age and other basic information. He said he
would “remain silent,” but would “address th[e] matter as the autho-
rized representative for the so-called defendant in the all caps style.” He
read an “entry of appearance” comprised of typical tax defier nonsense.
The magistrate judge, recognizing Hakim’s “attempt[s] to confuse the
record,”5 gave up on conducting a normal colloquy, instead simply in-
forming Hakim of the charges, reading the indictment, trying to dissuade
Hakim from representing himself, explaining the benefits of having an
attorney, and telling Hakim that he would be expected to abide by the
rules of procedure and evidence, question and cross-examine witnesses,
and perform all the tasks that an attorney would normally handle.6
Hakim finally stated that he wanted to handle the matter himself, but
only after the magistrate judge told him that if he wanted to represent
himself, he had to say so clearly and unequivocally, or else he would be
represented by the attorney.7 The court ultimately found that Hakim had
validly waived his right to counsel, allowed him to represent himself, and
appointed standby counsel.
Unfortunately, the magistrate judge, in explaining that failing to file
a tax return was a misdemeanor punishable by up to one year in prison,

1 United States v. Hakim, 30 F.4th 1310 (11th Cir. 2022), cert. denied 143 S. Ct. 776
(2023).
2 Faretta v. California, 422 U.S. 806 (1975) (recognizing a defendant’s constitutional
right to waive right to counsel and represent themselves at trial).
3 Hakim, 30 F.4th at 1315.
4 Id. at 1316.
5 Id.
6 The use of such a “Faretta-like monologue” is permitted when a defendant “re-
fuses to provide clear answers to questions regarding his Sixth Amendment rights.”
United States v. Garey, 540 F.3d 1253, 1267 (11th Cir. 2008) (en banc).
7 Hakim, 30 F.4th at 1316.

130 DOJ Journal of Federal Law and Practice December 2023

did not tell Hakim that the sentences on the three counts could run
consecutively, such that Hakim faced a potential sentence of up to three
years in prison.8
As the case proceeded, Hakim continued his “dilatory tactics and
obscurantism.”9 Among other things, he sought a continuance to “seek
counsel of [his] own choosing,” but refused to say whether that meant
a lawyer.10 At a change-of-plea hearing a few days before trial, Hakim,
among other things, asserted that if he plead guilty, “[a] piece of paper”
would be going to prison because he was a “third-party intervenor” who
was merely “standing as surety for a legal fiction.”11 At that hearing, the
district court informed Hakim that he faced a maximum sentence of three
years in prison.12
The district court declined to accept Hakim’s guilty plea, and trial
began shortly thereafter.13 Hakim represented himself at voir dire, but
prior to the jury being sworn, he asked to have standby counsel represent
him.14 The court granted the motion and the requested continuance to
allow the attorney to prepare. A new jury convicted Hakim on all counts.15
On appeal, the Eleventh Circuit reversed Hakim’s convictions. Over a
dissent, the court found that the magistrate court gave him “materially
incorrect information about his maximum sentence,” and because there
was no other evidence suggesting that Hakim knew the correct sentencing
range, his waiver was unknowing.”16 It did not matter that Hakim was
eventually told the correct sentencing range, that he failed to object even
after counsel was appointed, or that he was represented at trial. The court,
relying in part on White v. Maryland,17 further found that the four months
during which Hakim was not represented, which included the arraignment
at which a not-guilty plea was entered, a plea offer from the government,

8 Id. at 1315.
9 Id. at 1316.
10 Id. at 1317.
11 Id.
12 Brief for Appellee at 14, United States v. Hakim, 30 F.4th 1310, (11th Cir. 2022)
(No. 19-11970-JJ), 2020 WL 7333486, at *14.
13 Hakim, 30 F.4th at 1317–18.
14 Id. 1318.
15 Id.
16 Id. at 1324.
17 White v. Maryland, 373 U.S. 59 (1963). In White, the defendant entered a guilty
plea while unrepresented at a preliminary hearing. He was later arraigned and pleaded
not guilty and not guilty by reason of insanity; his guilty plea was introduced against
him at trial. The Court held that under those circumstances the preliminary hearing
was a critical stage and reversed the conviction.

December 2023 DOJ Journal of Federal Law and Practice 131

and the abortive change-of-plea hearing, comprised “critical stages” of
the proceedings.18 As a result, the court did not analyze whether Hakim
suffered any prejudice as a result of the invalid waiver; it found that it
was structural error and reversed.19
Practice note: The government filed a petition for a writ of cer-
tiorari arguing that that Hakim’s structural error holding was wrongly
decided.20 Denial of counsel in violation of the Sixth Amendment gives
rise to structural error only when the defendant is uncounseled during a
critical stage of the proceedings. As explained in the government’s peti-
tion, neither the federal arraignment at which Hakim plead not guilty nor
the subsequent pretrial proceedings were critical stages. The case was thus
amenable to harmless-error analysis, and any error should have been held
harmless because Hakim was informed of the correct maximum sentence
prior to his unsuccessful attempt to plead guilty and he was represented
at trial. Prosecutors who encounter arguments based on Hakim should
refer to the government’s petition for a writ of certiorari.
Ultimately, Hakim’s obstructive tactics worked; he had the benefit of
counsel at trial, but his conviction was reversed because of a seemingly
minor error during the Faretta hearing resulting in a finding that his
waiver of counsel was invalid.21 Errors like this are more likely to occur
when a defendant is intentionally uncooperative, and seeks to confuse and
obstruct the proceedings and frustrate or fluster the court. It is important
for prosecutors to be aware of the challenges posed by such defendants to
ensure that Faretta hearings and determinations stand up on appeal.

II. High stakes on a high wire

Courts and prosecutors must always tread carefully when a defen-
dant’s constitutional rights are concerned, of course, but the stakes are
even higher when a defendant seeks to waive the Sixth Amendment right
to counsel. It is well established that defendants have both the right to
counsel and the right to conduct their own defense.22 Both claims that a
district court improperly denied a defendant his right to represent him-
self and claims that a district court improperly allowed a defendant to

18 Hakim, 30 F.4th at 1326–27.

19 Id. at 1327.
20 See United States v. Hakim, No. 22-464, 2022 WL 17068479 (11th Cir. Nov. 14,
2022).
21 Id.
22 Faretta v. California, 422 U.S. 806, 807 (1975).

132 DOJ Journal of Federal Law and Practice December 2023

represent herself are reviewed de novo.23 And the nature of appellate re-
view of these claims creates a “damned if you do, damned if you don’t”
situation for prosecutors and district courts. A conviction will be au-
tomatically reversed if the district court improperly refused to let the
defendant represent himself24 or if the district court improperly let the
defendant represent himself, leaving him without counsel at trial or an-
other critical stage of the criminal proceedings.25 The district court is
walking a tightrope with no net: “whenever a defendant invokes his right
to self-representation, a district court risks violating the defendant’s con-
stitutional rights whether or not it permits the defendant to proceed pro
se.”26
So-called “structural errors” are those affecting the “framework within
which the trial proceeds,” rather than “simple an error in the trial process
itself.”27 A total deprivation of the right to counsel at a critical stage
of the proceedings is such a structural error.28 The right to counsel is
“fundamental and essential to fair trials,”29 and its absence during a
critical stage of the proceedings is a “structural defect[] in the constitution
of the trial mechanism, which def[ies]” harmless-error analysis.30
Likewise, the denial of the right of self-representation is a structural er-
ror,31 but for slightly different reasons. Unlike other constitutional rights,
generally intended to help a defendant effectively defend themselves, the
right to represent oneself, which is rooted in respect for a defendant’s au-
tonomy,32 is a right that “when exercised, usually increases the likelihood
of a trial outcome unfavorable to the defendant.”33 Indeed, “[v]irtually
every time a defendant elects to proceed pro se he is making a foolish

23 See, e.g., United States v. Atkins, 52 F.4th 745, 750 (8th Cir. 2022);
United States v. Johnson, 24 F.4th 590, 600–01 (6th Cir. 2022);
United States v. Hantzis, 625 F.3d 575, 579 (9th Cir. 2010).
24 United States v. Smith, 830 F.3d 803, 809 (8th Cir. 2016).
25 United States v. Hansen, 929 F.3d 1238, 1261 (10th Cir. 2019).
26 United States v. Taylor, 21 F.4th 94, 105 (3d Cir. 2021).
27 Arizona v. Fulminante, 499 U.S. 279, 309–10 (1991). In Fulminante, the
Supreme Court distinguished between constitutional errors subject to harmless-error
analysis, called “trial errors,” from “structural errors,” which do not require the de-
fendant to prove prejudice.
28 Gideon v. Wainwright, 372 U.S. 335 (1963).
29 Id. at 344.
30 Fulminante, 499 U.S. at 309.
31 McKaskle v. Wiggins, 465 U.S. 168, 177–78 (1984).
32 Faretta v. California, 422 U.S. 806, 834 (1975) (defendant’s choice to represent self
“must be honored out of that respect for the individual which is the lifeblood of the
law”).
33 McKaskle, 465 U.S. at 177 n.8.

December 2023 DOJ Journal of Federal Law and Practice 133

choice.”34 Because a defendant would almost always be better off repre-
sented by an attorney, harmless-error review is inappropriate.
And defendants, knowing this, may seek to game the system intention-
ally. Decades ago, courts recognized the risk that district courts could be
“whipsawed by defendants clever enough to record an equivocal request to
proceed without counsel in the expectation of a guaranteed error no mat-
ter which way the trial court rules.”35 This appellate “Catch-22” means
that prosecutors must be vigilant during Faretta hearings to help ensure
valid results.

III. “The right to go down in flames if they

wish”
As a result, the stakes are always high when a defendant invokes the
right to self-representation: An error in either direction could be fatal to
a hard-won conviction, and the government bears the burden of proving
that a waiver of the right to counsel was valid.36
To be valid, a defendant’s waiver of the right to counsel must be:
(1) clear and unequivocal; (2) knowing, intelligent, and voluntary; (3)
timely and not for purposes of delay; and (4) the defendant must be
competent to waive the right. This article will not review each of these
basic requirements in depth; rather, it will focus on the challenges specific
to tax defiers and sovereign citizens, because their statements and beliefs
can affect a district court’s determination as to each of the necessary
factors.

A. Faretta hearings
Because the “dangers and disadvantages of self-representation dur-
ing trial are so substantial,” a court must make a “searching or formal
inquiry” permitting a defendant to waive the right to counsel.37
A district court should hold a Faretta hearing anytime a defendant is
arguably invoking the right to self-representation. But sovereign-citizen
defendants can make such a hearing difficult. They may refuse to answer
questions, even basic ones such as their name, age, or education. They may
give non-responsive answers repeating nonsensical claims or challenging
the district court’s jurisdiction. They may “foil a district court’s best
efforts to engage in dialogue, thereby preventing the court from eliciting

34 Freeman v. Pierce, 878 F.3d 580, 588 (7th Cir. 2017).

35 Meeks v. Craven, 482 F.2d 465, 468 (9th Cir. 1973).
36 United States v. Stanley, 739 F.3d 633, 644 (11th Cir. 2014).
37 Hill v. Curtin, 792 F.3d 670, 677 (6th Cir. 2015) (en banc).

134 DOJ Journal of Federal Law and Practice December 2023

clear information regarding the defendant’s understanding of the dangers
of proceeding pro se.”38
In such cases, courts have sometimes approved of a “Faretta-like mono-
logue,” during which the district court advises the defendant of the po-
tential penalties and the risks and challenges faced by a pro se litigant.39
Essentially, the monologue conveys all the information and warnings nec-
essary, without any back-and-forth with the defendant. But the court
must still make all necessary findings regarding the clarity of the waiver:
whether it is knowing and intelligent, whether the defendant is compe-
tent to waive the right to counsel, and whether the request is timely,
to support its conclusion that the defendant’s waiver is or is not valid.
The ultimate question is not what the district court said, but what the
defendant understood.40
Alternatively, if a defendant refuses to participate in the colloquy, such
that “his own actions do[] not permit the court to ascertain whether a
waiver is knowing or voluntary, or even if he means to waive at all,” the
court may properly end the colloquy.41 In such circumstances, a defendant
“cannot use the court’s failure to acknowledge the waiver later to take a
mulligan and try his case again if he loses.”42
When a defendant seeks to frustrate the hearing (and the judge),
prosecutors should ensure that the district court provides all the necessary
information about the charges and potential sentences, that all the court’s
statements are accurate and complete, and that the court gives all the
necessary warnings. It is also important to confirm that the court makes
explicit findings on the record. Because there is no general mechanism to
cure a defective Faretta hearing after the fact,43 vigilance and attention
to detail at the hearing are critical.

38 United States v. Garey, 540 F.3d 1253, 1267 (11th Cir. 2008).
39 Id. at 1267–68.
40 United States v. Johnson, 980 F.3d 570, 578 (7th Cir. 2020);
United States v. Hansen, 929 F.3d 1238, 1252 (10th Cir. 2019); United States v. Stan-
ley, 739 F.3d 633, 645 (11th Cir. 2014); United States v. Kimmel, 672 F.2d 720, 722
(9th Cir. 1982).
41 United States v. Pryor, 842 F.3d 441, 451 (6th Cir. 2016).
42 Id.
43 United States v. Stanley, 739 F.3d 633, 646 (11th Cir. 2014) (because “[a] defen-
dant’s waiver must be knowing and voluntary at the time pro se representation is first
permitted[,] the fact that a defendant later became aware of the consequences of his
decision may not cure a waiver that was initially unknowing”; however, a reviewing
court “may look to subsequent events during a trial as evidence of what would have
been true when a defendant first waived his rights”).

December 2023 DOJ Journal of Federal Law and Practice 135

B. Clear and unequivocal
A waiver is not valid if a defendant does not clearly and unequivocally
assert his right to represent himself. One pitfall of convoluted and even in-
coherent sovereign-citizen rhetoric is that it can be difficult to understand
what a defendant is saying. Add to that the fact that such defendants of-
ten hem and haw and hedge, refusing to state clearly whether they want
to represent themselves; use the term “counsel” to refer to non-attorney
assistance; or simply contradict themselves. It can be tricky to determine
whether a defendant “clearly and unequivocally” invoked the right to
self-representation. Indeed, the courts have long recognized that “shrewd
litigants can exploit this difficult constitutional area by making ambigu-
ous self-representation claims to inject error into to the record.”44
Although different circuits have different ways of articulating the stan-
dard, it is generally the case that merely filing pro se motions,45 asking to
“fire” your attorney,46 expressing dissatisfaction with counsel or request-
ing new counsel,47 or asking for standby counsel48 does not constitute an
unequivocal waiver of the right to counsel. Nor is a conditional request
to represent oneself an unequivocal waiver.49 That said, because there is
no right to have appointed counsel of your choice, “an uncooperative de-
fendant” may waive the right to counsel by refusing “the only counsel to
which he is constitutionally entitled, understanding his only alternative
is self-representation with its many attendant dangers.”50

44 Cross v. United States, 893 F.2d 1287, 1290 (11th Cir. 1990);
United States v. Frazier-El, 204 F.3d 553, 559 (4th Cir. 2000); Bilauski v. Steele, 754
F.3d 519, 522–23 (8th Cir. 2014).
45 United States v. Miles, 572 F.3d 832, 837 (10th Cir. 2009).
46 United States v. Long, 597 F.3d 720, 725 (5th Cir. 2010).
47 Frazier-El, 204 F.3d at 559.
48 United States v. Salemo, 81 F.3d 1453, 1460 (9th Cir. 1996).
49 Bolden v. Vandergriff, 69 F.4th 479, 483 (8th Cir. 2023); cf.
United States v. Mendez-Sanchez, 563 F.3d 935, 946 (9th Cir. 2009).
50 United States v. Garey, 540 F.3d 1253, 1266 (11th Cir. 2008); United States v. Tay-
lor, 21 F.4th 94, 103 (3d Cir. 2021); United States v. Owen, 854 F.3d 536, 543
(8th Cir. 2017); United States v. Proctor, 166 F.3d 396, 402 (1st Cir. 1999). A persis-
tent, unreasonable demand for dismissal of counsel can constitute a voluntary waiver.
United States v. Mesquiti, 854 F.3d 267, 272 (5th Cir. 2017). But the court must
ensure that a defendant’s objections to counsel are not such that he has the right
to new counsel; a waiver of counsel is not valid if the defendant is being forced to
choose between representing himself and being represented by incompetent counsel.
United States v. Taylor, 113 F.3d 1136, 1140 (10th Cir. 1997). The district court can-
not foist an unwilling attorney on an unwilling defendant. United States v. Barton,
712 F.3d 111, 118-19 (2d Cir. 2013); see also United States v. Peppers, 302 F.3d 120,
132–33 (3d Cir. 2002).

136 DOJ Journal of Federal Law and Practice December 2023

 A defendant’s ambiguous or unclear statements must be viewed in the
context of the whole colloquy: A defendant on appeal may try to point to
a single statement and claim that it proves his waiver was not clear or un-
equivocal. For example, the defendant in United States v. Banks claimed
that he did not clearly invoke his right to represent himself because when
the district court asked if he wanted to represent himself, he responded,
“No. I am here in propria persona.”51 But the appellate court found that,
“in context of the remainder of the colloquy,” it was clear that he “was
preoccupied with making his sovereign-citizen defendant known to the
court,” and clearly intended to waive counsel.52
A court may end the colloquy when a defendant repeatedly refuses
to give a straight answer to the question whether he wishes to represent
himself or have counsel, because such conduct is “a rejection of further
inquiry into his waiver of counsel.”53 Some courts have found that when
a defendant also rejects the court’s authority, demands to fire the judge
or the prosecutor, or otherwise engages in other similar conduct, this
represents “a generally rebellion against the system trying him” rather
than a true assertion of the right to proceed pro se.54 A defendant’s refusal
to participate in the proceedings may even justify denying the defendant’s
request for self-representation if the conduct demonstrates a defendant’s
intent to disrupt and obstruct the proceedings.55
But a court must not be too hasty, rejecting a request at the first
sign of equivocation. It is “incumbent on the courts to elicit that elevated
degree of clarity through a detailed inquiry.”56 “That is, the triggering
statement in a defendant’s attempt to waive his right to counsel need not
be punctilious; rather, the dialogue between the court and the defendant

51 United States v. Banks, 828 F.3d 609, 616 (7th Cir. 2016).
52 Id.
53 United States v. Pryor, 842 F.3d 441, 449 (6th Cir. 2016).
54 United States v. Long, 597 F.3d 720 (5th Cir. 2010); see also Pryor, 842 F.3d at
451.
55 United States v. Atkins, 52 F.4th 745, 751 (8th Cir. 2022). In Atkins, the defendant
interrupted, argued with the court, insisted that the trial was not going to happen,
and behaved in such an unruly manner that he had to be removed from the courtroom.
The district court found that Atkins’ “disruptive behavior and refusal to participate
in the proceedings was ‘volitional and tactical or strategic in nature’ and ‘done for
effect.’” See also United States v. Hausa, 922 F.3d 129, 135–36 (2d Cir. 2019) (per
curiam) (“[The defendant’s] obstruction is independent support for the denial of his
purported waiver of counsel. [His] misconduct was egregious and intolerable by any
measure: he hummed and screamed, and rambled incoherently; he cursed at the judge,
declared him an enemy and threatened to kill him.”).
56 United States v. Proctor, 166 F.3d 396, 396 (1st Cir. 1999).

December 2023 DOJ Journal of Federal Law and Practice 137

must result in a clear and unequivocal statement.”57
This may require patience and persistence on the court’s part. As in
Hakim, some defendants will equivocate until warned that they will not
be allowed to represent themselves unless they state so unambiguously
and without qualifications. When a defendant is so warned and continues
to give non-responsive answers, the court may properly terminate the
colloquy and appoint counsel.58
In any case, a court should make explicit findings that a defendant’s
request was or was not clear and unequivocal. If there are any concerns
on this point, prosecutors should ask clarifying questions and ensure that
pertinent facts are clear on the record.

C. Competence, knowledge, and intelligence

A sovereign-citizen’s nonsensical statements and legal theories can
complicate the district court’s determination that a defendant is compe-
tent to waive the right to counsel and that the waiver is knowing, intelli-
gent, and voluntary. Prosecutors should be prepared to explain to judges
who have not encountered these sorts of defendants before that their non-
sensical pronouncements about jurisdiction, contracts, or the law do not
bar those defendants from representing themselves.
The competence required is the competence to waive the right, not
the competence to effectively represent oneself at trial.59 A defendant’s
“’technical legal knowledge’ is ‘not relevant’ to the determination whether
he is competent to waive his right to counsel.”60 Generally, a defendant
who is competent to stand trial is competent to proceed pro se.61
Likewise, the knowledge and intelligence necessary to validly waive
the right to counsel is not the knowledge necessary to conduct a trial. A
defendant must simply understand the nature of the right she is waiving.
That is, a defendant must understand the nature of the charges, the pos-
sible penalties, and the dangers and disadvantages of self-representation.
A defendant must understand that he has the right to appointed counsel

57 Id.
58 Pryor, 842 F.3d at 450.
59 Godinez v. Moran, 509 U.S. 389, 399 (1993).
60 Id. at 400 (quoting Faretta v. California, 422 U.S. 806, 836 (1975)).
61 Id. at 399–400. “There is a narrow class of cases in which a defendant may not
be competent to represent himself at trial, but there is no evidence of such circum-
stances here. The United States Supreme Court has explained that a ‘right of self-
representation at trial will not affirm the dignity of a defendant who lacks the mental
capacity to conduct his defense without the assistance of counsel.’” Imani v. Pollard,
826 F.3d 939, 946 (7th Cir. 2016) (quoting Indiana v. Edwards, 554 U.S. 164, 176
(2008)).

138 DOJ Journal of Federal Law and Practice December 2023

if he can’t afford an attorney, and the many benefits of being represented
by an attorney. He must understand that he will be expected to meet the
standards of an attorney in terms of courtroom procedure and conduct
and will be bound by the rules of evidence and criminal procedure.62 But
he need not know how to conduct an effective defense.
District courts may be puzzled when confronted with a defendant
spouting sovereign-citizen arguments; some courts may be tempted to rely
on such arguments to find a waiver invalid because the defendant’s reason
for wanting to represent himself is to permit him to mount a frivolous and
likely futile defense, or because the defendant’s outlandish beliefs indicate
that she cannot knowingly have waived her right to counsel.
Fortunately, courts often recognize this rhetoric for what it is—part
of an intentional strategy to obstruct and delay proceedings. But if a dis-
trict court is concerned about letting a defendant represent themselves
because of their frivolous theories, prosecutors may need to remind the
court that “adherence to bizarre legal theories, whether they are ‘sincerely
held’ or ‘advanced only to annoy the other side,’ does not ‘imply men-
tal stability or concrete intellect so deficient that trial is impossible.”63
“[V]oluminous filings of nonsensical pleadings do not create per se serious
doubt about competency.”64 In other words, “weird legal views [do] not
imply incompetence.”65
On appeal, these defendants may also point to their strange pro-
nouncements as evidence that they did not understand the nature of
the proceedings or otherwise did not validly waive their right to counsel.
But their outlandish contentions are “part and parcel” of sovereign-citizen
defenses, and their “purported confusion about the nature of the proceed-
ings” is a tactic.66 Here, a district court’s explicit factual findings can be
invaluable; while the validity of a waiver is reviewed de novo, the court’s
“front-row perspective” is given more deference.67

62 United States v. Hayes, 231 F.3d 1132, 1138 (9th Cir. 2000);
United States v. Hansen, 929 F.3d 1238, 1257-1258 (10th Cir. 2019).
63 United States v. Jonassen, 759 F.3d 653, 660 (7th Cir. 2014) (quoting
United States v. James, 328 F.3d 953, 955 (7th Cir. 2003)).
64 United States v. Neal, 776 F.3d 645, 657 (9th Cir. 2015).
65 United States v. James, 328 F.3d 953, 955 (7th Cir. 2003).
66 United States v. Jones, 65 F.4th 926, 930 (7th Cir. 2023) (finding defendant “can
make a clear-eyed tactical decision to mount a sovereign citizen defense.”); Neal, 776
F.3d at 657; see also United States v. Coleman, 832 F.App’x 876, 880 (5th Cir. 2020)
(“As the Government correctly observes, by asserting force, coercion, and duress, Cole-
man was simply repeating a phrase that was a standard part of his jurisdictional chal-
lenge to the court’s authority. Coleman’s reiteration of this phrase does not establish
that his decision to proceed pro se was involuntary.”).
67 Id. at 931.

December 2023 DOJ Journal of Federal Law and Practice 139

 Sovereign-citizen defendants often wish to represent themselves be-
cause they want to present a defense based on their purported beliefs,
but their counsel, quite rightly, balk at making these frivolous and base-
less arguments in court. This is no bar to self-representation. “Only in
rare cases will a trial judge view a defendant’s choice to represent himself
as anything other than foolish or rash . . .. But in the end a competent
defendant has a constitutional right to represent himself even if the judge
thinks the defendant has no good reason to do so.”68 Courts have upheld
the waivers of defendants who sought to represent themselves “in order
to make [their] sovereign-citizen defense that the court lacked jurisdic-
tion over [them].”69 Such a waiver is a “strategic decision” to allow the
defendant to peruse the case in their own way.70
Indeed, the merits of a defendant’s arguments have no bearing on
whether they are capable of appreciating the risks and consequences of
self-representation.71 Courts should not focus on the merits of the de-
fendant’s sovereign-citizen arguments or whether the defendant can effec-
tively represent herself.72 As the Ninth Circuit bluntly put it: “The record
clearly shows that the defendants are fools, but that is not the same as
being incompetent. Under both Faretta and Edwards, they had the right
to represent themselves and go down in flames if they wished, a right the
district court was bound to respect.”73

D. Timely and not for purposes of delay

Sovereign-citizen defendants may use requests to waive their right to
counsel (or revoke that waiver) to delay the proceedings. A request to
represent oneself is generally considered timely if made before the jury
is impaneled,74 but this rule is not absolute: An earlier request may be
untimely, and a defendant may assert the right to self-representation later

68 Imani v. Pollard, 826 F.3d 939, 945 (7th Cir. 2016). See also United States v. Eng-
land, 507 F.3d 581, 587 (7th Cir. 2007) (defendant argued that district court shouldn’t
have let him represent himself because he was committed to presenting frivolous legal
theories, but that’s not relevant to his competence.).
69 United States v. Banks, 828 F.3d 609, 615 (7th Cir. 2016).
70 Id. See also United States v. Kiderlen, 569 F.3d 358, 368 (8th Cir. 2009) (defen-
dant’s choice to “employ an unorthodox defense” was “a tactical and sophisticated
response to his legal situation.”).
71 United States v. Taylor, 21 F.4th 94, 102 (3d Cir. 2021).
72 United States v. Atkins, 52 F.4th 745, 750 (8th Cir. 2022).
73 United States v. Johnson, 610 F.3d 1138, 1140 (9th Cir. 2010).
74 United States v. Simpson, 845 F.3d 1039, 1053 (10th Cir. 2017).

140 DOJ Journal of Federal Law and Practice December 2023

in the proceedings.75
Courts should consider all relevant factors, including whether the de-
fendant is also requesting a continuance and for how long, as well as
whether the defendant has previously received numerous continuances
and how close to the trial the request is made.76 The court may consider
whether the defendant has repeatedly changed attorneys, how long the de-
fendant has been represented by counsel and whether the defendant has
previously complained about the quality of her representation.77 Other
factors include whether the defendant could reasonably have asserted the
right earlier or had good reasons not to do so, and whether the defendant
has generally been cooperative or obstreperous.78
In United States v. Atkins, for example, the district court properly
denied the defendant’s request to proceed pro se because it found that
his “disruptive behavior and refusal to participate in the proceedings was
‘volitional and tactical or strategic in nature’ and ‘done for effect,’” and
that the defendant was “‘simply trying to obstruct the proceedings.’”79
And where a defendant previously engaged in disruptive conduct or re-
fused to engage with the proceedings, a court may reasonably condition
a waiver on a “demonstration or promise that the conduct” will not re-
occur.80 If a district court denies a request for self-representation on the
grounds that it was untimely or made for the purpose of delay, it is es-
sential to have clear factual findings about the defendant’s intent. And if
the basis for the denial is the defendant’s pretrial conduct, the conduct

75 United States v. Edelmann, 458 F.3d 791, 809 (8th Cir. 2006) (request five days
before trial found untimely under “special facts of this case.”); United States v. Tucker,
451 F.3d 1176, 1181–82 (10th Cir. 2006) (request six days before trial untimely).
76 United States v. Mackovich, 209 F.3d 1227, 1237 (10th Cir. 2000);
United States v. Kelley, 787 F.3d 915, 918 (8th Cir. 2015); United States v. Smith,
413 F.3d 1253, 1280–81 (10th Cir. 2005). However, the mere fact that there may be a
delay is insufficient to deny a defendant’s request to proceed pro se; the request must
be made for the purpose of delaying the proceedings. Tucker, 451 F.3d at 1181–82.
77 United States v. Betancourt-Arretuche, 933 F.2d 89, 96 (1st Cir. 1991); Edelmann,
458 F.3d 791, 809 (8th Cir. 2006).
78 Tucker, 451 F.3d at 1181–82. On the flip side, a pro se defendant’s request to reap-
point counsel may be denied if the reappointment would require delay, particularly if
the delay is necessitated by defendant’s previous refusal to communicate with standby
counsel, see United States v. Coleman, 832 F.App’x 876, 881 (5th Cir. 2020). A defen-
dant is “not entitled to choreograph special appearances by counsel, or repeatedly to
alternate his position on counsel in order to delay his trial or otherwise obstruct the
orderly administration of justice. . . . or repeatedly alternate his position on counsel
in order to delay his trial. ” United States v. Taylor, 933 F.2d 307, 311 (5th Cir. 1991)
(quoting McKaskle v. Wiggins, 465 U.S. 168, 183 (1984)).
79 United States v. Atkins, 52 F.4th 745, 751 (8th Cir. 2022).
80 United States v. Pryor, 842 F.3d 441, 450 (6th Cir. 2016).

December 2023 DOJ Journal of Federal Law and Practice 141

must be such that it “affords a strong indication that the defendant will
disrupt the proceedings in the courtroom.”81

IV. Litigating against the pro se defendant

The Faretta hearing is over. The judge (hopefully) asked all the right
questions to determine whether the defendant’s waiver of his right to
counsel was knowing, voluntary and intelligent. So, what happens next?
How will a defendant with no legal training navigate the rules of criminal
procedure and evidence? What if the defendant changes his mind and
wants to go back to having a lawyer? What should the judge do if the
defendant attempts to use his pro se status to obstruct the proceedings?
And how exactly do you produce discovery, negotiate a plea, or conduct
a trial when a defendant doesn’t have an attorney?
The remainder of this article will address a variety of legal and practi-
cal issues that may arise when litigating against a pro se defendant, both
in the pretrial phase and during the trial. With their lack of legal knowl-
edge and their tendency to advance inadmissible evidence or arguments,
pro se defendants can be frustrating opponents, so it is important to be
prepared and patient as you navigate the challenges posed by these cases.

A. Appointment of standby counsel

At the conclusion of the Faretta hearing, after making the appropri-
ate findings and ruling that the defendant may proceed pro se, the court
should appoint standby counsel. If the court does not appoint standby
counsel on its own, the government should request that the court do
so because the presence of standby counsel benefits everyone. Standby
counsel can assist the pro se defendant with procedural matters, advise
on trial strategy, and generally promote a speedy and efficient trial. Ad-
ditionally, because the defendant will have an attorney by his side during
the trial, appointment of standby counsel can reduce the impression that
the government, with its trial table staffed with prosecutors and agents
and paralegals, is ganging up against the defendant.
But as the cautionary tale of Hakim illustrates, the appointment of
standby counsel can never be a substitute for a proper Faretta hearing.82
As described above, the court must first conduct the required colloquy

81 United States v. Smith, 830 F.3d 803, 810 (8th Cir. 2016) (emphasis added) (citing
United States v. Flewitt, 874 F.2d 669, 674 (9th Cir. 1989)).
82 United States v. Padilla, 819 F.2d 952, 959–60 (10th Cir. 1987) (holding that
“presence of advisory counsel in the courtroom or the defendant’s acquiescence in
counsel’s participation does not, by itself, relieve the district court of its responsibility
to ensure that defendant’s waiver of counsel is knowingly and intelligently made”).

142 DOJ Journal of Federal Law and Practice December 2023

with the defendant and conclude that the defendant has knowingly, vol-
untarily, and intelligently waived his right to counsel. The court cannot
skip that step and then appoint standby counsel under the theory that the
presence of standby counsel adequately protects the defendant’s rights.83
Although it is best practice for the court to appoint standby counsel
in every case where a defendant is representing himself, a defendant does
not have a constitutional right to standby counsel and appointment of
standby counsel is within the court’s discretion.84 This has several im-
portant implications. First, the court can appoint standby counsel over
the defendant’s objection.85 Second, a defendant does not have a right
to standby counsel of his choosing.86 Of course a court, in its discretion,
may entertain a defendant’s request to appoint a different individual as
standby counsel, but the failure to do so would not constitute reversible
error. Finally, courts have held that a defendant does not have a right to
the assistance of a non-lawyer “legal advisor” during trial.87 A defendant
may consult whomever he chooses in preparing his defense, but he has no
right to insist that the individual sit at counsel table.
So, what can standby counsel do? And is there anything he cannot
do? Generally, standby counsel can attend hearings with the defendant,
advise him on what motions to file, assist with filing those motions, re-
view the government’s discovery productions, suggest trial strategies the
defendant might pursue, advise the defendant on the merits of a proposed
plea agreement, sit next to the defendant at trial, suggest objections or
cross-examination questions, and much more. But there are important
boundaries that standby counsel cannot cross. Standby counsel cannot:
(1) interfere with the defendant’s “actual control over his defense”; or (2)
“undermine[ the defendant’s] appearance before the jury in the status of
a pro se defendant.”88 The government must be vigilant during trial and
object if it appears that standby counsel is crossing this line and there is

83 See Taylor, 933 F.2d at 312 (“Given the limited role that a standby attorney plays,
we think it clear that the assistance of standby counsel, no matter how useful to the
court or the defendant, cannot qualify as the assistance of counsel required by the
Sixth Amendment.”).
84 United States v. Cohen, 888 F.3d 667, 680 (4th Cir. 2018); United States v. More-
land, 622 F.3d 1147, 1155 (9th Cir. 2010); United States v. Webster, 84 F.3d 1056,
1063 (8th Cir. 1996); United States v. Bertoli, 994 F.2d 1002, 1017 (3d Cir. 1993);
United States v. Moya-Gomez, 860 F.2d 706, 741 (7th Cir. 1988); United States v. Mar-
tin, 790 F.2d 1215, 1218 (5th Cir. 1986).
85 Faretta v. California, 422 U.S. 806, 835 n.46 (1975).
86 Cohen, 888 F.3d at 680; Webster, 84 F.3d at 1063; United States v. Mills, 895 F.2d
897, 904 (2d Cir. 1990).
87 Martin, 790 F.2d at 1218.
88 McKaskle v. Wiggins, 465 U.S. 168, 185 (1984).

December 2023 DOJ Journal of Federal Law and Practice 143

a risk that the jury will be led to believe that standby counsel is actually
representing the defendant. In pretrial hearings and other proceedings
outside the presence of the jury, standby counsel may be permitted a
larger role, and the Supreme Court has declined to place a “categorical
bar on participation by standby counsel in the presence of the jury,” but
in general it is crucial that standby counsel confine himself to an advisory
role rather than that of an advocate in order to avoid running afoul of
the defendant’s right to represent himself.89
Finally, the Supreme Court held in McKaskle v. Wiggins that “Faretta
does not require a trial judge to permit ‘hybrid’ representation,” whereby
the defendant “choreograph[s] special appearances by counsel” while re-
taining control over other aspects of his defense.90 In other words, a pro se
defendant does not have a right to an attorney co-counsel. However, sub-
ject to the limits set forth in McKaskle, the nature and extent of standby
counsel’s participation in the case is generally left to the discretion of the
trial judge.

B. Re-assertion of the right to counsel

A defendant’s decision to proceed pro se need not be final. Confronted
by voluminous discovery or the daunting task of preparing for trial, a
defendant may wisely conclude that she would be better served by the
representation of trained counsel instead of going it alone. In such circum-
stances, the defendant may withdraw her waiver of the right to counsel
and request that she either be permitted to retain an attorney or, if in-
digent, that the court appoint counsel.91 A defendant who represented
herself at trial may also be permitted to reassert her right to counsel
after trial and request that an attorney represent her at sentencing.92
However, a defendant’s ability to reassert the right to counsel is not
without limitations.93 If the trial judge has “some basis for concluding
that a defendant is attempting to delay or obstruct the proceeding” by
requesting counsel after previously waiving that right, the court can deny
his request.94 In making that determination, the court must examine
whether the appointment of counsel would actually cause a delay.95 If,

89 See id. at 182, 188.

90 Id. at 183.
91 United States v. Pollani, 146 F.3d 269, 273 (5th Cir. 1998); Horton v. Dugger, 895
F.2d 714, 716 (11th Cir. 1990).
92 United States v. Robinson, 913 F.2d 712, 718 (9th Cir. 1990); United States v. Hol-
men, 586 F.2d 322, 324 (4th Cir. 1978).
93 Pollani, 146 F.3d at 273.
94 United States v. Smith, 895 F.3d 410, 421 (5th Cir. 2018).
95 Id. at 422.

144 DOJ Journal of Federal Law and Practice December 2023

for example, the defendant has standby counsel who is familiar with the
facts of the case and would be able to immediately assume representation
of the defendant, it may be error for the trial court to deny the defen-
dant’s request for counsel.96 On the other hand, a defendant should not
be permitted to “repeatedly alter[] his position on counsel to achieve de-
lay or obstruct the orderly administration of justice.”97 Therefore, where
a defendant changes his mind multiple times and keeps waiving and then
re-asserting his right to counsel, a court can find that he is seeking to
delay the proceedings and deny his request to change his representation
status.
One set of circumstances where a court may deny a defendant’s request
to reassert his right to counsel is where the defendant states that he
desires representation but rejects the attorney appointed by the court. In
some cases, the defendant may seek a different court-appointed counsel;
in others, he may engage in a seemingly endless search for an attorney
of his own choosing. This is not uncommon in tax defier and sovereign-
citizen cases, where licensed attorneys might consider themselves ethically
barred from making the types of frivolous arguments advanced by their
clients and therefore the defendant keeps “testing” new attorneys to find
one who will make these arguments. In such cases, it may be permissible
for the court to force the defendant to choose between proceeding pro se
and proceeding with the attorney appointed by the court.98 As with many
other aspects of the right to self-representation, the decision whether to

96 Id. (finding that the trial court erred in denying defendant’s request to re-assert
his right to counsel where standby counsel was present in courtroom and familiar with
case).
97 Pollani, 146 F.3d at 273 (citing United States v. Taylor, 933 F.2d 307, 311
(5th Cir. 1991)).
98 United States v. Welty, 674 F.2d 185, 188 (3d Cir. 1982) (“If the district court has
made the appropriate inquiries and has determined that a continuance for substitu-
tion of counsel is not warranted, the court can then properly insist that the defendant
choose between representation by his existing counsel and proceeding pro se.”); Mc-
Kee v. Harris, 649 F.2d 927, 931 (2d Cir. 1981) (holding that defendant may be asked
to choose between his current attorney or waiver of his right to counsel); Wilks v. Is-
rael, 627 F.2d 32, 35 (7th Cir. 1980) (same); Maynard v. Meachum, 545 F.2d 273, 278
(1st Cir. 1976) (“A criminal defendant may be asked, in the interest of orderly pro-
cedures, to choose between waiver and another course of action as long as the choice
presented to him is not constitutionally offensive.”). See also Lockett v. Arn, 740 F.2d
407, 413 (6th Cir. 1984) (“Although a criminal defendant is entitled to a reasonable
opportunity to obtain counsel of his choice, the exercise of this right must be balanced
against the court’s authority to control its docket.”); United States v. Udey, 748 F.2d
1231, 1242–43 (8th Cir. 1984) (holding that the right to assistance of counsel does
not imply the absolute right to counsel of one’s choice, the court denied a request to
appoint an attorney who shared the defendant’s beliefs in this country’s tax laws).

December 2023 DOJ Journal of Federal Law and Practice 145

place the defendant in this position is highly dependent on the facts of
the case and courts should act cautiously before forcing a defendant to
choose between self-representation and his current attorney.

C. Termination of the right to self-representation

The right to self-representation “is not absolute.”99 Therefore, there
are circumstances in which a court may terminate a defendant’s self-
representation and impose court-appointed counsel over the defendant’s
objection. Notably, the trial judge may terminate a defendant’s self-
representation where the defendant “deliberately engages in serious and
obstructionist misconduct.”100
However, as with other aspects of pro se representation, tread carefully
in this area. A court should not terminate a defendant’s self-representation
merely because it is inconvenient or annoying for the court. In 2016, the
Eighth Circuit vacated a defendant’s tax convictions after the trial court
denied the defendant the right to represent himself because of a concern
that the defendant would advance improper arguments at trial.101 The
Eighth Circuit explained:
Repeated, frivolous challenges to the court’s jurisdiction, to
the government’s authority to prosecute, or to the validity
of the federal laws defendant is charged with violating, are
not disruptive or defiant in this sense—unless they threaten
to forestall pretrial or trial proceedings. The proper judicial
response is repeated denials and lesser sanctions if necessary.
Ultimately, frivolous behavior at trial is likely to result in
an adverse jury reaction, but defendants have “the right to
represent themselves and go down in flames if they wish[ ], a
right the district court [is] required to respect.”102
The Eighth Circuit also gave examples of conduct that would rise to
the level of “serious and obstructive,” and would therefore justify revok-
ing a defendant’s right to represent himself, such as using subpoenas to

99 Indiana v. Edwards, 554 U.S. 164, 171 (2008).

100 Faretta v. California, 422 U.S. 806, 834 n.46 (1975). See also Illinois v. Allen, 397
U.S. 337, 343 (1970) (holding “that that a defendant can lose his right to be present at
trial if, after he has been warned by the judge that he will be removed if he continues
his disruptive behavior, he nevertheless insists on conducting himself in a manner so
disorderly, disruptive, and disrespectful of the court that his trial cannot be carried
on with him in the courtroom”).
101 United States v. Smith, 830 F.3d 803, 805 (8th Cir. 2016).
102 Id. at 810 (quoting United States v. Reed, 668 F.3d 978, 986 (8th Cir. 2012)). See
also United States v. Flewitt, 874 F.2d 669, 674 (9th Cir. 1989) (lack of preparation
for trial is not a basis for termination of the right to self-representation).

146 DOJ Journal of Federal Law and Practice December 2023

harass witnesses, interrupting the judge and prosecutor during trial, and
physically threatening a defense attorney.103
If the court determines that the defendant can no longer proceed pro
se, the court must appoint an attorney to represent the defendant. This
is one of the many benefits of standby counsel; if there is an attorney
already familiar with the case ready to step in and represent the defendant
whose self-representation was terminated, there is less of a risk that the
appointment of counsel will result in a delay of the proceedings.

D. Practical pretrial considerations

1. Communication with pro se defendants
When a defendant is representing himself, if may be necessary to com-
municate with him regarding case-related matters, including discovery
productions, plea negotiations, trial scheduling, proposed jury instruc-
tions, etc. If these contacts occur over the phone or in person, prosecutors
should ensure that a witness—ideally a case agent—is present to docu-
ment the communication. Every conversation should be followed with a
letter confirming the content of the conversation, as well as who partici-
pated in or witnessed it.
The presence of the witness serves two purposes. First, to the extent
the defendant makes any incriminating statements, the witness can record
them and potentially testify as to them later. Second, the presence of a
witness protects the prosecutor in case the defendant later claims that
the prosecutor made certain promises or representations that she did not
make. Ideally, the prosecutor should ask the defendant to provide an email
address for purposes of case-related communications. This eliminates the
need for a witness and ensures that all statements by the defendant and
representations by the prosecutor are memorialized in their own words.
In some circumstances—particularly where a pro se defendant is incar-
cerated pending trial—it may be appropriate to utilize standby counsel as
a conduit for providing information to the defendant (such as a proposed
plea agreement) or soliciting information from the defendant (such as his
views on proposed jury instructions). Generally, using standby counsel
in this way will not run afoul of McKaskle because it does not interfere
with the defendant’s “actual control over his defense.” For example, at
least one court has held that the government did not violate the defen-
dant’s right to self-representation when it engaged in plea discussions with
standby counsel because standby counsel was not serving as “anything

103 Id. at 811.

December 2023 DOJ Journal of Federal Law and Practice 147

other than an emissary for” the defendant.104 The Fifth Circuit found
that “[b]y serving as an intermediary, standby counsel merely ‘assist[ed
the defendant] in overcoming routine obstacles that st[ood] in the way of
the defendant’s achievement of his own clearly indicated goals.’”105

2. Producing discovery
In general, a defendant has a right to review materials that are pro-
duced in discovery.106 This is particularly important for pro se defen-
dants because, as the Supreme Court has held, “a defendant’s right to
self-representation plainly encompasses,” among other things, the right
“to control the organization and content of his own defense.”107 A pro
se defendant cannot formulate trial strategy without access to the gov-
ernment’s discovery production. For that reason, when the government
produces discovery pursuant to Rule 16, Brady, Giglio, and the Jencks
Act, the government should make the production directly to the defen-
dant and send a copy to standby counsel.
Production of discovery to a pro se defendant is more complicated,
however, when a defendant is incarcerated pending trial. The facility in
which the defendant is held may limit access to the volume of materials a
defendant may keep in his cell, for example. Some facilities may permit a
defendant the use of a computer to view electronic evidence, while others
do not. There may even be rules about whether paper records can include
binder clips or staples. Prior to producing discovery, the prosecutor should
contact the facility in which the defendant is being held to determine the
best way to produce discovery.108
Recognizing that prisons may have regulations that necessarily will
limit a defendant’s possession of or access to discovery materials, courts
have held that while a pro se defendant has the right to control the or-
ganization and content of his own defense, including the right to review
discovery, a defendant does not necessarily have a right to possess all dis-
covery materials in pretrial detention.109 Federal Rule of Criminal Proce-

104 United States v. Mamoth, 47 F.4th 394, 401 (5th Cir. 2022).
105 Id. (quoting McKaskle v. Wiggins, 465 U.S. 168, 184 (1984)).
106 United States v. Truong Dinh Hung, 667 F.2d 1105, 1108 (4th Cir. 1981).
107 McKaskle, 465 U.S. at 174.
108 Sometimes, it is necessary to get creative. In one tax case involving a large vol-
ume of electronic evidence, including emails seized from multiple accounts and video
evidence, the Tax Division loaded the materials onto a laptop (which had otherwise
been wiped of all programs and information). The laptop was then provided to the
county jail where the defendant was held pending trial and the defendant was granted
access to the laptop under the supervision of jail personnel.
109 United States v. Sarno, 73 F.3d 1470, 1491 (9th Cir. 1995) (holding that while

148 DOJ Journal of Federal Law and Practice December 2023

dure 16(d)(1) also states that “at any time the court may, for good cause,
deny, restrict, or defer discovery or inspection, or grant other appropriate
relief,” which provides the court with the authority to balance the defen-
dant’s need to prepare for trial against the security considerations in the
facility where the defendant is held.
Because there may be limits imposed on an incarcerated pro se de-
fendant’s access to discovery materials, this is another area where the
appointment of standby counsel can facilitate a fair and efficient trial.
For example, standby counsel can assist the defendant with his review of
the discovery by bringing materials to the jail for the defendant to review,
even if the defendant is not permitted to maintain those materials in his
cell.

3. Serving pleadings
Pro se defendants generally will not have access to CM/ECF. There-
fore, whenever a document is electronically filed in the case, the prosecu-
tor should also cause a copy to be served on the defendant directly, even
though his standby counsel will also receive a copy via CM/ECF. If the
defendant is willing to provide the government with an email address to
use for this purpose, pleadings can be served by email. Otherwise, the
document can be served by Federal Express (FedEx), the United Parcel
Service (UPS), or the United States Postal Service (USPS). FedEx and
UPS are preferred because they are faster than using USPS and because
they provide confirmation of delivery.

E. Practical considerations during trial

1. Preliminary jury instructions
The government should request that the court give a preliminary in-
struction to the jury that explains the fact that the defendant has chosen
to represent himself and directs them not to consider his pro se status

“the Sixth Amendment demands that a pro se defendant who is incarcerated be af-
forded reasonable access to” materials necessary to prepare his defense, that “right of
access is not unlimited, but must be balanced against the legitimate security needs
or resource constraints of the prison). Accord Wolter v. Fed. Public Defenders Of-
fice, et al., No. 21-CV-201, 2021 WL 11644418, at *2 (D. N.Dak. Nov. 17, 2021);
United States v. Bonadore, No. 19-CR-50038, 2021 WL 1516053, at *1 (D. S.Dak.
Apr. 16, 2021); United States v. Youker, No 14-CR-152, 2015 WL 13864159, at *2
(E.D. Wash. Apr. 30, 2015). See also United States v. Ruth, No. 18-CR-4, 2020 WL
3063939, at *3 (W.D.N.Y. June 9, 2020) (“[R]easonable restrictions on Defendant’s
access to the materials in a jail setting are . . . appropriate.”); United States v. Ger-
ard, No. 3:16-CR-270, 2018 WL 4113351, at *3 (W.D.N.C. Aug. 29, 2018) (denying
criminal defendant’s motion to retain and review all discovery materials while in jail).

December 2023 DOJ Journal of Federal Law and Practice 149

in any way. The Third Circuit’s Model Criminal Jury Instructions con-
tain an instruction that can be used for this purpose, which includes the
following language:
(Name of defendant) has decided to represent (himself) (herself) in
this trial and not to use the services of a lawyer. (He) (She) has a consti-
tutional right to do that. (His) (Her) decision has no bearing on whether
(he) (she) is guilty or not guilty, and it must not affect your consideration
of the case.110
Such an instruction provides the jury with an answer to the question
that they will naturally have upon seeing the defendant act as his own
advocate and minimizes the potential that the jury will render a verdict
based on sympathy for the defendant rather than based on the facts of
the case.
A defendant who is proceeding pro se after the court forced him
to choose between court-appointed counsel and self-representation may
make comments about that choice in the presence of the jury. If that oc-
curs, the government should ask the court to give a curative instruction
that reiterates the defendant has a constitutional right to represent him-
self and that the jury should not consider his manner of representation
in its deliberations.
At the outset of trial, the court should also instruct the jury that when
a pro se defendant delivers an opening statement or closing argument,
makes objections, or questions witnesses, his words are not evidence.111 If
the defendant attempts to testify other than under oath from the witness
box, the government may consider requesting that the court provide the
jury with a curative instruction.112

2. Objections
In Faretta, the Supreme Court stressed that “[t]he right of self-represe-
ntation . . . is not a license not to comply with relevant rules of procedural

110 Third Circuit Model Criminal Jury Instructions, No. 1.18 (2021).
111 See Third Circuit Model Criminal Jury Instructions, No. 1.18 (2021). Many cir-
cuits have pattern instructions that explain that statements made by attorneys are not
evidence. See e.g., First Circuit Pattern Criminal Jury Instructions, No. 1.05 (2002);
Fifth Circuit Pattern Jury Instructions, No. 1.01 (2019); Sixth Circuit Pattern Crim-
inal Jury Instructions, No. 1.04(3) (2023). Such instructions can easily be modified to
address statements made by pro se defendants.
112 See Third Circuit Model Criminal Jury Instructions, No. 2.34 (2021) (curative
instruction for improper verbalization by pro se defendant). The instruction reads:
“You just [describe behavior; e.g., heard the defendant speak to the witness]. The
defendant’s statements are not evidence in this case. You must disregard any statement
that the defendant makes in this courtroom unless (he)(she) is testifying as a witness.”

150 DOJ Journal of Federal Law and Practice December 2023

and substantive law.”113 Therefore during the Faretta hearing, the court
will ask the defendant if he is familiar with the Federal Rules of Evidence
and Federal Rules of Criminal Procedure and remind him that those rules
“will not be relaxed for [his] benefit.”114 And yet, it is unreasonable to
believe that a defendant with no legal training or courtroom experience
will be able to comply with these rules to the same extent as an expe-
rienced litigator. For that reason, while judges are not required to relax
the rules of evidence and procedure for pro se defendants, they often do
so.
During trial, the government must make frequent strategic calcula-
tions about when and whether to object to a pro se defendant’s violation
of these rules. For example, what happens if the defendant attempts to
introduce a bank statement, which the government produced in discov-
ery, during the cross examination of a witness from that bank, who the
prosecutor knows is familiar with the document, but the defendant fails
to ask the right questions to establish that the exhibit is authentic or falls
within the business records exception to the hearsay rule? Certainly, the
prosecutor could object, citing hearsay and lack of foundation. But should
she object? Maybe. Or maybe not. Frequent objections—particularly on
technical grounds—can make the prosecutor appear to the jury as if she is
bullying the defendant. Therefore, it is often prudent to reserve objects for
irrelevant lines of inquiry or documents that the prosecutor knows should
not be admitted into evidence, while allowing more technical violations
of the rules to slide.

3. Testimony by pro se defendants

When a defendant is represented by counsel and elects to testify in
his own defense, the direct examination proceeds as it would for any
other witness: Defense counsel asks questions and the defendant answers
them, with the government interposing objections as necessary. When a
defendant represents himself and elects to testify, however, attention must
be paid to the manner in which he will testify.
The government should always object to a pro se defendant’s request
to testify in a narrative fashion (as opposed to a question-and-answer for-
mat) because narrative testimony does not provide the government with
an opportunity to make timely objections to any questions where legally
appropriate.115 If the defendant has standby counsel, the preferred man-

113 Faretta v. California, 422 U.S. 806, 834 n.46 (1975).

114 Benchbook for U.S. District Court Judges (March 2013), § 1.02.
115 See United States v. Beckton, 740 F.3d 303, 306 (4th Cir. 2014) (holding that
it was within trial court’s discretion to deny pro se defendant’s request to testify

December 2023 DOJ Journal of Federal Law and Practice 151

ner of taking testimony from a pro se defendant is for him to furnish his
standby counsel with a list of questions and for the standby counsel to
ask them verbatim (even if standby counsel, who is familiar with the rules
of evidence and procedure, knows that one or more questions will draw
objections from the government).116 If standby counsel deviates from the
questions drafted by the defendant, there is a risk that an appellate court
will view this as a violation of the defendant’s right control the organi-
zation and content of his own defense.117 If the defendant does not have
standby counsel, or refuses to cooperate with standby counsel by pro-
viding a list of direct examination questions, another possible solution is
for the defendant to furnish the government with a list of questions in
advance to permit the government to object to particular questions or
lines of inquiry.

V. Conclusion
Preparation and vigilance are the keys to navigating the legal and pro-
cedural minefield that is the right to self-representation. By understanding
Faretta and its progeny and by educating oneself—and the court—on the
logistics of a case involving a pro se defendant, prosecutors can not only
protect their hard-fought convictions, but also ensure an efficient trial
presentation.

About the Authors

Katie Bagley is the Assistant Chief of the Tax Division’s Criminal Ap-
peals and Tax Enforcement Policy Section. She joined the Division as an
Honors Attorney prosecuting criminal tax cases in the Western Criminal
Enforcement Section.

in narrative form); United States v. Schwartz, 315 F.App’x. 412, 416 (3d Cir. 2009)
(same).
116 See United States v. Jones, 452 F.3d 223, 230 n.5 (3d Cir. 2006) (“We have
expressly approved arrangements in which standby counsel advises a pro se defendant,
makes opening or closing statements, and questions the defendant if he testifies in his
own defense.”).
117 In United States v. Hendrickson, 822 F.3d 812 (6th Cir. 2016), a defendant who
represented herself at trial argued that her right to self-representation was violated
when her standby counsel skipped certain direct examination questions that the defen-
dant provided to him to ask during her testimony. Although the Sixth Circuit did not
find that the defendant’s rights were violated by this omission on the particular facts
of the case, it is preferable that standby counsel does not deviate from the questions
drafted by the defendant. If necessary, the propriety of certain questions or lines of
inquiry can be addressed prior to the defendant taking the stand.

152 DOJ Journal of Federal Law and Practice December 2023

Melissa Siskind is the National Director of the Tax Division’s Tax De-
fier Initiative and a Trial Attorney in the Division’s Northern Criminal
Enforcement Section. The Tax Defier Initiative provides training and sup-
port to prosecutors and law enforcement at both the federal and state level
to combat the threat posed by tax defiers and sovereign citizens.

December 2023 DOJ Journal of Federal Law and Practice 153

Page Intentionally Left Blank

154 DOJ Journal of Federal Law and Practice December 2023

A Taxing Dilemma:
Navigating the Crime–Fraud
Exception in Criminal Tax
Cases
Sean Beaty
Senior Litigation Counsel
Tax Division

Wilson Stamm
Trial Attorney
Tax Division

I. Introduction
In criminal tax investigations, experienced prosecutors prioritize de-
veloping strong evidence of the target’s willful violation of the tax laws:
that is, indications that the target intentionally violated their “known
legal duty.”1 Of course, well-resourced targets often hire attorneys to as-
sist them with their tax planning and even the preparation of tax returns
and other documents that will be submitted to the Internal Revenue Ser-
vice (IRS). What should prosecutors do if they discover that an attorney
prepared materially false documents that the target then submitted to
the IRS? What if an attorney unwittingly delivers falsified documents to
the case agents that the target fraudulently altered? What if an attorney
gave the target advice—legal or illegal—regarding the client’s scheme to
willfully evade the tax laws? This article aims to help federal prosecutors
navigate the investigative waters of attorney-adjacent criminal conduct.

II. The attorney–client privilege and the

crime–fraud exception
The attorney–client communication privilege is a well-established rule
of evidence.2 It safeguards the confidentiality of certain communications

1 United States v. Bishop, 412 U.S. 346, 360 (1973).

2 See Mohawk Industries, Inc. v. Carpenter, 558 U.S. 100, 108 (2009) (“We read-
ily acknowledge the importance of the attorney–client privilege, which ‘is one of the

December 2023 DOJ Journal of Federal Law and Practice 155

between an attorney and client, promoting open discussions and candid
advice. To qualify for this privilege, certain elements must be present,
namely: (1) an attorney; (2) a client; (3) a communication; (4) a con-
fidentiality that was anticipated and preserved; and (5) legal advice or
assistance (as opposed to business or personal advice) as the primary
purpose of the communication.3
Despite suppressing the disclosure of evidence that would otherwise
be relevant in any given case, the benefits gained by the attorney–client
communication privilege—that is, the long-term societal benefits it pro-
vides by encouraging quality legal advice and enhancing the effectiveness
of the law—are believed to outweigh its costs.
Relatedly, the attorney work-product doctrine protects “material ob-
tained or prepared by counsel in the course of their legal duties provided
that the work was done with an eye toward litigation.”4 “At its core,
the work-product doctrine shelters the mental processes of the attorney,
providing a privileged area within which he can analyze and prepare his
client’s case.”5 “Where it facially applies, [the attorney work-product doc-
trine] may be overridden if the party that seeks the otherwise protected
materials ‘establish[es] adequate reasons to justify production.’”6
Neither the attorney–client communications privilege nor the attor-
ney work-product doctrine is absolute. The crime–fraud exception applies
equally to both the attorney–client communications privilege and materi-
als protected as attorney work product, so for the purpose of this article,
we refer to these two concepts collectively.

A. The crime–fraud exception

The “crime–fraud exception” holds that communications made be-
tween an attorney and their client, for the purpose of furthering the com-
mission of a future or present crime or fraud, are not protected from

oldest recognized privileges for confidential communications.’”) (quoting Swidler &

Berlin v. United States, 524 U.S. 399, 403 (1998)).
3 See, e.g., Brennan Ctr. for Just. at New York Univ. Sch. of L. v. U. S. Dep’t
of Just., 697 F.3d 184, 207 (2d Cir. 2012); United States v. Nelson, 732 F.3d 504,
518 (5th Cir. 2013); United States v. Sadler, 24 F.4th 515, 557 (6th Cir. 2022);
United States v. Evans, 113 F.3d 1457, 1461 (7th Cir. 1997); United States v. Sanmina
Corporation, 968 F.3d 1107, 1116 (9th Cir. 2020); Knox v. Roper Pump Co., 957 F.3d
1237, 1248 (11th Cir. 2020); Siler v. Environmental Protection Agency, 908 F.3d 1291,
1297 (Fed. Cir. 2018).
4 Drummond Co. v. Conrad & Scherer, LLP, 885 F.3d 1324, 1334-35 (11th Cir. 2018).
5 United States v. Nobles, 422 U.S. 225, 238 (1975).
6 United States v. Christensen, 801 F.3d 970, 1010 (9th Cir. 2015) (quoting Hick-
man v. Taylor, 329 U.S. 495, 512 (1947)).

156 DOJ Journal of Federal Law and Practice December 2023

disclosure by the attorney–client privilege.7 This exception exists to pre-
vent the abuse of the attorney–client relationship and to maintain the
integrity of the legal system. Notably, in most circuits, the crime–fraud
exception does not require the crime or fraud to have occurred; merely
seeking legal assistance for illicit purposes is usually sufficient to trigger
the exception and vitiate the privilege’s protection.8
The purpose of the crime–fraud exception is to remove the privilege
protection from clients who attempt to exploit the attorney–client rela-
tionship. As a result, the primary focus of any crime–fraud inquiry is on
the intent of the client. The law is clear that the criminal or fraudulent
intentions of the client alone can override the privilege protection. It is
neither necessary nor sufficient for the opponent of the privilege to prove
that the attorney was aware of or involved in the client’s criminal conduct.
Importantly, application of the crime–fraud exception hinges on the
connection between the client’s communication and their wrongful con-
duct. Specifically, only those communications that a court deems to have
been prepared in furtherance of criminal or fraudulent conduct fall under
the exception. For the attorney–client relationship to be considered abu-
sive, the client’s communications must relate to their crimes or frauds.
The precise degree of closeness required between the communications and
the wrongful conduct is not entirely clear. Different courts have estab-

7 See, e.g., Clark v. United States, 289 U.S. 1, 15 (1933) (“A client who consults
an attorney for advice that will serve him in the commission of a fraud will have
no help from the law.”); In re Grand Jury Subpoena Duces Tecum Dated Sept.
15, 1983, 731 F.2d 1032, 1038 (2d Cir. 1984); In re Grand Jury Proceedings, 604
F.2d 798, 802 (3d Cir. 1979); In re Grand Jury Proceedings #5 Empaneled Jan-
uary 28, 2004, 401 F.3d 247 (4th Cir. 2005); In re Grand Jury Proceedings, 680
F.2d 1026, 1028 (5th Cir. 1982) (en banc); In re Antitrust Grand Jury, 805 F.
2d 155 (6th Cir. 1986); Petition of Sawyer, 229 F.2d 805, 808 (7th Cir. 1956);
United States v. Williams, 720 F.3d 674, 688 (8th Cir. 2013); United States v. Fried-
man, 445 F.2d 1076, 1086 (9th Cir. 1971); In re September 1975 Grand Jury Term,
532 F.2d 734, 737 (10th Cir. 1976); In re Grand Jury (G.J. No. 87-03-A), 845 F.2d
896, 897 (11th Cir. 1988); In re Sealed Case, 754 F.2d 395, 399 (D.C. Cir. 1985). The
crime–fraud exception also applies to materials protected as attorney work product.
See, e.g., United States v. Neff, 787 F. App’x. 81, 88 (3d Cir. 2019) (not precedential);
In re Richard Roe, Inc., 168 F.3d 69, 70 (2d Cir. 1999).
8 See, e.g., In re Richard Roe, Inc., 68 F.3d 38, 40 (2d Cir. 1995); In re Grand Jury
Subpoena Duces Tecum Dated Sept. 15, 1983, 731 F.2d 1032, 1039 (2d Cir. 1984)
(“[T]he client need not have succeeded in his criminal or fraudulent scheme for the
exception to apply. If a fraudulent plan were ineffective, the client’s communications
would not thereby protected from disclosure.”); United States v. Collis, 128 F.3d 313
(6thCir. 1997); In re Grand Jury Proceedings, 87 F. 3d 377 (9th Cir.1996); but see In
re Sealed Case, 107 F.3d 46 (D.C. Cir. 1997) (“First, the client must have or received
the otherwise privileged communication with the intent to further an unlawful or
fraudulent act. . . Second, the client must have carried out the crime or fraud.”).

December 2023 DOJ Journal of Federal Law and Practice 157

lished different standards for the nexus between the communications and
the criminal or fraudulent conduct at issue.9 Nevertheless, all courts agree
that merely consulting an attorney before committing a crime does not
automatically imply the intent to use the advice in furtherance of that
crime.

III. Organizing principles for evaluating

attorney-adjacent criminal conduct in
your investigations
When faced with attorney-adjacent criminal conduct in their investi-
gations, prosecutors would be well served by asking themselves (and their
case agents) four important questions—each discussed below—before de-
ciding whether to pursue a crime–fraud ruling.

A. Has the privilege already been waived?

Prosecutors confronting attorney-adjacent criminal conduct should
know that there are some instances in which the privilege can be im-
plicitly waived by the target.

1. Attorney work product made for the purpose of

disclosure is generally not protected by the
privilege
The client holds the attorney–client privilege, and if the client is an
individual, they possess the authority to waive the protection. Notably, if
the client or the client’s authorized agent voluntarily discloses privileged
communications to a third party who is not an agent of either the attorney
or the client, such disclosure results in the loss of the privilege.10 The
voluntary release of documents, dissemination of reports, and making of

9 See, e.g., In re Grand Jury Subpoenas Duces Tecum, 798 F.2d 32, 32 (2d Cir. 1986)
(“purposeful nexus”); In re Grand Jury Subpoena, 745 F.3d 681, 692-93 (3d Cir. 2014)
(“in furtherance”); In re Grand Jury Proceedings #5 Empaneled January 28, 2004,
401 F.3d 247, 255 (4th Cir. 2005) (“close relationship”); In re Grand Jury Subpoena,
419 F.3d 329, 346 (5th Cir. 2005) (“reasonably related”); In re Special September 1978
Grand Jury (II), 640 F.2d 49 (7th Cir. 1980) (“relevant to the fraudulent conduct”);
In re Murphy, 560 F.2d 326, 338 (8th Cir. 1977) (“close relationship”); In re Grand
Jury Recalcitrant Witness 962 F.2d 13 (9th Cir. 1992) (“some relationship”); In re
September 1975 Grand Jury Term, 532 F.2d 734, 738 (10th Cir. 1976) (“potential
relationship”); In re Grand Jury (G.J. No. 87-03-A), 845 F.2d 896 n.5 (11th Cir.) (the
relationship “should not be interpreted restrictively”); In re Sealed Case, 676 F.2d
793, 815 (D.C. Cir. 1982) (“reasonably related”).
10 United States v. Arthur Young & Co., 465 U.S. 805, 819 (1984).

158 DOJ Journal of Federal Law and Practice December 2023

representations in an affidavit have all led to findings of waiver.
This doctrine holds particular significance in the context of criminal
tax prosecutions, where prosecutors often seek to obtain documents pre-
pared by an attorney on behalf of their client for submission to the IRS.
The Second, Fourth, Fifth, Seventh, Eighth, Ninth, and Eleventh Cir-
cuits have ruled that information communicated to an attorney for the
purpose of inclusion in a tax return is not protected by the attorney–
client privilege, either because the client had no reasonable expectation
of confidentiality in such communications or because the attorney is offer-
ing accounting advice rather than legal advice.11 The Seventh Circuit has
taken an additional step, holding that submitting a tax return not only
waives the privilege for the information contained in the return, but also
for the communications revealing the basis for that information.12 Pros-
ecutors who are not yet prepared to make the requisite showing of an
abusive attorney–client relationship may seek to compel the production
of this narrow category of documents without relying on the crime–fraud
exception.

11 See, e.g., Colton v. United States, 306 F.2d 633 (2d Cir. 1962) (“[I]n the case of
an attorney preparing a tax return. . . a good deal of information transmitted to an
attorney by a client is not intended to be confidential, but rather is given for trans-
mittal by the attorney to others – for example, for inclusion in a tax return. Such
information is, of course, not privileged.”); United States v. Bornstein, 977 F.2d 112,
116-17 (4th Cir. 1992) (“Preparation of tax returns is primarily an accounting service,
not a legal one, and accounting services are not privileged. However, accounting ser-
vices performed ancillary to legal advice may be within the attorney–client privilege.
Preparation of tax returns may in some circumstances come within this category. . . .”);
United States v. Davis, 636 F.2d 1028, 1043 (5th Cir. 1981) ([A]lthough preparation
of tax returns by itself may require some knowledge of the law, it is primarily an
accounting service. Communications relating to that service should therefore not be
privileged, even though performed by a lawyer.”); United States v. Lawless, 709 F.2d
485, 487 (7th Cir. 1983) (“If the client transmitted the information so that it might
be used on the tax return, such a transmission destroys any expectation of confiden-
tiality which might otherwise have existed.”); Canady v. United States, 354 F.2d 849,
857 (8th Cir. 1966) (requiring attorney to produce documents, work papers and tax
returns prepared for client because the privilege does not apply when attorney is act-
ing as a scrivener); United States v. Abrahams, 905 F.2d 1276, 1284 (9th Cir. 1990)
(“Although communications made solely for tax return preparation are not privileged,
communications made to acquire legal advice about what to claim on tax returns might
be privileged.”); In re Grand Jury Investigation, 842 F.2d 1223, 1225 (11th Cir. 1987)
(“Admittedly, the preparation of a tax return requires some knowledge of the law, and
the manner in which a tax return is prepared can be viewed as an implicit interpreta-
tion of that law. Nevertheless, the preparation of a tax return should not be viewed as
legal advice. If a professional accountant prepares a tax return, his client cannot invoke
any privilege. . . A taxpayer should not be able to invoke a privilege simply because he
hires an attorney to prepare his tax returns.”).
12 Lawless, 709 F.2d at 487.

December 2023 DOJ Journal of Federal Law and Practice 159

2. Assertion of a reliance defense
Criminal defendants in tax prosecutions frequently assert reliance de-
fenses, in which they claim that did not act willfully because they followed
an attorney’s or other tax professional’s advice in good faith. Generally,
to establish a good faith reliance on an attorney’s advice, a defendant
must show: (1) that they made a full and complete, good faith report of
all material facts to their attorney; (2) the attorney did, in fact, provide
the defendant with a specific course of conduct that the client strictly
followed; and (3) that the defendant reasonably relied on the attorney’s
advice in good faith.13 A reliance defense asserted at trial waives the de-
fendant’s attorney–client privilege, and the defense permits the prosecutor
to cross-examine the defendant (should they testify) or the defendant’s
attorney about the content of their communications.14
However, prosecutors generally cannot anticipatorily trigger this pro-
cess—that is, the target’s assertion of a reliance defense and the resulting
waiver of the attorney–client privilege—prior to indictment. Thus, if an
investigation reveals that an attorney communicated with or otherwise
assisted the target in connection with the crimes under investigation,
prosecutors must closely examine—using the non-privileged information
available to them—the nature and extent of the attorney’s role in the
crimes under investigation. Generally, the mere fact that an attorney
told the target what the law requires (or what is not legally permissible)
and that the target then failed to obey the law will not, by itself, support
a motion for a crime–fraud ruling.15
Although prosecutors are unable to proactively trigger a privilege-
waiving reliance defense, they can, under some circumstances, pursue
a crime–fraud ruling to determine whether the defendant has a viable

13 See, e.g., United States v. Butler, 211 F.3d 826, 833 (4th Cir. 2000);
United States v. Wilson, 887 F.2d 69, 73 (5th Cir. 1989); United States v. Tan-
don, 111 F.3d 482, 490 (6th Cir. 1997); United States v. Cheek, 3 F.3d 1057,
1061 (7th Cir. 1993); United States v. Rice, 449 F.3d 887, 897 (8th Cir. 2006);
United States v. Kenney, 911 F.2d 315, 322 (9th Cir. 1990); United States v. Wenger,
427 F.3d 840, 853 (10th Cir. 2005); United States v. Petrie, 302 F.3d 1280, 1287
(11th Cir. 2002); United States v. West, 392 F.3d 450, 457 (D.C. Cir. 2004).
14 See, e.g., In re Keeper of Records (Grand Jury Subpoena Addressed to XYZ
Corp.), 348 F.3d 16, 24 (1st Cir. 2003); United States v. Simpson, 69 F.App’x. 492,
493 (2d Cir. 2003); Glenmade Trust Co. v. Thompson, 56 F.3d 476 (3d Cir. 1995);
United States v. Miller, 600 F.2d 498, 501-02 (5th Cir. 1979); New Phoenix Sun-
rise Corp. v. C.I.R., 408 F.App’x. 908, 919 (6th Cir. 2010); United States v. Wal-
ters, 913 F.2d 388 (7th Cir. 1990); United States v. Workman, 138 F.3d 1261, 1263
(8th Cir. 1998); Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1162 (9th Cir. 1992);
United States v. Jensen, 573 F. App’x. 863, 870-71 (11th Cir. 2014).
15 See, e.g., United States v. Jacobs, 117 F.3d 82 (2d Cir. 1997).

160 DOJ Journal of Federal Law and Practice December 2023

reliance defense at all.
Example. A target’s attorney submits a materially false Collection
Information Statement, IRS Form 433-A, on behalf of the target, failing
to disclose the target’s foreign bank accounts. The prosecutor’s investiga-
tion has already uncovered records indicating that the target controlled
those unreported foreign bank accounts during the time in question. The
prosecutor successfully obtains a crime–fraud ruling, compelling the at-
torney to produce documents and provide testimony to ascertain whether
the false Collection Information Statement resulted from: (1) the attor-
ney’s mistake (for example, the target disclosed the foreign bank accounts
to the attorney, but the attorney thought the form only required disclo-
sure of domestic bank accounts); or (2) an affirmative misrepresentation
by the target to the attorney (for example, the attorney dutifully asked
the target whether they had foreign bank accounts and the target denied
having any).

B. How far along are you in the investigation?

Whether they begin with a whistleblower’s application submitted to
the IRS, a lead from a Suspicious Activity Report task force, or just an
entrepreneurial and intrepid case agent, many tax investigations remain
covert for several months (or even years) while the case agent collects
bank and financial records, tax returns, and other foundational evidence.
If they are lucky, prosecutors and their case agents can strategically se-
lect the opportune moment to take their investigation overt, usually by
attempting to interview the target of the investigation. Whether the inves-
tigation is overt or covert is a significant factor in a prosecutor’s decision
to seek a crime–fraud ruling.

1. Proceeding covertly
Although uncommon, prosecutors can potentially seek a crime–fraud
ruling from a court while keeping their investigation covert. However,
this exposes prosecutors to potential challenges to the crime–fraud rul-
ing, which may jeopardize their role in the case or the prosecution itself.
In sum, while covertly obtaining a crime–fraud ruling is legally permis-
sible, prosecutors should carefully consider whether pursuing a crime–
fraud ruling marks an opportune moment to take the investigation overt
to insulate their crime–fraud ruling and any resulting prosecution from
subsequent attack.
Example. A whistleblower provides the IRS with non-privileged in-
formation about a scheme to evade federal employment taxes involving a
target and their attorney. An undercover operation reveals that both the
target and the attorney promote the illegal scheme. Whereupon the pros-

December 2023 DOJ Journal of Federal Law and Practice 161

ecutor obtains a third-party search warrant, accessing a trove of emails
between the target and their attorney. The emails provide sufficient ev-
idence to establish a prima facie case of abuse of the attorney–client re-
lationship and the prosecutor persuades the court to issue a crime–fraud
ruling ex parte, without hearing from the target.16 However, because the
search-warrant records reveal that the attorney represented the target
in unrelated the legal matters, the target seeks and successfully secures
dismissal as a sanction for unjustifiably invading their attorney–client
privilege without adequate safeguards.

2. Proceeding overtly
If the investigation is already overt, and the target is represented by an
attorney, prosecutors should assess whether engaging with the target’s at-
torney could potentially conserve resources before seeking a crime–fraud
ruling. The government’s crime–fraud motion typically relies on a con-
temporaneous declaration by the case agent, presenting facts and relevant
documents justifying the ruling. Thus, if the prosecutor and case agent
have progressed enough in the investigation to develop a compelling nar-
rative and gather supporting exhibits demonstrating the commission of a
crime, they may consider redirecting their efforts towards a reverse proffer
with the target and their attorney. This approach could short-circuit the
process and generate a pre-indictment plea with the same energy invested
to build the crime–fraud case.

16 In the context of a grand jury investigation in which target has not yet been
indicted, the crime–fraud motion would almost always be filed under seal. Some cir-
cuits also permit prosecutor to submit all or part of their motions ex parte (that
is, without having to disclose to the target the facts that would support a crime–
fraud ruling, or even the motion itself). See In re Grand Jury Proceedings (Violette),
183 F.3d 71, 79 (1st Cir. 1999) (“The law seems well-settled that, in the context of
grand jury proceedings, the government may proffer ex parte the evidence on which
it bases its claim that a particular privilege does not apply, and that the court may
weigh that evidence, gauge its adequacy, and rule on the claim without affording the
putative privilege-holder a right to see the evidence proffered or an opportunity to
rebut it.”); John Doe, Inc. v. United States (In re John Doe, Inc.), 13 F.3d 633, 635
(2d Cir. 1994); In re Grand Jury Investigation, 445 F.3d 266, 275 (3d Cir. 2006);
Under Seal 1 v. United States (In re Grand Jury Subpoena), 642 F.App’x 223, 226-27
(4th Cir. 2016); (“[W]e have long held that not only facts supporting the crime–
fraud exception, but even the nature of the alleged crime or fraud itself, may be
presented ex parte and held in confidence.”); United States v. Jena, 478 F.App’x 99,
105 (5th Cir. 2012); In re Antitrust Grand Jury, 805 F.2d 155, 167-68 (6th Cir. 1986);
United States v. Boender, 649 F.3d 650, 651 (7th Cir. 2011); In re Grand Jury Sub-
poena as to C97-216, 187 F.3d 996, 998 (8th Cir. 1999); In re Grand Jury Proceedings
(Doe), No. 91-56139, 1993 U.S. App. LEXIS 1247, at *13-14 (9th Cir. Jan. 15, 1993);
In re Grand Jury Subpoenas, 144 F.3d 653, 662-63 (10th Cir. 1998); In re Grand Jury
Subpoena (Miller), 405 F.3d 17, 19 (D.C. Cir. 2005).

162 DOJ Journal of Federal Law and Practice December 2023

 Prosecutors with overt investigations should also consider the tacti-
cal advantages and risks associated with seeking a crime–fraud ruling. For
example, if the investigation opened with information provided by an IRS
whistleblower regarding attorney-adjacent criminal conduct, is the gov-
ernment’s crime–fraud motion supported primarily by the whistleblower’s
information (in which case, the prosecutor might consider having the
whistleblower execute an affidavit or even secure their testimony before
grand jury) or can the prosecutor corroborate the whistleblower’s claims
with independent evidence and other witnesses’ statements (in which case,
the government might not have to disclose the whistleblower’s role)?

3. Statute of limitations considerations

Prosecutors pursuing a crime–fraud ruling should be mindful that the
process is time-consuming, especially when compelling the production of
documents or testimony from an attorney before the grand jury. The en-
tire process of obtaining a favorable judgment and finally obtaining the
necessary documents or testimony might extend over several months (or
years), and there is a potential that further delay could come from an
interlocutory appeal of the ruling. Due to this potentially lengthy time-
line, prosecutors should carefully assess their deadlines, including soon-
to-expire statutes of limitations, when deciding to whether to pursue a
crime–fraud ruling.
Example. After obtaining Tax Division approval, a prosecutor issues
a grand jury subpoena to an attorney for records related to an Offshore
Voluntary Disclosure Program (OVDP) submission made by the attorney
for their client, the target of the investigation.17 The attorney notifies the
target about the subpoena, and one week later, the target instructs the
attorney to invoke the attorney–client privilege. Thirty days later, the
attorney provides the prosecutor with a log of the withheld records. Our
clever prosecutor already had a draft of the crime–fraud motion in the
works, so one week later the government moves the court, ex parte, to
compel production of records or testimony citing the crime–fraud excep-
tion to the rule. The judge overseeing the grand jury issues the crime–
fraud ruling a week later, and the prosecutor serves the attorney with
a copy of the order compelling them to turn over privileged materials
the same day and resets the new document production deadline for the
next grand jury session in two weeks. Once again, the attorney provides
the requisite notice to their client, the target of the investigation. The
attorney notifies the target about the order and, citing thePerlman doc-

17 See U.S. Dep’t of Just., Just. Manual § 9-13.410 (2016) and U.S. Dep’t of Just.,
Criminal Tax Manual § 138, 1(g) (2012).

December 2023 DOJ Journal of Federal Law and Practice 163

trine18 , the target seeks an emergency hearing to intervene in the grand
jury, asserting their attorney–client privilege and challenging the crime–
fraud ruling. The target also requests access to sealed, ex parte filings,
claiming that they need to know the evidence considered by the court
to challenge the ruling adequately. In the fullness of time, the prosecutor
prevails at the emergency hearing. The target appeals the denial of their
motion to the circuit court, while the district court holds its crime–fraud
ruling in abeyance. In the fullness of time, the circuit court affirms the
crime–fraud ruling. After the passage of many moons and the expira-
tion of several statutes of limitations, the prosecutor resets the attorney’s
document production deadline for the next grand jury session.

C. How do you view the attorney at issue?

A court’s application of the crime–fraud exception does not depend
on the attorney’s personal culpability for the crimes under investigation.
The exception is equally applicable to communications with attorneys
who knowingly assisted their clients with committing crimes and those
who were unwittingly involved.19 Nevertheless, prosecutors should con-
sider how they view the attorney involved in the criminal conduct when
contemplating a crime–fraud motion.

18 Church of Scientology of Cal. v. United States, 506 U.S. 9, 18 (1992)(“[U]nder the

so-called Perlman doctrine, Perlman v. United States, 247 U.S. 7 (1918), a discovery
order directed at a disinterested third party is treated as an immediately appealable fi-
nal order because the third party presumably lacks a sufficient stake in the proceeding
to risk contempt by refusing compliance.”); but see Mohawk Industries Inc. v. Car-
penter, 558 U.S. 100, 106 (2009) (no jurisdiction for litigants’ interlocutory appeal of
a crime–fraud order compelling production).
19 The primary focus of any crime–fraud inquiry is on the intent of the client, and
the law is clear that the criminal or fraudulent intentions of the client alone can
override the privilege protection. It is neither necessary nor sufficient for the gov-
ernment to prove that the attorney was aware of or involved in the client’s criminal
conduct. See, e.g., Clark, 289 U.S. at 1 (“Nor does the loss of the privilege depend
upon the showing of a conspiracy, upon proof that client and attorney are involved
in equal guilt. The attorney may be innocent, and still the guilty client must let the
truth come out.”); United States v. Gorski, 807 F.3d 451, 462 (1st Cir. 2015); In re
Grand Jury Proceedings, 604 F.2d 798, 802 (3d Cir. 1979); In re Grand Jury Pro-
ceedings, 102 F.3d 748, 751 (4th Cir. 1996); United States v. Soudan, 812 F.2d 920,
927 (5th Cir. 1986); United States v. Aldridge, 484 F.2d 655, 658 (7th Cir. 1973);
United States v. Calvert, 523 F.2d 895, 909 (8th Cir. 1975); United States v. Chen, 99
F.3d 1495, 1504 (9th Cir. 1996); In re Grand Jury Proceedings, 689 F.2d 1351, 1352
n.2 (11th Cir. 1982); In re Sealed Case, 676 F.2d 793, 812 (D.C. Cir. 1982).

164 DOJ Journal of Federal Law and Practice December 2023

1. Innocent attorneys (or Kovel accountants)
In some investigations, the target might have utilized the services of
their attorney (or Kovel accountant20 ) to commit a crime without the at-
torney’s knowledge. When faced with ambiguity about the attorney’s in-
volvement in the criminal conduct, prosecutors should frame their crime–
fraud motions neutrally with respect to the attorney’s role. Upstanding
attorneys typically prioritize safeguarding their professional reputations,
so framing the motion neutrally may incentivize cooperation from the
attorney in question.
Example. A target used their attorney as an intermediary to sub-
mit false documents to the IRS without the attorney’s knowledge of the
fraud. Upon obtaining a crime–fraud ruling, the prosecutor faces minimal
resistance from the attorney when seeking documents and testimony, as
the attorney feels frustrated and embarrassed that their client manipu-
lated them to defraud the IRS. Remember, however, that the privilege is
ultimately belongs to the client.

2. Culpable attorneys
In other investigations, the target’s attorney might have willingly fa-
cilitated or participated in their client’s crimes. In such cases, prosecutors
may find it easier to establish a establish a prima facie case of abuse of
the attorney–client relationship. Notwithstanding this fact, there may be
additional challenges to securing a crime–fraud ruling.
If the attorney is themself a target of the criminal investigation, De-
partment policy21 likely limits a prosecutor’s ability to serve the attorney
with a grand jury subpoena for testimony (the condition precedent re-
quired for a motion to compel their testimony under the crime–fraud
exception). If the attorney is a partner of a law firm, a prosecutor may
find success in subpoenaing records from the partnership; however, if
the attorney is a sole practitioner operating under a single-member lim-
ited liability company, the prosecutor should be prepared to argue that
Braswell 22 requires the attorney’s company (and not the attorney them-

20 Although there is no accountant-client privilege, the attorney–client privilege may

attach to communications where the client, or the client’s attorney retains an accoun-
tant for the purpose of obtaining or providing legal advice. However, to be considered
agents of the attorney, many courts require evidence that the involvement of the ac-
countant was crucial to the legal services provided. See, e.g., United States v. Kovel,
296 F.2d 918, 921 (2d Cir. 1961) (“The presence of the accountant. . . is necessary or
at least highly useful for the effective consultation between the client and the lawyer
which the privilege is designed to protect.”).
21 See U.S. Dep’t of Just., Just. Manual § 9-11.150 (2018).
22 Braswell v. United States, 487 U.S. 99, 102, 118 (1988) (reaffirming the “well es-

December 2023 DOJ Journal of Federal Law and Practice 165

self) to produce the records sought.
Naturally, the attorney also retains their own Fifth Amendment rights,
so even if the prosecutor has not yet developed enough evidence to des-
ignate the attorney as a target of the investigation, a subpoena to an
attorney who is a subject of the investigation may still invoke their right
to not testify before the grand jury.23 Thus, a crime–fraud ruling com-
pelling a lawyer’s testimony before the grand jury could prove to be a
pyrrhic victory.

3. Conflict of interest issues

Targets sometimes ask the attorney adjacent to the crimes under in-
vestigation to also represent them in the criminal investigation. In such
cases, the prosecutor should forewarn the attorney that, given their role
in the conduct under investigation, the government views them as a wit-
ness. If the attorney refuses to withdraw from the representation, the
prosecutor will likely have to move the court—either in a separate, con-
temporaneous motion or as part of the crime–fraud motion itself—for a
Garcia 24 hearing. Even in circuits allowing ex parte crime–fraud motions,
the motion for a Garcia hearing would likely require the prosecutor to
disclose details about the attorney’s conduct and the resulting conflict
with the target, potentially revealing more evidence to the target than
might typically be available in the crime–fraud context alone.

D. How will a crime–fraud ruling help you at trial?

(that is, does this really matter?)
Veteran prosecutors view most of their case-related decisions through
the lens of how they will help (or hurt) the government’s case at trial and
deciding whether to seek a crime–fraud ruling from the court warrants no
exception. Prosecutors should always ask themselves whether the juice is
worth the squeeze.
Example. A target’s attorney played a minor role in the target’s large
criminal enterprise. The target’s inapt reliance defense will not sufficiently

tablished” rule that artificial entities such as corporations are not protected by the
Fifth Amendment, and holding that, as long as the government is prohibited from
making “evidentiary use” of the fact that a given individual produced the corpora-
tion’s records, a sole proprietor could not resist a subpoena compelling his to produce
corporate records on Fifth Amendment grounds.).
23 See U.S. Dep’t of Just., Just. Manual § 9-11.154 (2020).
24 See United States v. Garcia, 517 F.2d 272 (5th Cir. 1975) (“[W]hen it is apparent
that a potential conflict of interest exists, the district court must conduct an inquiry
to ensure the defendant is “knowingly, intelligently, and voluntarily” waiving his con-
stitutional right to conflict-free counsel”).

166 DOJ Journal of Federal Law and Practice December 2023

address the government’s evidence at trial. Given the effort required to
obtain a crime–fraud ruling, the potential benefit may not justify the
costs.
Considering the potentially lengthy process involved in obtaining a
crime–fraud ruling, prosecutors should thoroughly assess whether alter-
native means are available to acquire the necessary information. Exploring
other investigative avenues may prove more efficient, potentially saving
valuable resources and expediting the progress of the case.
Example. A target used an otherwise-uninvolved attorney’s Inter-
est on Lawyers’ Trust Accounts (IOLTA) account as an intermediary to
facilitate illicit financial transactions between the target’s personal bank
account and a bank account held by a nominee entity. Rather than pursue
a crime–fraud ruling, the prosecutor could issue subpoenas to the banks
involved, proving the flow of funds without the need for the attorney’s
testimony.
Finally, if the investigation is already overt, it is important to ascer-
tain whether the target is, in fact, asserting privilege over the information
or records sought. Assuming you have served the appropriate preservation
requests and otherwise safeguarded against the destruction of evidence,
have you considered simply asking the target for a waiver (or to pro-
duce the records directly to the government)? While Department policy
prohibits prosecutors from requiring corporations to waive the attorney–
client privilege as a condition of cooperation,25 it does not preclude pros-
ecutors from asking targets (through their attorneys) if they would vol-
untarily produce the records the government needs. In an investigation in
which the target aims to dissuade the government from pursuing charges,
the target may be willing to negotiate a limited waiver of their privilege,
enabling the prosecutor to engage with their attorney and obtain addi-
tional information that could contextualize the evidence already possessed
by the prosecutor.

IV. Moving the court for a crime–fraud

ruling
In this final section, we discuss the mechanics of seeking a crime–
fraud ruling, including the requisite evidentiary support and the various
procedural postures from which a prosecutor might seek a ruling from the
court.

25 See U.S. Dep’t of Just., Just. Manual § 9-28.720 (2023).

December 2023 DOJ Journal of Federal Law and Practice 167

A. Prima facie standard
The burden of demonstrating the crime–fraud exception falls on the
opponent of the privilege, which, in criminal tax investigations, is the
government.26 To invoke the crime–fraud exception, the government must
make a prima facie showing that: (1) the client committed or intended to
commit a crime or fraud when they sought the advice of an attorney and
(2) the attorney’s assistance was obtained in furtherance the criminal or
fraudulent activity.27
Notably, courts vary in their definition the prima facie standard. The
Supreme Court, for instance, has stated that the prima facie standard
requires the government to present “something to give colour to the
charge.”28 Although courts have consistently held that the prima facie
standard does not require the government to prove the actual existence
of the alleged crime or fraud, the exact quantum of proof required re-
mains unsettled. Some courts, including the Second, Sixth, and D.C.
Circuits have equated the prima facie standard with probable cause.29
Other courts, including the Ninth, Eleventh, and Federal Circuits, de-
mand merely enough evidence to require explanation.30 Still other courts,
including the Third and Eighth Circuits, require enough evidence to sup-
port a verdict in favor of the moving party.31

26 See, e.g., Jacobs, 117 F.3d at 87; Ward v. Succession of Freeman, 854 F.2d 780,
790 (5th Cir. 1988); In re Sealed Case, 676 F. 2d 793, 812, 814-15 (D.C. Cir. 1982).
27 See, e.g., In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983, 731
F.2d 1032 (2d Cir. 1984); In re Chevron Corp., 633 F.3d 153, 166 (3d Cir. 2011);
Ward v. Succession of Freeman, 854 F.2d 780, 790 (5th Cir. 1988); In re Antitrust
Grand Jury, 805 F.2d 155 (6th Cir. 1986); Mattenson v. Baxter Healthcare Corp., 438
F.3d 763, 796 (7th Cir. 2006); United States v. Hodge and Zweig, 548 F.2d 1347, 1354
(9th Cir. 1977); In re Grand Jury Subpoenas, 144 F.3d 653, 660 (10th Cir. 1998); In
re Sealed Case, 754 F.2d 395, 399 (D.C. Cir. 1985).
28 Clark, 289 U.S. at 15.
29 See, e.g., In re Grand Jury Subpoena Duces Tecum, 798 F.2d 32, 34 (2d Cir. 1986);
In re Antitrust Grand Jury, 805 F.2d 155, 166 (6th Cir. 1986); In re Sealed Case, 754
F.2d 395, 399 n.3 (D.C. Cir. 1985).
30 In re Grand Jury Proceedings (Corporation), 87 F.3d 377, 381 (9th Cir. 1996)
(requiring “reasonable cause to believe” that the attorneys were being utilized in
furtherance of a crime or fraud (quotation omitted)); Micron Tech. Inc. v. Rambus,
Inc., 645 F.3d 1311, 1330 (Fed. Cir. 2011) (making a prima facie showing is “not a
particularly heavy” burden); In re Grand Jury Investigation (Schroeder), 842 F.2d
1223, 1226 (11th Cir. 1987) (“a prima facie showing can be established by a good
faith statement by the prosecutor as to what evidence is before the grand jury”).
31 In re Grand Jury Subpoena, 223 F.3d 213, 217 (3d Cir. 2000) (“A prima facie
showing requires presentation of evidence which, if believed by the fact-finder, would
be sufficient to support a finding that the elements of the crime–fraud exception were
met.” (internal quotations omitted)); In re BankAmerica Corp. Sec. Litig., 270 F.3d

168 DOJ Journal of Federal Law and Practice December 2023

B. Crime–fraud motion
When contesting a privilege claim under the crime–fraud exception,
the government presents a two-part “crime–fraud motion” before the
judge supervising the relevant grand jury proceeding. The crime–fraud
motion consists of a sealed motion to compel along with an ex parte ad-
dendum (usually in the form of a declaration by the case agent) which
thoroughly details the relevant facts supporting a crime–fraud ruling.
The crime–fraud motion should include a discussion of relevant legal
standards, including the burden of the privilege claimant to demonstrate
the applicability of the privilege, the narrow construction of privilege
claims, the criteria for applying the crime–fraud exception, and the le-
gal basis for authorizing ex parte submission of additional evidence.32 It
should also include relevant procedural history and factual assertions not
restricted by grand jury secrecy or confidentiality concerns.
Prosecutors most frequently file crime–fraud motions in conjunction
with motions to compel documents from an attorney or their law firm in
response to a grand jury subpoena. To enhance the likelihood of securing a
crime–fraud ruling, prosecutors can strategically craft focused subpoena
attachments that are limited in their scope and which request specific
categories of records.
Example. A prosecutor issues a grand jury subpoena to an attor-
ney for records related to an Offshore Voluntary Disclosure Program
(“OVDP”) submission made by the attorney for their client, the target
of the investigation. Rather than opening the list of sought-after docu-
ments with a general statement like “all communications between [target]
and [attorney] regarding IRS filings,” the prosecutor should make specific

639, 644 (8th Cir. 2001) (“a factual basis adequate to support a good faith belief by
a reasonable person that the [party asserting the privilege] was engaged in intentional
fraud”).
32 See, e.g., In re Grand Jury Proceedings, 183 F.3d 71, 79 (1st Cir. 2009);In re John
Doe Corp., 675 F.2d 482 (2d Cir. 1982) (“There is a public interest in respecting
confidentiality of communications by clients to their attorneys, in maintaining the
secrecy of grand jury proceedings and in investigating and prosecuting federal crimes.
Where these interests conflict or the validity of the privilege claims based on these
interests are challenged, the limitations on adversary argument caused by ex parte
in camera submissions are clearly outweighed by the benefits of obtaining a judicial
resolution of a preliminary evidentiary issue while preserving confidentiality.”); In re
Grand Jury Proceedings, 604 F.2d 798, 800 (3d Cir. 1979); In re Grand Jury Subpoena,
884 F.2d 124 (4th Cir. 1989); In re Grand Jury Proceedings-Gordon, 722 F.2d 303,
310 (6th Cir. 1983); In re Special September 1978 Grand Jury (II), 640 F.2d 49, 58
(7th Cir. 1980); In re Grand Jury Proceedings, 867 F.2d 539, 541 (9th Cir. 1989); In re
Vargas, 723 F.2d 1461, 1467 (10th Cir. 1983); In re Grand Jury Proceedings, 708 F.2d
1571, 1576 (11th Cir. 1983); In re Sealed Case, 676 F.2d 793, 814 (D.C. Cir. 1982).

December 2023 DOJ Journal of Federal Law and Practice 169

and detailed requests, such as “all communications between [target] and
[attorney] regarding [target]’s representation on page [#] of IRS Form
14653 that [target]s’ failure to report all income, pay all tax, and submit
all required information returns, including Foreign Bank and Financial
Accounts (FBARs), was due to non-willful conduct.”
If prosecutors have concerns that excluding a broad “all documents”
request in the subpoena attachment could provide the attorney with room
to avoid producing necessary documents, best practice dictates placing
the ‘catch-all’ request (for example, “to the extent not covered in doc-
ument requests 1-15 above, please produce all communications. . . ”) to-
wards the end of the list of document demands.
When dealing with a motion to compel, meticulously tailored sub-
poena attachments leave the target’s attorney with minimal grounds for
objection. Courts will recognize and appreciate that the prosecution has
sincerely attempted to request only the essential records relevant to the
crime–fraud matter.
Example. An attorney has been representing the target for over ten
years. The investigated crimes have transpired only within the past three
years. Even if the government possesses sufficient evidence to show that
the target recently used their attorney’s services to commit crimes, the
judge may feel more comfortable compelling production of records or
testimony from the attorney if the prosecutor’s request is limited to doc-
uments generated within the last three years. By seeking solely the ev-
idence indispensable to their case and conceding unnecessary categories
information or records, the prosecutor can not only assuage any concerns
the judge may have regarding governmental overreach, but also enhance
their standing and credibility with the court.
Prosecutors might encounter instances where defense attorneys proac-
tively counter a prosecutor’s motion to compel by submitting their own
motion to quash the grand jury subpoena. This strategic maneuver offers
the target an advantageous position, because if the court deems the sub-
poena overbroad, unduly burdensome, or otherwise defective, the target’s
attorney would be spared the time and expense of preparing a privilege
log. Weighing the importance of framing against the norms of local prac-
tice, prosecutors should consider invoking the crime–fraud exception by
either opposing the motion to quash by or filing their own cross-motion
to compel the production of documents or testimony.
By gaming out the various ways in which the crime–fraud issue might
reach the court in response to an attorney subpoena, prosecutors can
divine two additional best practices. First, if the prosecutor aims to pursue
a crime–fraud ruling, it is advisable to delay serving the attorney with
a grand jury subpoena until the prosecutor has a working draft of their

170 DOJ Journal of Federal Law and Practice December 2023

crime–fraud motion and accompanying declaration in support. This way,
if a defense attorney moves to quash the subpoena, the prosecutor is
well-prepared to quickly respond.
Second, it is of the utmost importance that the prosecutor require
the subpoenaed attorney to produce a comprehensive privilege log that
specifies the documents being withheld from production, or, at the very
least, outlines the categories of such documents. Armed with the privilege
log, the prosecutor can reevaluate the subpoena’s scope and determine
precisely which documents necessitate a motion to compel production.
Conversely, if the attorney declines to provide a privilege log in response
to the grand jury subpoena, their failure to do so speaks volumes, arming
the prosecutor with an argument that the target’s attorney’s failure to
comply with basic procedures signifies a lack of good faith.

C. Search warrants
Notwithstanding the risk of seeking an ex parte crime–fraud discussed
above, prosecutors may have compelling reasons to consider seeking a
crime–fraud ruling in connection with search warrants executed in their
investigation. Depending on location (or recipient) of the search warrant
and how far along they are in their investigation, a prosecutor might
move for a crime–fraud ruling prior to or contemporaneously with the
application for the search warrant.
For example, if a prosecutor already has sufficient evidence of attorney-
adjacent criminal conduct to make a prima facie showing and the case
agents want to execute a traditional search warrant at the target’s home,
the prosecutor might seek a contemporaneous crime–fraud ruling that
the agent could cite in their search-warrant affidavit when discussing the
potential for discovering attorney–client protected material during the
search. Moreover, armed with a crime–fraud ruling, the case agents may
be able to better plan for and execute the search warrant by more eas-
ily identifying evidence that is covered by the ruling (and thus might
not need to be segregated as ‘taint’ material pursuant to their agency’s
policies) and isolating facially privileged materials that are not expressly
covered by the crime–fraud ruling (for example, communications between
the target and a different attorney) for further processing by a taint team.
Alternatively, in the case of a search warrant executed against the
target’s email account, a prosecutor might want to wait until the third-
party service produces all records responsive to the warrant before seeking
a crime–fraud ruling. Doing so offers at least two advantages. First, even
without reviewing any facially privileged communications, a prosecutor
can collect significant data points regarding the nature and number of
communications between the target and their attorney. For example, the

December 2023 DOJ Journal of Federal Law and Practice 171

header data will reveal the number of emails seized sent between the tar-
get and the attorney, and by using search terms, the prosecutor (or a filter
team) can identify additional emails the target sent or received that ref-
erence the attorney. Additionally, appropriate application of search terms
might help the prosecutor describe the universe of communications be-
tween the target and their attorney, and those that would likely be di-
rectly relevant to the crime under investigation. For example, an email
search warrant might yield 750 emails between the target and their long-
time attorney; however, a list of search terms designed with the specific
attorney-adjacent criminal conduct in mind may identify those 150 emails
that are most relevant to the investigation. Having this information can
inform a prosecutor’s decision regarding whether to seek a crime–fraud
ruling, and, if so, provide useful data about the materials sought and give
the court a better sense of the scope of the ruling.
Second, assuming the investigation is still covert, the prosecutor can
determine if there are any additional investigative steps to take before
seeking a crime–fraud ruling, which will likely result in taking the in-
vestigation overt. For example, the non-privileged email search-warrant
results might lead to additional email accounts that need to be examined
and seized, or the records might identify additional bank accounts about
which the target failed to inform their attorney.

D. In camera inspection
The district court has the authority to perform an in camera inspec-
tion of the potentially privileged materials to determine whether the gov-
ernment has established a prima facie case under the crime–fraud ex-
ception.33 To obtain an in camera review, the government must produce
evidence “sufficient to support a reasonable belief that an in camera re-
view may yield evidence that the crime–fraud exception applies.”34 No-
tably, to trigger the in camera inspection, the government must satisfy
its burden through extrinsic evidence, that is, evidence other than the
communications in question.35 The high hurdle reflects the importance of

33 See, e.g., In re Grand Jury Subpoenas Duces Tecum, 798 F.2d 32, 34 (2d Cir. 1986);
In re Grand Jury Subpoena, 745 F.3d 681, 687 (3d Cir. 2014); Union Camp
Corp. v. Lewis, 385 F.2d 143, 144 (4th Cir. 1967); United States v. Aucoin, 964
F.2d 1492, 1498 (5th Cir. 1992); In re Antitrust Grand Jury, 805 F.2d 155, 169
(6th Cir. 1986); In re Special September 1978 Grand Jury (II), 640 F.2d 49, 59
(7th Cir. 1980); In re Berkeley and Co., Inc., 629 F.2d 548, 553 (8th Cir. 1980);
In re Grand Jury Investigation, 810 F.3d 1110, 1114 (9th Cir. 2016); In re Sealed
Case, 676 F.2d 793, 807 (D.C. Cir. 1982).
34 United States v. Zolin, 491 U.S. 554, 574-75 (1989).
35 See, e.g., United States v. Christensen, 828 F.3d 763, 799 (9th Cir. 2015) (“[I]f the
government makes such a preliminary showing based on evidence other than the po-

172 DOJ Journal of Federal Law and Practice December 2023

the attorney–client privilege in the American legal system and serves as
a reminder to prosecutors that motions for a crime–fraud ruling must be
based on substantial evidence, rather than a mere hunch. To be clear: al-
though the government cannot rely on the content of the communications
to justify in camera review, it can rely on the content of the communica-
tions to make out its prima facie case (if and when the in camera review
is granted).36 Generally, the best practice is to seek in camera review,
and at least two circuits mandate it.37

V. Conclusion
Well-resourced targets frequently attempt to insulate themselves from
criminal exposure in tax cases by cloaking themselves in the attorney–
client privilege. But “the privilege protecting communications between
attorneys and their clients takes flight if the relation is abused. A client
who consults an attorney for advice that will serve them in the commission
of a fraud will have no help from the law.”38 We hope this article provides
our colleagues with a framework to navigate attorney-adjacent criminal
conduct in their tax investigations and introduces them to a powerful tool
in the fight to enforce our nation’s tax laws.

About the Authors

Sean Beaty is a Senior Litigation Counsel for the Tax Division. After
college, Sean served as a police officer with the D.C. Metropolitan Police
Department from 1998 until 2004. While working as a police officer, he
attended law school at The George Washington University, receiving his
law degree in 2004. After six years in private practice, Sean joined the Tax
Division’s Central Civil Trial Section in 2010, and, in 2012, he was de-
tailed as a Special Assistant U.S. Attorney to the Criminal Division of the
United States Attorney’s Office in Connecticut. In 2014, Sean transferred
to the Southern Criminal Enforcement Section, where he has prosecuted
and tried a wide variety of cases, including employment tax crimes, immi-
gration, money laundering, and illegal structuring offenses, SIRF fraud,

tentially privileged materials themselves, the court may conduct an in camera review
to determine whether the materials are privileged and, if so, whether the crime–fraud
exception applies.”).
36 Zolin, 491 U.S. at 574-75.
37 See In re Grand Jury Investigation, 810 F.3d 1110, 1114 (9th Cir. 2016) (requir-
ing in camera review during crime–fraud “in furtherance” analysis); In re Antitrust
Grand Jury, 805 F.2d 155, 168–69 (6th Cir. 1986) (same); see also In re Grand Jury
Proceedings #5, 401 F.3d 247, 253 n.5 (4th Cir. 2005) (recognizing Circuit split).
38 Clark, 289 U.S. at 15.

December 2023 DOJ Journal of Federal Law and Practice 173

evasion of assessment and payment of individual and corporate taxes, and
offshore tax offenses.
Wilson Stamm is a Trial Attorney for the Tax Division. He joined the
Department of Justice through the Attorney General’s Honors Program
after graduating from Columbia Law School. He previously served as Spe-
cial Assistant United States Attorney at the United States Attorney’s
Office for the Eastern District of Virginia.

174 DOJ Journal of Federal Law and Practice December 2023

Prosecuting Fraudulent Tax
Return Preparers
Sarah Kiewlicz
Trial Attorney
Western Criminal Enforcement Section
Tax Division

Thomas F. Koelbl
Assistant Chief
Northern Criminal Enforcement Section
Tax Division

I. Introduction
You’ve just received a fraudulent return preparer case to investigate.
Now what? Chances are, the fraudulent return preparer has been at this
for years, preparing hundreds, potentially thousands, of false and fraudu-
lent tax returns. How do you sift through the returns to determine what
charges and counts to bring? How do you select the best client witnesses
to prove your case at trial? What evidence should you subpoena and ulti-
mately introduce at trial? This article is intended to provide an overview
of fraudulent return preparer cases, offer strategies, and identify poten-
tial pitfalls to help you successfully take your case through every stage of
prosecution from investigation to sentencing.

II. Investigation of fraudulent return

preparers
Fraudulent return preparer cases often originate with the Internal
Revenue Service (IRS) Scheme Development Center (SDC). The SDC
uses the defendant’s unique Preparer Tax Identification Number (PTIN)
and Electronic Filing Identification Number (EFIN) to analyze tax filing
history and identify indicia of fraud. A PTIN is a number issued by the
IRS to paid tax return preparers. It is used as the tax return preparer’s
identification number and, when applicable, must be placed in the Paid
Preparer section of a tax return that the return preparer completed for
compensation. An EFIN is a number issued by the IRS to individuals or
firms that have been approved as authorized IRS e-file providers. It is in-

December 2023 DOJ Journal of Federal Law and Practice 175

cluded with all electronic return data transmitted to the IRS. PTINs are
issued to individuals. EFINs are issued to individuals or firms. Most pre-
parers need both.1 After receiving a referral from the SDC, IRS-Criminal
Investigation (IRS-CI) will assign a case agent and open a criminal inves-
tigation. Most tax cases begin as administrative investigations. An ad-
ministrative investigation is a case that is investigated solely by the case
agent using administrative methods, such as issuing summonses to obtain
records and conducting voluntary witness interviews. Administrative in-
vestigations generally do not have assigned prosecutors. A prosecutor is
typically assigned once the case has been referred for a grand jury investi-
gation, or after prosecution has been authorized if the entire investigation
was conducted administratively. During the administrative investigation,
the case agent will likely identify and interview potential client witnesses
and make a preliminary selection of the tax returns that will form the
basis of the charges against the fraudulent return preparer. Ideally a pros-
ecutor will be assigned to the investigation prior to the IRS-CI’s submis-
sion of a prosecution referral to the Tax Division. The Attorney General
authorized the Tax Division to oversee all criminal proceedings arising un-
der the internal revenue laws. As such, the Tax Division must approve any
and all grand jury investigations and criminal charges a U.S. Attorney’s
Office intends to bring against a defendant for any conduct arising under
the internal revenue laws.2 Fraudulent return preparer cases often require
use of the grand jury, as Tax Division policy directs prosecutors to sub-
poena all material witnesses in tax cases to testify before the grand jury.
A material witness is any witness whose testimony is required to prove an
element of the charged offenses. In fraudulent return preparer cases, the
client witnesses for each charged tax return are material. A prosecutor
typically cannot prove the defendant was aware of or the source of the
false information without the testimony of the client witness. The follow-
ing section is a guide for prosecutors regarding the investigative steps to
take and charging decisions for fraudulent return preparer cases.

A. Key statutes
There are several statutes prosecutors should consider when investi-
gating a fraudulent return preparer case. To determine the appropriate
charge, a prosecutor should weigh the facts of the case against the statutes
of limitations and sentencing considerations. Below is a list of statutes

1 See IRS, Frequently Asked Questions: Do I Need a PTIN? (May 3, 2023),

https://www.irs.gov/tax-professionals/frequently-asked-questions-do-i-need-a-ptin.
2 U.S. Dep’t of Just., Justice Manual 6-4.200: Tax Division Jurisdiction and
Procedures.

176 DOJ Journal of Federal Law and Practice December 2023

most used in fraudulent return preparer cases and an explanation of the
benefits for each statute.

1. 26 U.S.C. § 7206(2)—Aiding or Assisting in the

Preparation of False Returns
Title 26, United States Code, section 7206(2) (section 7206(2)), Aiding
and Assisting in the Preparation of False Returns, is the statute most
used by prosecutors in fraudulent return preparer cases. It is often the
most appropriate charge in cases involving a defendant with a real tax
preparation business who meets with real clients with legitimate wages or
income, such as Forms W-2 and Forms 1099 recipients. Section 7206(2)
reads in pertinent part as follows:
Any person who . . . [w]illfully aids or assists in, or procures,
counsels, or advises the preparation or presentation under,
or in connection with any matter arising under, the inter-
nal revenue laws, of a return, affidavit, claim, or other docu-
ment, which is fraudulent or is false as to any material matter,
whether or not such falsity or fraud is with the knowledge or
consent of the person authorized or required to present such
return, affidavit, claim, or document . . . shall be guilty of a
felony . . . .3
To establish a violation of section 7206(2), the government must prove
beyond a reasonable doubt: “(1) that defendant aided, assisted, procured,
counseled, advised or caused the preparation and presentation of a return;
(2) that the return was fraudulent or false as to a material matter; and
(3) that the act of the defendant was willful.”4
Section 7206(2) has a six-year statute of limitations from the date the
return was filed or the statutory due date, whichever date is later.5 The
statute has a three-year statutory maximum sentence and the sentenc-
ing guidelines are calculated using U.S. Sentencing Guidelines (U.S.S.G.)
sections 2T1.4 and 2T4.1.6 Restitution cannot be ordered as a part of a
defendant’s sentence unless the defendant explicitly agrees to restitution
in a plea agreement;7 however, restitution can be ordered as a condition

3 26 U.S.C. § 7206(2).
4 United States v. Sassak, 881 F.2d 276, 278 (6th Cir. 1989); see also
United States v. Searan, 259 F.3d 434, 441 (6th Cir. 2001).
5 26 U.S.C. § 6531(3); 26 U.S. § 7206(2); United States v. Habig, 390 U.S. 222, 223,
225–27 (1968).
6 26 U.S.C. § 7206(2); U.S. Sent’g Guidelines Manual (U.S.S.G.) §§ 2T1.4, 2T4.1.
7 For additional guidance on restitution and the language to include in tax plea

December 2023 DOJ Journal of Federal Law and Practice 177

of supervised release or probation.8 When negotiating a plea agreement,
prosecutors should make every effort to include restitution as a concrete
term of the plea.

2. 18 U.S.C. § 287—False Claims

False return preparers can also be prosecuted under title 18, United
States Code, section 287 (section 287) for False Claims. To establish a
violation of section 287, the government must prove beyond a reasonable
doubt that: (1) the defendant made or presented a claim to a department
or agency of the United States for money or property; (2) the claim was
false, fictitious or fraudulent; and (3) the defendant knew at the time that
the claim was false, fictitious or fraudulent.9
Section 287 charges are appropriate under certain circumstances, such
as when there is no question the claim for a refund on the tax return is
fraudulent. For example, cases in which the returns include false Forms
W-2 or fake dependents, or if the defendant doesn’t have a storefront,
doesn’t meet with real clients, and isn’t listed as the return preparer
on the tax returns.10 False Claims charges are also appropriate in cases
involving identity theft and in instances when returns request the refund
be paid directly to the fraudulent return preparer. Under section 287,
there is a five-year statute of limitations, typically from the date the
return is filed. There is also a five-year statutory maximum sentence and
the sentencing guidelines are calculated using U.S.S.G. § 2B1.1.11 Finally,
restitution is more readily available under title 18 due to the Mandatory
Victim Restitution Act of 1996 (MVRA).12 The MVRA covers tax crimes
prosecuted under title 18, including section 287.13 Under the MVRA,
restitution is mandatory for section 287 charges and must be ordered as
an independent part of the sentence.

agreements, please consult the Criminal Tax Manual Chapter 44 available at

https://www.justice.gov/media/1100541/dl?inline.
8 18 U.S.C. § 3563(b); see United States v. Perry, 714 F.3d 570, 577 (8th Cir. 2013);
United States v. Batson, 608 F.3d 630, 633–37 (9th Cir. 2010).
9 18 U.S.C. § 287; Johnson v. United States, 410 F.2d 38, 46 (8th Cir. 1969);
United States v. Clark, 577 F.3d 273, 285 (5th Cir. 2009).
10 See U.S. Dep’t of Just., Criminal Tax Manual, 22.
11 18 U.S.C. § 287; see also U.S. Sent’g Guidelines Manual (U.S.S.G.) § 2B1.1.
12 Pub. L. No. 104-132, § 204(a), 110 Stat. 1227 (1996) (codified as amended at
18 U.S.C. § 3663A).
13 United States v. Blanchard, 618 F.3d 562, 577 (6th Cir. 2010) (MVRA applies to
offenses under 18 U.S.C. § 287). Prosecutors should be aware that the MVRA does
not apply to title 26 offenses.

178 DOJ Journal of Federal Law and Practice December 2023

B. Common patterns of false items
A critical component of any fraudulent return preparer case is identi-
fying a pattern of false items that the fraudulent return preparer typically
included on client returns. Identifying and establishing the pattern of fal-
sities is crucial to proving the case at trial. Defendants will nearly always
blame the clients for any false items on the return, claiming they were un-
aware that the clients were giving them false information. Proving that
the same false items are reported on numerous returns undercuts this
claim and demonstrates to the jury that the defendant was the source of
the lies.
Prosecutors should request the assistance of an IRS Revenue Agent
(RA) to aid with identifying the pattern of false items and creating a
statistical analysis and summary charts for use at trial. It is important
to have an RA assigned to the case early in the investigation to allow
the prosecutor to better understand the pattern of false items and make
more informed charging decisions. It also enables the RA to begin creat-
ing summary charts that will be used at trial, allowing ample time for the
prosecutor and RA to collaborate on the charts and be prepared for sum-
mary disclosures. RAs are critical witnesses in fraudulent return preparer
cases. It’s important to maintain communication with the RA throughout
the course of the investigation. RAs will act as summary witnesses and
potentially summary expert witnesses depending on the nature of their
testimony.
There are several common patterns frequently used by fraudulent re-
turn preparers. The goal of the fraudulent return preparer is to increase
a client’s refund. Typically, by increasing the client’s refund amount, the
fraudulent return preparer is able to charge higher fees and increase busi-
ness through word of mouth from satisfied clients. Occasionally, the return
preparer fraudulently inflates clients’ refunds to siphon a larger portion
of the refund as a fee without the clients’ knowledge. Prosecutors should
trace the disposition of the fraudulently obtained refunds to help deter-
mine the fraudulent return preparer’s motive.
For clients with legitimate Form W-2 wages, the fraudulent return pre-
parer typically adds false items to offset the client’s taxable income. These
false items often include false Schedule A deductions and fake Schedule
C businesses operating at a loss. The RA should be able to identify the
pattern of Schedule A deductions used by the fraudulent return preparer
to offset a client’s adjusted gross income. Common Schedule A deduc-
tions used by fraudulent return preparers include unreimbursed employee
business expenses (such as cell phones, tools, and uniforms), charitable
contributions, medical expenses, and other miscellaneous deductions. In
addition, the RA will be able to provide a statistical analysis of the returns

December 2023 DOJ Journal of Federal Law and Practice 179

where the fraudulent return preparer included fake Schedule C businesses
operating at a loss. For clients with suspected fake Schedule C businesses,
prosecutors and the RA should review the client’s tax returns from previ-
ous years to determine whether the client previously attached a Schedule
C. Ideally for proving the case, the false items on client returns will solely
appear during tax years prepared by the fraudulent return preparer.
It is also common for fraudulent return preparers to target unemployed
individuals to prepare tax returns. In such situations, the fraudulent re-
turn preparer will add fake Schedule C businesses operating at a minor
profit and add false dependents to trigger tax credits, such as the Earned
Income Tax Credit (EITC). This results in a tax refund that the client
would not be entitled to otherwise. The goal of the fraudulent return pre-
parer is to manipulate the information on a client’s tax return to generate
the largest possible refund.

C. Selection of charges and counts

A prosecutor should be strategic when determining the number and
selection of counts to indict in a fraudulent return preparer case. One
should consider the following factors: the credibility of witnesses, the
ability to demonstrate the pattern of false items on client returns, any
statute of limitations concerns, and the sentencing guidelines. Prosecutors
should first start with the tax returns and clients identified by IRS-CI in
the grand jury or prosecution referral reports. It is important to use the
aforementioned factors to evaluate each of the referred tax returns indi-
vidually to determine whether the return should be charged. A prosecutor
should not feel limited by the referred tax returns or obligated to pur-
sue every referred tax return. The referred returns are a starting point,
and often include the most compelling returns and witnesses in a fraud-
ulent preparer case. However, prosecutors typically have some flexibility
in determining the number and selection of counts in the indictment. As
previously discussed, the counts that a prosecutor selects for prosecution
must be authorized by the Tax Division.
Prosecutors should be mindful of the number of counts they select and
the number of witnesses they will have testify to prove each count. Ide-
ally, a prosecutor will be able to identify client witnesses who had returns
for multiple tax years prepared by the fraudulent return preparer. Iden-
tifying repeat clients will enable more streamlined trial testimony. The
presentation of client witnesses at trial is critical to proving the charged
conduct; however, the testimony and evidence introduced through each
client witness may be substantially similar. It is critical to strike a bal-
ance between proving the pattern of false items among unrelated clients
to establish the defendant’s willfulness, and avoiding boredom among the

180 DOJ Journal of Federal Law and Practice December 2023

jury due the repetitive nature of the testimony. Often, IRS-CI will request
authorization to charge a fraudulent return preparer with an abundance
of individual counts. Examining the referred counts, identifying the tax
returns that best demonstrate the pattern of fraud, and identifying the
client witnesses that will provide the most credible testimony for more
than one false tax return will allow the prosecutor to strategically limit
the number of charges. The result is a powerful, yet concise case proving
the fraudulent return preparer’s guilt.

D. Selection of client witnesses

Determining which client witnesses to include in an indictment is one
of the most important strategic decisions a prosecutor will make when
prosecuting a fraudulent return preparer case. There are many factors
you should consider when selecting client witnesses, including credibility
and the possible need for immunity if the client witness was aware of
the false items on his or her return. The selection of client witnesses is a
decision that should be made in tandem with the selection of counts for
your indictment.
To best evaluate a client witness’s credibility, prosecutors should meet
in-person and interview each client witness for the prospective charges. It
is critical to meet client witnesses before calling them to testify before the
grand jury. Prosecutors should also evaluate whether the client witness
knew about the false items on his tax return. There are Fifth Amendment
implications for clients who participated in falsifying their tax returns or
were aware of the false items prior to filing the returns.14 If the client is
also culpable for the false tax return, he or she may require immunity
prior to testifying before the grand jury and at trial. If a client witness
invokes his or her Fifth Amendment privilege against self-incrimination,
prosecutors will have to decide whether to exclude the client’s tax returns
from the charged counts or extend immunity to the client.15 It’s important
to note that a client’s knowledge of the false return is not a defense for the

14 The Department of Justice’s policy on witness immunity is governed by

18 U.S.C. §§ 6001–6005. As detailed in the Justice Manual: “Sections 6001 to 6005
provide a mechanism by which the government may apply to the court for an order
granting a witness limited immunity in all judicial, administrative, and congressional
proceedings when the witness asserts his or her privilege against self-incrimination.”
U.S. Dep’t of Just., Justice Manual, 9-23.100.
15 All requests for witness immunity are subject to Assistant Attorney General or
United States Attorney approval. U.S. Dep’t of Just., Justice Manual, 9-23.100.
Prosecutors must fill out a request form and submit it for approval. Prosecutors should
consult with their immediate supervisor before submitting any immunity requests.

December 2023 DOJ Journal of Federal Law and Practice 181

fraudulent return preparer.16 It’s also prudent to review the client’s tax
return history before and after her dealings with the fraudulent return
preparer. If a client has a history of filing false tax returns with other
return preparers, it’s unlikely the client will be a credible witness.
Finally, a prosecutor should determine how cooperative the client wit-
ness is and whether he is willing to testify at trial. Client witnesses are
material in fraudulent return preparer cases and the success of the prose-
cution depends on the testimony of the clients. If a client is uncooperative
and unwilling to meet with the government for initial interviews, it is un-
likely that she will be cooperative at trial. Learning, before indictment,
how cooperative a client witness will be is essential to avoiding potential
issues with subpoena compliance at trial.
As a matter of course, the Tax Division typically does not treat client
witnesses as victims in fraudulent return preparer cases. Although the
client witness may be audited or required to pay back the inflated refund,
it was a benefit to which they were not entitled, and they are not victims
because they have to return it.

E. Employee witnesses
Fraudulent return preparers may work alone; however, the fraudulent
return preparer often owns a tax preparation business that employs other
return preparers. If the fraudulent return preparer has employees, a de-
termination must be made whether to include the employees as targets
of the investigation or as witnesses. As discussed in the client witness
section, the prosecutor should evaluate the facts regarding employees to
determine how they should be treated in the investigation. One should
consider each employee’s background in tax (if any), whether the fraud-
ulent return preparer provided training or directives to employees about
including false items on the tax return, how much autonomy the employ-
ees had when preparing and filing tax returns, and other relevant factors.
Prosecutors should interview employees in-person, if possible, to deter-
mine whether their potential testimony will benefit the case against the
fraudulent return preparer. Those interviews are often conducted with
proffer protections, if requested by counsel.
Employee witnesses may provide important details to help prove the
fraudulent return preparer’s willfulness, however, the employee witnesses
may also be culpable and require immunity prior to testifying. If employ-
ees prepared fraudulent tax returns, there are Fifth Amendment impli-
cations to interviewing them. Prosecutors should evaluate whether the

16 See, e.g., United States v. Jennings, 51 F.App’x. 98, 99–100 (4th Cir. 2002);
Baker v. United States, 401 F.2d 958, 987–88 (D.C. Cir. 1968).

182 DOJ Journal of Federal Law and Practice December 2023

information employees have merits seeking immunity. As previously dis-
cussed, immunity applications are subject to Assistant Attorney General
or U.S. Attorney approval. A prosecutor should balance the benefits of
possible testimony against any credibility or culpability issues before sub-
poenaing current or former employees to testify.

F. Evidence to obtain during the investigation

1. IRS records to obtain
There are many records that a prosecutor can request from the IRS
to aid in the investigation and prosecution of a fraudulent tax return pre-
parer. Commonly used records include the fraudulently filed tax returns,
tax transcripts for the fraudulent tax returns, audit files, and the defen-
dant’s personal and business tax returns. Additional records a prosecutor
should consider obtaining are PTIN Information Reports and Preparer
Information Reports. A PTIN Information Report contains all the de-
tails a return preparer provided to the IRS when he or she applied for a
PTIN. This includes name, address, phone number, email, and business
name. The report also indicates the date the preparer’s PTIN was issued
and whether the PTIN is still active or has expired. A Preparer Informa-
tion Report contains filing statistics associated with a particular preparer
during a particular tax filing year. The report includes information for in-
dividual returns prepared and filed using the PTIN and business returns
prepared and filed using the PTIN. The statistics include total number
of returns; number of returns including Schedules A, C, E, and F; the
percentage of returns that resulted in a refund; the number of returns
requesting refund anticipation loans; the percentage of returns requesting
specific credits and amount claimed; and other details. The report also
indicates whether complaints have been filed against the return preparer
or if any civil injunctions or criminal sanctions have been imposed on the
return preparer. These reports contain the information a preparer used
when applying for a PTIN and statistics relating to the tax returns filed
using a specific PTIN for each filing year.
Prosecutors should also request any complaints filed by clients with
the IRS against the fraudulent return preparer or business. As early as
possible in the investigation, prosecutors should identify taxpayer clients
who filed complaints against the fraudulent return preparer for their false
tax returns. The complaint evidence will not only further establish the
willfulness element for the fraudulent return preparer, but it will also aid
in establishing the credibility for the client witness. In addition, prosecu-
tors should determine whether the return preparer’s business was audited
or otherwise civilly investigated by the IRS. If so, prosecutors should ob-

December 2023 DOJ Journal of Federal Law and Practice 183

tain the IRS audit records and any records relating to civil compliance
proceedings.

2. Subpoenaing records from the tax preparation

business
If the IRS did not already pursue a search warrant in its administrative
investigation and the fraudulent return preparer operates a brick-and-
mortar business, the prosecutor should issue a subpoena to the business
for all tax preparation records Although there are no guarantees that the
fraudulent return preparer will comply with the subpoena, records from
the business often provide clarity into the operation of the business, can
be used to corroborate witness statements, and can identify any incon-
sistencies or possible defenses for the fraudulent return preparer. These
records typically include client intake forms, client return files, signed pa-
perwork, tax preparation fee payment records, and tax software records.
It is possible that the fraudulent return preparer will oppose comply-
ing with the subpoena, asserting the Fifth Amendment privilege against
self-incrimination. The Supreme Court has held that the Fifth Amend-
ment extends to the act of producing business records of a sole proprietor-
ship.17 Prosecutors should weigh the benefits and drawbacks to issuing a
subpoena to the fraudulent return preparer or simply applying for a search
warrant. If the prosecutor believes that a fraudulent return preparer is
unlikely to comply with the subpoena, he may want to consider applying
for a search warrant instead. There is some risk to issuing a subpoena
to a fraudulent return preparer who invokes the Fifth Amendment. Once
the subpoena has been issued, the investigation can no longer proceed in
a covert manner. This may result in the destruction of evidence.

3. Use of search warrants

Search warrants are often used as an alternative to a subpoena if a
prosecutor has reason to believe that the fraudulent return preparer will
not be compliant. Search warrants are most effective if the fraudulent
return preparer is operating a brick-and-mortar tax preparation business.
Prosecutors should obtain appropriate approvals before executing a search
warrant. Tax Division Directive No. 52 delegates authority to the U.S.
Attorney in the investigating district to authorize search warrants in tax
cases without Tax Division approval. However, Tax Division Directive
No. 52 B.1. carves out several exceptions to that authority. Tax Division
approval is required prior to applying for a search warrant if the target of
the search warrant is reasonably believed to be one of the following: an

17 United States v. Doe, 465 U.S. 605 (1984).

184 DOJ Journal of Federal Law and Practice December 2023

accountant; a lawyer; a physician; a local, state federal, or foreign public
official or political candidate; a member of the clergy; a representative of
the electronic or printed news media; an official of a labor union; or an
official of an organization deemed to be exempt under Section 501(c) of
the Internal Revenue Code. Typically, search warrants executed on return
preparation companies do not raise privilege or filter issues, however, it
is important to identify any potential privilege issues before executing
the warrant. Prosecutors should discuss any privilege concerns with their
office’s filter coordinator before executing a search warrant. In addition
to conducting a search of the physical offices, search warrants can be used
to obtain the fraudulent tax preparer’s records maintained through the
cloud-based tax preparation software company they use for the business.
Search warrants can also be used to obtain evidence from email pr-
oviders and social media companies. Fraudulent return preparers often
use social media to promote the business and communicate with prospec-
tive employees and clients. Email is also frequently used to communicate
with employees and clients. Executing search warrants on social media
accounts or email accounts can provide clarity regarding the daily opera-
tion of the business and the fraudulent return preparer’s knowledge and
willfulness. It is important, however, to consider whether the potential
evidence obtained merits the use of a warrant, or if there is sufficient
evidence to prove the case without it. Search warrants issued to email
providers, social media companies, and cloud-based tax preparation soft-
ware companies fall under the Electronic Communications Privacy Act
(ECPA). Prosecutors should refer to the Computer Crime and Intellec-
tual Property Section (CCIPS) website to familiarize themselves with
the process of applying for search warrants under the ECPA. The CCIPS
website also contains examples for drafting search warrant affidavits and
other helpful resources. Prosecutors should also consider discussing the
proposed ECPA warrants with their office’s Computer Hacking and In-
tellectual Property (CHIP) coordinator.

4. Other records
As discussed in the trial section below, there are many other records
that a prosecutor should seek during a fraudulent return preparer case.
For example, refund anticipation loan (RAL) records, such as Refund
Advantage, Refundo, or Greendot, contain important details to trace the
flow of money from the U.S. Treasury, through the RAL provider, and
ultimately to the client. Bank records from the defendant’s business or
personal accounts are also critical to tracing the fraudulent return pre-
parer’s sources of income. The prosecutor should also obtain Secretary of
State records to establish when the business was created, identifying the

December 2023 DOJ Journal of Federal Law and Practice 185

owner of the business, and other details regarding its operating status.
Records evidencing any continuing professional education or annual cer-
tifications required by a state are also valuable to obtain to establish the
fraudulent return preparer’s knowledge.

G. Use of the grand jury

A prosecutor should subpoena all material witnesses to testify before
the grand jury in tax cases. In fraudulent return preparer cases, material
witnesses include the taxpayer clients for each charged tax return and
may include employees of the fraudulent return preparer’s business. It is
critical to lock in the testimony of taxpayer clients and other key witnesses
at the grand jury before indicting a fraudulent return preparer case.

H. Charging the defendant’s personal returns and

business returns
Often a fraudulent return preparer will include false items on her own
tax return that are consistent with the pattern of false items on the fraud-
ulent returns prepared for clients. A prosecutor should consider charging
a defendant’s personal fraudulent tax returns or fraudulent business re-
turns to make a more compelling presentation of the evidence to the jury.
In other instances, a defendant doesn’t file personal tax returns or tax
returns for the fraudulent tax preparation business. A prosecutor should
consider whether to charge the failure to file under 26 U.S.C. § 7203,18
or to move in limine to include evidence of the defendant’s failure to file
tax returns as direct evidence of willfulness or in accordance with Federal
Rule of Evidence 404(b).19

I. Parallel civil proceedings

Once a prosecutor is assigned to a fraudulent return preparer case, he
should determine whether there is a parallel civil investigation.20 If there
is a parallel civil investigation, prosecutors should immediately contact
their civil or criminal coordinator to discuss next steps to prevent any

18 Failure to file is a misdemeanor charge and carries a statutory maximum sentence

of one year. See also U.S. Dep’t of Just., Criminal Tax Manual, 10.
19 Federal Rule of Evidence 404(b) provides that while “evidence of a crime, wrong,
or other act is not admissible to prove a person’s character in order to show that on
a particular occasion the person acted in accordance with the character,” evidence of
a crime, wrong, or other act “may be admissible for another purpose, such as proving
motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake,
or lack of accident.”
20 The Justice Manual permits simultaneous criminal, civil, and administrative ac-
tions. U.S. Dep’t of Just., Justice Manual, 6-4.400.

186 DOJ Journal of Federal Law and Practice December 2023

possible Tweel issues that may arise from parallel proceedings.21
J. Other considerations
When evaluating the case evidence before making charging decisions,
a prosecutor should consider whether mail fraud or wire fraud charges are
more appropriate. Mail fraud and wire fraud charges are not always appro-
priate in fraudulent return preparer cases and typically will not be used
in run-of-the-mill fraudulent return preparer cases. If the case involves
a large-scale fraudulent return scheme there are strategic advantages to
charging mail fraud or wire fraud, such as allowing the prosecutor to make
the entire scheme an express element of each individual count. In addi-
tion, mail and wire fraud charges support restitution, money laundering
charges, and asset forfeiture. Mail fraud and wire fraud charges arising
under the internal revenue laws require Tax Division approval prior to
indicting a case.22
Typically, the fraudulent return preparer charges clients flat tax prepa-
ration fees and does not directly benefit from the fraudulently inflated tax
refund. However, there are instances where fraudulent return preparers
inflate client refunds for their personal enrichment. A prosecutor should
determine whether the fraudulent return preparer required clients to use
RAL services and whether the fraudulent return preparer used the RAL
services to appropriate a portion of the client’s inflated refund. This type
of fraud scheme often necessitates wire fraud charges to appropriately
account for the fraudulent return preparer’s conduct.

III. Fraudulent return preparer trials

The fraudulent return preparer has been indicted, and pre-trial plea
discussions have ended, unsuccessfully. The case is scheduled for trial.
Now what? The heart of the case is testimony from the defendant’s clients
and introduction of their false tax returns into evidence. But, beyond the
obvious, there are other steps the prosecutor can take to prepare for, and
succeed at, trial.

21 United States v. Tweel, 550 F.2d 297 (5th Cir. 1977). For additional information
regarding parallel proceedings, prosecutors should review “Parallel Proceedings in Tax
Cases: Avoiding Common Pitfalls” by Carole Koehler Ide. 61 DOJ J Fed. L & Prac.,
n. 3, 2013.
22 See U.S. Dep’t of Just., Justice Manual, 6-4.210; U.S. Dep’t of Just.,
U.S. Attorneys’ Manual, Tax Division Directive No. 128.

December 2023 DOJ Journal of Federal Law and Practice 187

A. Exhibits
1. Certified IRS records
IRS records, including tax returns, and any other relevant records
(such as client audit files and correspondence between the IRS and the
defendant) are essential in a fraudulent return preparer prosecution. Thus,
when beginning to prepare for trial, the prosecutor should obtain certi-
fied copies of the relevant IRS records from the IRS. The IRS can pro-
vide certified copies of any of these records (not just tax returns), and
these certified records are self-authenticating under the Federal Rules of
Evidence.23 Thus, they will be admissible without requiring witness testi-
mony, which can be especially useful in fraudulent return preparer cases,
where clients may not remember, or have even seen, their filed tax re-
turns. As a practical matter, it can take a significant amount of time to
obtain certified records from the IRS (especially if the records are paper-
filed tax returns), so the prosecutor should build extra time into the trial
preparation process to account for this.

2. The defendant’s return preparation files

Records from the defendant’s return preparation business, if the pros-
ecutor successfully obtained any of them during the investigation phase
of the case, can be an extremely useful source of information at trial.
Intake forms completed by clients may show what information the clients
did—and more importantly, did not—provide the defendant during the
preparation of the client’s tax return. The defendant may also possess
correspondence between herself and the IRS, either on behalf of clients
(perhaps attempting to justify false items on client returns) or on her own
behalf, demonstrating her notice or knowledge of proper reporting require-
ments for items on tax returns. Finally, the defendant’s files may provide
evidence of the fees she charged her customers, perhaps demonstrating
her motive, or showing that her own tax returns falsely underreported
her income from her business. In short, there is often something relevant
and probative in the defendant’s own records.24

23 Certified copies of IRS records are self-authenticating under Federal Rule of Evi-
dence 902(1) (signed and sealed domestic public documents are self-authenticating),
and courts routinely hold that such records are excepted from hearsay, typically under
Federal Rule of Evidence 803(8) (excepting public records from the hearsay exclusion).
See, e.g., Brewer v. United States, 764 F.Supp 309, 318 (S.D.N.Y. 1991).
24 The defendant’s own records likely are admissible as statements of a party oppo-
nent. Fed. R. Evid. 801(d)(2).

188 DOJ Journal of Federal Law and Practice December 2023

3. Bank and other records demonstrating return
preparation fees
In cases where the defendant has used the false return preparation
scheme to enrich herself with unusually large return preparation fees, evi-
dence of this is useful at trial to demonstrate the return preparer’s motive.
The defendant’s bank records may show the large fees the defendant re-
ceived. Records from any third-party companies the defendant worked
with, such as an RAL company, may also show this information. These
records are useful to show the jury the flow of money from the fraudulent
refunds to the defendant.

4. Summaries
Because the government’s evidence in return-preparation trials often
focuses on patterns across multiple returns, years, and clients, summary
exhibits are an especially useful way to present evidence to the jury. Sum-
maries are an effective way to show that the tax returns prepared by the
defendant contained similar patterns of falsities on tax returns prepared
for different clients, over multiple years. In addition, in many return-
preparation cases, the effect of the defendant’s falsities is to maximize
the amount of the Earned Income Credit (and thus refund) the clients
are able to claim on their tax returns. Summaries are an effective way to
show the defendant’s maximizing of the credit to the jury. An IRS RA
(discussed below) is a good witness to use to present and discuss sum-
maries. Summary charts are admissible under Rule 1006 of the Federal
Rules of Evidence.25

5. Undercover operations
Often in investigations of crooked tax-return preparers, the IRS will
conduct an undercover operation in which an undercover IRS agent poses
as a customer of the target and has a tax return prepared by the target.
Where successful, the target prepares a false tax return on behalf of the
undercover agent, and their encounter is recorded by the agent.
In cases where the IRS did an undercover shop at the defendant’s
business during the investigation, video or audio evidence of the defen-

25 Rule 1006 states: “The proponent may use a summary . . . to prove the con-
tents of voluminous writings . . . that cannot be conveniently examined in court.”
Fed. R. Evid. 1006. Accordingly, courts have consistently held that summarizing evi-
dence is admissible. United States v. Blackwood, 366 F.App’x 207, 212 (2d Cir. 2010);
United States v. Moore, 923 F.2d 910 (1st Cir. 1991); United States v. Suther-
land, 929 F.2d 765 (1st Cir. 1991); United States v. Sturman, 951 F.2d 1466, 1480
(6th Cir. 1991).

December 2023 DOJ Journal of Federal Law and Practice 189

dant’s interactions with the undercover agent will be crucial to putting
the jury in the room while the defendant prepared a false tax return. To
ensure the admissibility of the undercover operation, one should consider
whether to substantively charge the false return prepared for the under-
cover agent if the return was electronically submitted to the IRS by the
fraudulent return preparer. Otherwise, a motion in limine should be filed
with the court requesting admission of the recording under Rule 404(b).

B. Witnesses
1. Client witnesses
Client witnesses are essential in a case against a fraudulent return
preparer. As discussed above, the prosecutor chose witnesses who will
confirm that the tax returns prepared on their behalf by the defendant
were false, and that they did not provide the defendant with the false in-
formation included on those returns. Moreover, the testimony from these
clients, taken together, will demonstrate a pattern of conduct by the de-
fendant (for example, that the defendant reported the same or similar
types of false items on each of the client’s tax returns). The clients’ testi-
mony will prove that the tax returns charged in the indictment were false,
that the defendant prepared those tax returns, and that the defendant
acted willfully.

2. IRS records custodian

Even though certified IRS records are admissible without witness testi-
mony, the prosecutor nevertheless should consider calling an IRS records
custodian as a trial witness. Testimony from an IRS records custodian
(sometimes referred to as an IRS Service Center Representative or Court
Witness Coordinator) can provide the jury with useful context at the
outset of the government’s case. A records custodian can explain tax
documents to the jury and orient them to the important parts (such as
the false items) on the clients’ tax returns.

3. IRS undercover agent

As previously discussed, the IRS frequently conducts undercover op-
erations in fraudulent return preparer cases. The undercover agent’s tes-
timony and any recording are some of the strongest and most compelling
evidence in a trial of a fraudulent return preparer.

4. IRS Revenue Agent

Another useful IRS witness a prosecutor should consider for trial is an
IRS Revenue Agent (RA). RAs, who conduct examinations as part of the

190 DOJ Journal of Federal Law and Practice December 2023

IRS’s civil functions, may be assigned to assist in criminal investigations
and prosecutions. In a fraudulent return preparer trial, an RA from the
Special Enforcement Program (SEP) can provide testimony concerning
the proper tax treatment of the false items at issue and can calculate each
client-witness’s correct tax liability, had their tax returns been properly
prepared.
Courts frequently hold that an IRS summary witness may testify as to
what the evidence showed.26 Thus, an IRS RA who is testifying as a sum-
mary witness may testify regarding the tax consequences of transactions
or events, so long as she does not “give a legal opinion that necessarily
determines the guilt of a defendant or instructs the jury on controlling
legal principles.”27
A question sometimes arises as to whether the RA’s testimony is sum-
mary witness testimony or expert witness testimony. As a general matter,
there is no bright-line rule about the proper characterization of RA tes-
timony. But an RA who performs straightforward and transparent tax
calculations, which are based on facts already admitted into evidence,
and who merely spells out the tax consequences of those facts, is likely
to be considered a summary witness.28 In such instances, the RA is sim-
ply testifying as to what the evidence shows, and performing calculations
that the jury could do itself, given enough time, and may not need to be
qualified as an expert witness. Thus, in most fraudulent return preparer
cases, the prosecutor should strive to treat the RA as a summary witness.
The prosecutor should consider moving in limine for a ruling that
the RA’s testimony is summary, rather than expert, in nature. Further,
the prosecutor should seek a ruling permitting the RA to remain in the
courtroom for the entire trial as a person whose presence is essential to the
presentation of the government’s case under Rule 615(c) of the Federal
Rules of Evidence.29

26 See United States v. Stierhoff, 549 F.3d 19, 27–28 (1st Cir. 2008) (discussing and
affirming summary testimony by an IRS RA). “The key to admissibility is that the
summary witness’s testimony does no more than analyze facts already introduced
into evidence and spell out the tax consequences that necessarily flow from those
facts.” Id.; see also United States v. Pree, 408 F.3d 855, 869 (7th Cir. 2005) (“It is
well-established that the nature of a summary witness’ testimony requires that he
draw conclusions from the evidence presented at trial.” (internal citations omitted));
United States v. Moore, 997 F.2d 55, 58 (5th Cir. 1993) (“As a summary witness,
an IRS agent may testify as to the agent’s analysis of the transaction which may
necessarily stem from the testimony of other witnesses.”).
27 United States v. Sabino, 274 F.3d 1053, 1067 (6th Cir. 2001).
28 See,e.g.,Stierhoff, 549 F.3d at 27–28.
29 Rule 615 of the Federal Rules of Evidence provides that “a person whose presence
a party shows to be essential to presenting the party’s claim or defense” may be

December 2023 DOJ Journal of Federal Law and Practice 191

 If, however, the prosecutor believes that the court could potentially
exclude or limit the RA’s testimony because it borders on expert testi-
mony, the prosecutor should alternatively notice the witness as a poten-
tial expert witness and follow the requirements of Rule 702 of the Federal
Rules of Evidence. It is important for prosecutors to determine how judges
in their district have typically treated RA summary testimony. In some
districts, judges treat the RAs as summary expert witness and expect
prosecutors to comply with the requirements for experts under Rule 702.

5. Employees of the defendant’s business

If the defendant prepared her fraudulent tax returns through a busi-
ness that had employees, those employees can also be valuable witnesses
at trial. Employees who did not participate in preparing false tax returns
could testify about the general operations of the business and how le-
gitimate tax returns were prepared, including how tax information was
obtained from clients and incorporated into tax returns. They could also
testify about any training and instructions the defendant gave them about
how to prepare tax returns. Employees who had a role in the preparation
of false tax returns could also testify about any instructions the defendant
gave them about falsifying items on those tax returns.

6. IRS Special Agent

Although calling the case agent to testify is often discouraged, as it po-
tentially puts the entire investigation on trial and certainly makes discov-
ery disclosure obligations more burdensome, there are certain occasions
when you would want to call the IRS Special Agent who investigated the
case to testify. For example, in circumstances where the Special Agent
has interviewed the defendant, who has made certain favorable admis-
sions that the prosecutor believes should be introduced at trial. If there
is a second Special Agent at the interview, it would be preferable to call
the non-case agent to testify instead, so long as they are able to testify
concerning those statements made by the defendant.

C. Rule 404(b) evidence

In almost every fraudulent return preparer prosecution, there will be
evidence of false tax returns prepared by the defendant that cannot be

excluded from sequestration. Fed. R. Evid. 615. When a witness’s testimony relates
only to a summary of evidence, even the rationale for the sequestration of the witness
is absent. See United States v. Charles, 456 F.3d 249, 258 (1st Cir. 2006); see also
United States v. Strauss, 473 F.2d 1262, 1263 (3d Cir. 1973) (purpose of excluding
witnesses is “to prevent the shaping of testimony by witnesses to match that given by
other witnesses”) (internal citations omitted).

192 DOJ Journal of Federal Law and Practice December 2023

included in the indictment because they fall outside of the statute of
limitations. The prosecutor should consider whether to offer this as “other
act” evidence under Rule 404(b) of the Federal Rules of Evidence.
Rule 404(b) provides that while “evidence of any crime, wrong, or act
is not admissible to prove a person’s character in order to show that on a
particular occasion the person acted in accordance with the character,”
evidence of any crime, wrong, or act “may be admissible for another
purpose, such as proving motive, opportunity, intent, preparation, plan,
knowledge, identity, absence of mistake, or lack of accident.”30
In fraudulent return preparer prosecutions, the evidence of other, sim-
ilarly false tax returns prepared by the defendant is typically offered to
prove the defendant’s intent. In a case charged under 26 U.S.C. § 7206(1)
or 7206(2) the government must prove that the defendant acted willfully,
that is, that the defendant intentionally violated a known legal duty.31
Willfulness is rarely proved directly in any case, much less a tax case, but
often is proved by circumstantial evidence of a defendant’s conduct.32 Ev-
idence of other, similarly false tax returns prepared by the defendant is
highly probative of the defendant’s intent.
The prosecutor should be cautious, however, in how much evidence to
attempt to admit through Rule 404(b). While there is no bright line rule,
it is prudent to make sure that the uncharged conduct is proportionate
to the charged conduct. Otherwise, an objection under Rule 403 of the
Federal Rules of Evidence of unfair prejudice may be sustained.33

D. Common defenses
While, on occasion, a defendant will claim not to have prepared the
false tax returns at issue in a fraudulent return preparer trial, a more
typical defense is that the defendant did not act willfully because she did
not know what she was doing was wrong. This commonly takes one of

30 Fed. R. Evid. 404(b).

31 Willfulness has the same meaning in fraudulent return preparer cases as it has for
other criminal tax violations: “the word ‘willfully’ in these statutes generally connotes
a voluntary, intentional violation of a known legal duty.” United States v. Bishop,
412 U.S. 346, 360 (1973); see also Cheek v. United States, 498 U.S. 192, 200 (1991);
United States v. Ervasti, 201 F.3d 1029, 1041 (8th Cir. 2000).
32 See generally Huddleston v. United States, 485 U.S. 681, 685 (1988) (“Extrinsic
acts evidence may be critical to the establishment of the truth as to a disputed issue,
especially when that issue involves the actor’s state of mind and the only means of
ascertaining that mental state is by drawing inferences from conduct.”).
33 Under Rule 403, a court may find that the probative value of an excessive number
of uncharged returns is not “substantially outweighed by the danger of . . . unfair
prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or
needlessly presenting cumulative evidence.” Fed. R. Evid. 403.

December 2023 DOJ Journal of Federal Law and Practice 193

two forms: (1) the defendant did not know she reported false information
on the tax returns (“blame the clients”); or (2) the defendant did not
know she reported items incorrectly on the tax returns (“blame the tax
law”). If the prosecutor has properly prepared the case, neither of these
defenses is likely to be successful.
A “blame the clients” defense gains little traction where client-witne-
sses testify unequivocally that they did not provide the false information
to the defendant, and where the tax returns of multiple client witnesses
all contain the same, or similar falsities. This testimony is even stronger
when it is corroborated by prior or subsequent tax returns of the client
witnesses that were not prepared by the defendant, and that did not
include similar falsities. This evidence supports the argument that the
false items on the tax returns had to have come from the defendant.
A “blame the law” defense can be trickier to rebut. Often, an appeal to
the jurors’ common sense is the best approach. A defendant’s scheme may
be so egregious (for example, reporting wholly fake Schedule C businesses
for clients) that an argument that the defendant did not know it was
wrong lacks all credibility.
To support either defense, a defendant may seek to admit evidence of
uncharged, non-fraudulent tax returns to support a willfulness defense. As
a general rule, evidence of non-criminal conduct is irrelevant, and the fact
that a defendant prepared other, accurate tax returns has no bearing on
whether the tax returns charged in the indictment are false.34 Accordingly,
if applicable, the prosecutor should consider moving in limine to exclude
any such evidence before trial.

E. Jury instructions
In addition to any applicable Circuit pattern jury instructions, the
prosecutor can find model jury instructions for fraudulent return preparer
cases in the Tax Division’s Criminal Tax Manual. Several instructions
warrant particular consideration. First, a unanimity instruction can be
important in a fraudulent return preparer case. That is, where a particular
count in the indictment alleges that a tax return is false in more than one
way, the prosecutor should consider an instruction that the jury need not
find that all items alleged as false in the count are false, but the jury
must unanimously agree on what item alleged as false is false.35

34 See, e.g., United States v. Daulton, 266 F.App’x. 381, 386 (6th Cir. 2008)
(“[e]vidence of noncriminal conduct to negate the inference of criminal con-
duct is generally irrelevant”); United States v. Ellisor, 522 F.3d 1255, 1270
(11th Cir. 2008) (evidence of good conduct is not admissible to negate criminal intent);
United States v. Scarpa, 897 F.2d 63, 70 (2d Cir. 1990).
35 See, e.g., United States v. Helmsley, 941 F.2d 71, 93 (2d Cir. 1991).

194 DOJ Journal of Federal Law and Practice December 2023

 Second, given that in some fraudulent return preparation cases the
defendant’s clients were knowing and willing participants in the fraud, an
instruction that the culpability of the client is irrelevant to the culpability
of the preparer should be used. The defense is likely to attempt to blame
the clients for the falsities on their tax returns, but it is not a defense
that the client also knew that the return was false.

IV. Sentencing
The defendant has been convicted at trial, and it is now time for
sentencing. There are several issues the prosecutor should be prepared to
address at sentencing.

A. Tax loss
1. Two-level enhancement for return preparers
First, the prosecutor should always argue that a two-level increase in
the defendant’s offense level is appropriate because the defendant “was in
the business of preparing or assisting in the preparation of tax returns.”36

2. Aggravating Role Enhancement

Second, the prosecutor should consider whether the facts of the re-
turn preparer case merit an aggravating role enhancement. Aggravating
role enhancements apply if the defendant was an organizer, leader, man-
ager, or supervisor in the criminal activity and range from a two-level
increase to a four-level increase.37 The enhancement may be appropriate
in cases where the return preparer’s employees were knowingly filing false
returns. It may also be appropriate if the false return scheme involved
other participants responsible for creating false documents to support
the fraudulently filed tax returns.

3. Relevant conduct
Third, the prosecutor should seek to include as many uncharged, but
false, tax returns in the applicable tax loss calculations as possible.
In determining the base offense level for sentencing, a court must in-
clude all relevant conduct.38 The U.S. Sentencing Guidelines specify that
relevant conduct includes “all acts and omissions . . . that were part of
the same course of conduct or common scheme or plan as the offense of
conviction,” but only for “offenses of a character for which § 3D1.2(d)

36 U.S.S.G. § 2T1.4(b)(1)(B).
37 U.S.S.G. § 3B1.1.
38 U.S.S.G. § 1B1.3(a).

December 2023 DOJ Journal of Federal Law and Practice 195

would require grouping of multiple counts”—which includes tax offenses
sentenced under Part T of Chapter Two of the Guidelines.39 The commen-
tary to section 2T1.1 further explains that “all conduct violating the tax
laws should be considered as part of the same course of conduct or com-
mon scheme or plan unless the evidence demonstrates that the conduct is
clearly unrelated.”40 Thus, other fraudulently prepared tax returns, be-
cause they are part of the same course of conduct or common scheme
or plan as the offense of conviction, should be accounted for as relevant
conduct in calculating tax loss.41
Relevant conduct is important in fraudulent return preparer prosecu-
tions because the counts charged in the indictment rarely capture the full
extent of the defendant’s crimes. Thus, the prosecutor should argue that
the proper tax loss includes all other known false tax returns prepared
by the defendant. Any tax returns that can be shown, by a preponder-
ance of the evidence, to be false should be treated as relevant conduct,
including other false tax returns prepared for the clients who testified at
trial and false returns prepared on behalf of clients whose returns were
not included in the indictment. It is proper to include tax returns that
were confirmed to be false during IRS interviews with taxpayers, even if
there was no opportunity for the defendant to cross-examine the taxpay-
ers.42 The relevant conduct can include tax loss from years barred by the
statute of limitations, and it can also include acquitted conduct.43
Given that much of this type of evidence is unlikely to have been
admitted at trial, it will need to be introduced at sentencing. Typically,
an IRS RA can testify about these additional tax loss figures and the
methodology used to calculate them.

4. Extrapolation
Relevant conduct can also be established through an extrapolation
method. “To extrapolate means ‘to estimate the values of . . . a function
or series . . . outside a range in which some of its values are known, on

39 Id.; U.S.S.G. § 3D1.2(d) (providing that “[o]ffenses covered by” (inter alia)
“§§2T1.1, 2T1.4, 2T1.6, 2T1.7, 2T1.9, 2T2.1, [and] 2T3.1” “are to be grouped un-
der this subsection”).
40 U.S.S.G. § 2T1.1, n.2.
41 See, e.g., United States v. Hendrickson, 822 F.3d 812, 829–30 (6th Cir. 2016) (court
properly included tax loss from fraudulent refunds in failure to file case).
42 United States v. Goosby, 523 F.3d 632, 639 (6th Cir. 2008).
43 See, e.g., United States v. Ziskind, 491 F.3d 10, 16–17 (1st Cir. 2007);
United States v. Watts, 519 U.S. 148, 157 (1997) (per curiam) (guidelines range may
rest on uncharged conduct or conduct underlying acquitted charges, if court finds
conduct proven by a preponderance of evidence).

196 DOJ Journal of Federal Law and Practice December 2023

the assumption that the trends followed inside the range continue outside
it.’”44 In a fraudulent return preparer case, that means taking a random
sample of tax returns that are “representative of the larger group of”
returns, calculating the tax loss within that sample, and then using that
figure to estimate the total tax loss.45
For an extrapolation to be unbiased, the sample returns must be ran-
domly chosen.46 The sample returns must be chosen from the entire uni-
verse of the defendant’s returns, not those already flagged by the IRS as
suspicious. A sample used for extrapolation must also consist of enough
returns to allow the estimate of the total tax loss to be made with rea-
sonable confidence—typically, that means the sample must be at least
thirty returns.47 Practically speaking, a successful extrapolation may re-
quire a lot of legwork, especially on behalf of the case agent, who will
need to interview taxpayers or obtain other evidence (such as IRS audit
files) that establish which of the sample returns are false. Extrapolation
can be time-consuming and complicated. A prosecutor who would like to
undertake it should consult with the Tax Division to obtain guidance and
assistance.

B. Restitution
Restitution is an important component of sentencing in criminal tax
cases. Restitution is limited to the actual loss caused by the counts of con-
viction, unless the defendant agrees to pay a higher restitution amount.48
As a result, the restitution calculations will often differ from the total tax
loss calculations. As previously discussed, restitution can only be ordered
as a separate part of the defendant’s sentence if the defendant agrees to
pay restitution in a plea agreement. When negotiating a plea agreement,
the Tax Division directs prosecutors to include the sample restitution
language in the Criminal Tax Manual. If there isn’t a plea agreement,
or the plea agreement does not include an agreement to restitution, then
the court may only order restitution as a condition of supervised release
or probation.49 It is important that prosecutors alert the court to the
appropriate manner of ordering restitution to ensure a clean record.

44 United States v. Mehta, 594 F.3d 277, 283 (4th Cir. 2010) (internal citation omit-
ted).
45 Id.
46 See United States v. Jenkins, 786 F.App’x 852, 860 (11th Cir. 2019).
47 See United States v. Johnson, 185 F.3d 765, 769 (7th Cir. 1999).
48 U.S. Dep’t of Just., Criminal Tax Manual, 44.03[1].
49 U.S. Dep’t of Just., Criminal Tax Manual, 44.00; CTM 44.10[1].

December 2023 DOJ Journal of Federal Law and Practice 197

C. Costs of prosecution
Prosecutors in most tax cases, including fraudulent return preparer
cases, are permitted to seek the “costs of prosecution” as a mandatory
component of the sentence.50 The ability to seek the costs of prosecution
in criminal tax cases is often overlooked. The Tax Division strongly rec-
ommends that prosecutors request the recovery of the costs of prosecution
at sentencing in criminal tax cases.51

V. Conclusion
Prosecuting fraudulent return preparers need not be complicated. In
most instances, these cases do not involve complicated tax schemes, but
basic fraud. We hope this article provides guidance on some of the tools
used to prosecute these cases.

About the Authors

Sarah Kiewlicz is a Trial Attorney with the Tax Division, Western
Criminal Enforcement Section. She joined the Tax Division in 2016 through
the Department’s Honors Program.
Thomas F. Koelbl is an Assistant Chief with the Tax Division, North-
ern Criminal Enforcement Section. He joined the Tax Division as a trial
attorney in the Civil Trial Section, Southern Region in 2005 through
the Department’s Honors Program, and he became a prosecutor in the
Northern Criminal Enforcement Section in 2014.

50 See U.S.S.G. § 5E1.5 (providing that “[c]osts of prosecution shall be imposed on a

defendant as required by statute” and identifying 26 U.S.C. § 7206(2) as one of the
statutes that “require the court to impose the costs of prosecution”).
51 See U.S. Dep’t of Just., Criminal Tax Manual, 43.12[2].

198 DOJ Journal of Federal Law and Practice December 2023

Gathering and Using Foreign
Evidence in Tax Cases
Kimberle E. Dodd
Criminal Appeals and Tax Enforcement Policy Section
Tax Division

Nanette L. Davis
Senior Litigation Counsel
Criminal Enforcement Section, Northern Region
Tax Division
Does your case involve issues and facts that may require you to ob-
tain evidence from outside the United States? The Department of Jus-
tice (Department) and the Internal Revenue Service (IRS) provide helpful
guidance and resources to agents and attorneys regarding obtaining infor-
mation, assistance, and evidence from abroad in tax cases.1 The purpose
of this article is not to walk through those resources in exhaustive detail,
but to offer practical suggestions and considerations for attorneys fac-
ing the task of gathering evidence and information from foreign sources.
The key practice tip to remember is to start early because international
evidence gathering takes a considerable amount of time and can cause
significant delays in an investigation or trial proceeding.
Do not start gathering your international evidence by sending an
email, making a telephone call, or attempting to subpoena a source of
evidence in a foreign country. It is very important that no U.S. inves-
tigators, prosecutors, or attorneys contact foreign witnesses or authori-
ties, or undertake foreign travel, without obtaining the proper clearances
and authorizations. Most problems associated with gathering foreign evi-
dence revolve around the concept of sovereignty. A violation of a nation’s
sovereignty can cause diplomatic problems and result in denial of access
to the evidence or even the arrest of the agent or attorney who acts in
the foreign nation.

1 E.g., U.S. Dep’t of Just., Just. Manual § 4-4.630; U.S. Dep’t of Just., Just. Man-
ual § 9-13.000; U.S. Dep’t of Just. Tax Div., Criminal Tax Manual – Chapter
41 (https://www.justice.gov/tax/foia-library/criminal-tax-manual-title-page-0); IRM
35.4.5 (Jan. 18, 2013).

December 2023 DOJ Journal of Federal Law and Practice 199

I. What evidence can you obtain in the
United States?
Attorneys should consider sources of evidence that exist in the United
States regarding the international firm, financial institution, or other for-
eign evidence holder. Often, we can obtain domestic evidence that relates
to the foreign source and may help strengthen later formal treaty requests
seeking assistance from another country. For example, searches and re-
ports run in LexisNexis, Thomson Reuters CLEAR, and Accurint may
contain useful information regarding foreign entities, including details on
the executives and directors, main office and branch locations, and cur-
rent operating status (active versus inactive) of the foreign source. When
searches are run on the target or U.S. taxpayer, these reports also may
identify foreign assets and other potential sources of international evi-
dence that the investigator or trial team did not know existed. One of the
first steps that we recommend to attorneys working on a matter involving
foreign issues is to ask a librarian or paralegal to run these searches in at
least two databases other than Accurint. The IRS typically uses Accurint
in their cases, so we find it helpful to obtain reports from LexisNexis and
CLEAR. All these databases have advanced search and analytics capa-
bilities that help users locate people, assets, businesses, email addresses,
cell phone details, social media accounts, court records, and other useful
information.
The Treasury Department’s Financial Crimes Enforcement Network
(FinCEN)2 is another source of useful information in matters involving
foreign financial issues. Reports of Foreign Bank and Financial Accounts
(FBARs), Suspicious Activity Reports (SARs), and Currency Transac-
tion Reports (CTRs) may provide helpful information regarding foreign
accounts and the movement of foreign assets relevant to your case. FBARs
are filed by U.S. persons, including entities, who have a financial interest
in or signature or other authority over financial accounts located outside
the United States that have an aggregate value greater than $10,000 at
any time during the calendar year reported.3 FBARs help to verify known
foreign accounts, identify unknown foreign accounts, identify third-party
firms retained to prepare and file the FBARs on behalf of the U.S. per-
son (another potential source of evidence, and often a different firm than
the tax return preparer), and provide information indicating whether the

2 U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, https://www.fincen.gov/.

3 U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, Report Foreign Bank
and Financial Accounts, https://www.fincen.gov/report-foreign-bank-and-financial-
accounts.

200 DOJ Journal of Federal Law and Practice December 2023

reports were timely filed or filed late.
SARs are filed by domestic financial institutions to report suspicions
of money laundering, tax evasion, fraud, or other criminal activity. Some
foreign countries have a similar suspicious transaction reporting regime,
which have been accessed by Department prosecutors via law enforcement-
to-law enforcement contacts. In one case, the prosecutors were able to
identify an as-yet unidentified co-conspirator, who subsequently pleaded
guilty here in the United States. SARs are required to be filed within
60 calendar days after the date of the initial detection of a reportable
transaction.4 SARs are often quite detailed in the narrative relating to
the reportable transaction, identify involved suspects and other parties,
provide specific information on the movement of funds, and can iden-
tify additional, unknown financial accounts relevant to your case. If you
locate SARs containing relevant and useful information, request the sup-
porting documentation and records from the bank that filed the report.
No legal process is required when the financial institution is providing
the supporting documentation and records underlying a SAR in response
to an appropriate request for the information. Additionally, banks are re-
quired to maintain a copy of the SAR and the original or business record
equivalent of any supporting documentation, and banks must provide all
supporting documentation for the SAR upon request by FinCEN or an
appropriate law enforcement or supervisory agency.5
CTRs also are filed by domestic financial institutions to report cur-
rency (cash or coin) transactions over $10,000 conducted by, or on behalf
of, one person, as well as multiple currency transactions that aggregate
to be over $10,000 (referred to as “structuring” to evade the reporting
requirement).6 Banks are required to obtain personal identification in-
formation about the individual conducting the transaction, usually their
driver’s license information and Social Security number. CTRs are filed
for deposits, withdrawals, exchanges of currency, and other payments or
transfers. These reports also may provide helpful information regarding
the movement of foreign assets relevant to your case and potential at-
tempts to evade reporting requirements. As with SARs, financial institu-

4 Office of the Comptroller of the Currency, Suspicious Activity Reports (SARs),

https://www.occ.treas.gov/topics/supervision-and-examination/bank-operation-
s/financial-crime/suspicious-activity-reports/index-suspicious-activity-reports.html.
5 U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, Suspicious Activity Report
Supporting Documentation, https://www.fincen.gov/resources/statutes-regulations/-
guidance/suspicious-activity-report-supporting-documentation (June 13, 2007).
6 U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, Notice to Customers: A
CTR Reference Guide, https://www.fincen.gov/sites/default/files/shared/CTRPam-
phlet.pdf.

December 2023 DOJ Journal of Federal Law and Practice 201

tions are required to maintain a copy of the CTR data and all supporting
documentation, and the institution must provide the information and
records upon receipt of an appropriate request.7 If a CTR contains infor-
mation that is relevant to your case, you should request the supporting
documentation and records from the bank that filed the report.
FinCEN also handles requests under Section 314 of the Patriot Act in
certain criminal cases, like money laundering and terrorism cases. There,
once the law enforcement agent has provided the appropriate certification,
FinCEN will post a request for information from more than 34,000 points
of contact at more than 14,000 voluntarily participating financial institu-
tions worldwide. The participating institutions have two weeks from the
posting date of the request to provide data matches for accounts main-
tained by a named subject during the preceding 12 months and transac-
tions conducted within the last 6 months. While this data cannot be used
as evidence itself, it can be followed by an appropriate legal request for
the foreign records.8
To run searches, obtain these reports, and determine whether FinCEN
has information relevant to your case, you need to have an account with
FinCEN. Most law enforcement agencies and Department divisions have
a designated FinCEN point of contact. If you do not know the FinCEN
contact person for your office, ask a reviewer or supervisor. It is impor-
tant to follow the appropriate FinCEN user guide and process when you
access FinCEN information because it is covered by the Bank Secrecy
Act, and approval must be obtained before you may share or disseminate
information received from FinCEN.
In tax cases, consider asking the IRS to provide Treasury Enforce-
ment Communication System (TECS) data and Foreign Account Tax
Compliance Act (FATCA) information for the relevant U.S. taxpayers.
The Department of Homeland Security’s TECS system is used to assist
with screening and determinations regarding persons crossing our bor-
der. TECS historical travel information provides U.S. entrance and exit
information for U.S. citizens, resident aliens, and non-resident aliens.9
TECS historical travel data can be useful in cases involving foreign issues
because it may provide information on when a U.S. person crossed the
border, took a commercial airline flight, or traveled by sea, and the en-

7 U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, FinCEN Cur-
rency Transaction Report (FinCEN CTR) Electronic Filing Requirements,
https://www.fincen.gov/sites/default/files/shared/FinCEN%20CTR%20Electronic
FilingInstructions%20-%20Stand%20Alone%20doc.pdf (July 2013).
8 See U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, USA PATRIOT Act
Section 314(b), https://www.fincen.gov/section-314b.
9 IRM 5.1.18 (Aug. 7, 2023).

202 DOJ Journal of Federal Law and Practice December 2023

try or exit point usually is identified in the report. TECS historical travel
data can be useful in cases involving foreign issues because it may provide
information on when a U.S. person crossed the border, took a commer-
cial airline flight, or traveled by sea, and the entry or exit point usually
is identified in the report. This information can be cross-referenced with
personal visits to an offshore bank or a foreign fiduciary firm, and it may
identify where a taxpayer has foreign assets or conducts business activity.
TECS information also can be used to compute the amount of time a
defendant or taxpayer is out of the country to support tolling the limi-
tations periods in some criminal and civil tax cases.10 Obtaining TECS
data may take several weeks in a criminal case or several months in a
civil matter, so we recommend requesting the information early in your
investigation or case.
A request to the IRS for FATCA data is another step we recommend
in cases involving offshore financial accounts. The IRS FATCA data can
be a useful source of information regarding foreign accounts of U.S. tax-
payers for periods after 2014. The FATCA requires that foreign financial
institutions report to the IRS on the foreign assets held by their U.S.
clients.11 FATCA information can help to verify known foreign accounts
and to identify unknown foreign accounts relevant to an investigation or
civil case. There also may be an ability through the respective FATCA
agreement, tax treaty, or Tax Information Exchange Agreement (TIEA)
for the IRS to request the actual account records for an account reported
under FATCA. This option should be discussed with IRS counsel and
IRS Exchange of Information, which is the competent authority for tax
treaties. FATCA information is protected under 26 U.S.C. § 6103, and you
also will need to obtain permission to use it in your case under the re-
spective FATCA agreement. We recommend asking IRS counsel to obtain
use authorization from IRS Exchange of Information when you send your
initial request for FATCA information. The amount of time it takes to
get the already existing FATCA information from the IRS is not lengthy,
but if you decide to follow up that request with a formal request through
the IRS for the actual account records, it will take several months before
a response is received from the foreign competent authority. Requesting
and obtaining any FATCA information early in your investigation or case
is strongly recommended.
Another domestic source of information regarding foreign financial ac-

10 See 26 U.S.C. §§ 6503 and 6531.

11 Internal Revenue Service, Foreign Account Tax Compliance Act (FATCA),
https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-
fatca.

December 2023 DOJ Journal of Federal Law and Practice 203

tivity and offshore accounts is the U.S. correspondent bank for the specific
foreign financial institution. A correspondent bank is a third-party finan-
cial institution that provides services to another financial institution and
acts as an intermediary between banks. Many investigators and attorneys
are unaware that wire transfers in U.S. currency pass through U.S. banks
that act as correspondent banks in the transfer process. For example, a
U.S. person sends a $5M wire transfer from his Swiss bank account to a
bank account in Luxembourg. The investigator or trial attorney can look
up the U.S. correspondent bank used by the Swiss bank during that pe-
riod,12 then the trial attorney can subpoena the U.S. correspondent bank
to obtain more information regarding the wire transfer and receiving ac-
count at the Luxembourg bank. Additionally, the information provided
in response to the subpoena may help support a formal treaty request
to Luxembourg for information relating to the receiving account. A sub-
poena to The Clearing House (TCH) also is an option in cases involving
significant wire payments, but you should obtain guidance in advance
from TCH regarding the information to include in your request.13 It is
helpful to familiarize yourself with TCH and Clearing House Interbank
Payments System (CHIPS) payment messages before drafting your sub-
poena.
In addition, you may be able to get your supervisor’s approval in some
cases to use a material witness detainer, under 18 U.S.C. § 3144, to obtain
an interview, grand jury testimony, or Rule 15 deposition testimony of a
foreign witness. Under section 3144, you would seek a court-ordered arrest
warrant for the witness. You would have your agent put an alert into the
TECS system for the witness in anticipation of travel to or through the
United States. The witness would then be arrested on the warrant as they
entered the United States and would then be subject to the bail rules
and procedures of 18 U.S.C. § 3142. Section 3144 specifically provides
that the witness may be detained until the witness’s deposition can be
taken pursuant to the Federal Rules of Criminal Procedure. You should
get management approval before trying this forceful route.
Short of a material witness detainer, your law enforcement agents
may be able to serve a grand jury subpoena on a witness traveling to or
through the United States. While enforcement of such a subpoena may
present difficulties, the service of the subpoena could prompt a dialogue
between you and the witness’s counsel and can give rise to cooperation
from witnesses who want to be able to travel without concerns about

12 The Clearing House, UID Lookup, https://www.theclearinghouse.org/uid-lookup.

13 The Clearing House, Subpoena Instructions, https://www.theclearinghouse.org/
about/subpoena-instructions.

204 DOJ Journal of Federal Law and Practice December 2023

service of process.
Finally, have you determined whether the target or U.S. taxpayer has
any of the foreign evidence already within the United States? In many tax
cases, the U.S. taxpayer has provided some records for offshore accounts
to an accountant, domestic financial advisor, or tax return and FBAR
preparers. Bankruptcy filings, criminal cases, civil litigation, U.S. Tax
Court cases, and divorce proceedings within the United States also may
be a source for some of the foreign evidence relevant to your case. Divorce
proceedings are frequently sealed, but you can try a court order from
the grand jury judge. In such states, a subpoena may not be considered
sufficient as at least some clerks do not treat subpoenas as the requisite
court order. You may also be able to get documents from a cooperative ex-
spouse. As with the other domestic sources of evidence, this information
can be obtained faster and more easily than foreign evidence located in
another country, and it also can be used to strengthen a formal treaty
request seeking information and assistance from another nation.

• Department prosecutors have successfully used TECS data, in con-

junction with confirmatory information such as credit card charges,
airline, hotel, and other travel data, and emails, to extend statutes
of limitations based on 26 U.S.C. § 6531. Helpfully, the purpose
of the target’s reason for being outside the United States is irrele-
vant, and if successfully deployed, this tool will extend the statute
of limitations for the period of foreign travel.
• Department prosecutors have used SAR data as a source for foreign
account identification, which can provide details such as account
names, account numbers, and wire transfer details that help formu-
late better Mutual Legal Assistance Treaty (MLAT) or tax treaty
requests. SAR data has also been used to identify banking accom-
plices.
• Correspondent bank data can help you to identify accounts even if
all you have is an amount and date of a wire transfer. This can be
a bit of a needle-in-the-haystack search, but it has been successful.
Banks nowadays are sending spreadsheets of transactions, which
can provide a wealth of information including account holder iden-
tification and addresses, and beneficiary data. We recommend using
a date range and amount range to account for delays inherent in the
wire transfer system and deductions for fees such a wire transfer or
foreign currency conversion fees. Seek assistance from banks’ wire
transfer departments, rather than subpoena compliance groups, if
they have issues finding your transactions.

December 2023 DOJ Journal of Federal Law and Practice 205

II. What informal sources exist for gathering
international evidence?
It is possible to obtain some international evidence through informal
mechanisms and resources, and we recommend that agents and attorneys
explore these options early in cases involving foreign evidence. The IRS
has attaché offices positioned abroad that are staffed by IRS Criminal
Investigation and may be able to assist with investigations and tax cases.
IRS Criminal Investigation develops relationships with foreign govern-
ment partners through these attaché offices, such as IRS-CI’s “J5” re-
lationships with the taxation agencies of Canada, the United Kingdom,
the Netherlands, and Australia. In many instances, the IRS can obtain
foreign evidence for us that is very helpful. In addition to the traditional
attaché offices, the IRS has a new pilot program where cyber attachés are
deploying to four continents across the globe that include Asia, Europe,
South America, and Australia to combat cybercrime, focusing on tax and
financial crimes.14 Attorneys should discuss contacting the respective IRS
attaché office with the IRS agent or IRS attorney assigned to their tax
case. Consider the appropriate timing if an investigation is covert, and
do not assume that requests to foreign government partners will be kept
confidential. An introductory conference call or video meeting is a better
method than email messages for the initial case summary and discus-
sion of information or assistance needed, particularly if it is necessary to
discuss multiple foreign evidence issues or a covert investigation. If you
receive information or records from an IRS attaché office, ask whether it
is for intelligence purposes only or whether it can be used as evidentiary
material. If you want to use the information in court, it may be necessary
to send a formal treaty request.
An Egmont request is another useful tool in developing international
evidence for your case. The Egmont Group, formed in 1995, is a co-
operative network of more than 150 national financial intelligence units
(FIUs) that collect information on suspicious or unusual financial activ-
ity from the financial industry, analyze the data, and share it with other
FIUs for use in combating terrorist funding and other financial crimes.15
The Egmont Group allows members to request and share financial intel-

14 Press Release, I.R.S., IRS-CI Deploys 4 Cyber Attachés to Locations Abroad to

Combat Cybercrime (May 18, 2023), https://www.irs.gov/compliance/criminal-
investigation/irs-ci-deploys-4-cyber-attaches-to-locations-abroad-to-combat-
cybercrime.
15 Egmont Group of Fin. Intel. Units, Members by Region, https://egmontgroup.org/
members-by-region/ (2023).

206 DOJ Journal of Federal Law and Practice December 2023

ligence with one another. The United States is a member of the Egmont
Group through the Treasury Department’s Financial Crimes Enforcement
Network (FinCEN), through which attorneys may request information.16
Section 9.4.4 of the IRS Internal Revenue Manual17 addresses requests
for information by IRS Criminal Investigation and has specific subsec-
tions regarding FinCEN and Egmont requests. Egmont requests are sent
from IRS Criminal Investigation to FinCEN for processing. If an inves-
tigation is covert, the prosecution team should discuss the appropriate
timing before proceeding with any Egmont requests. While the informa-
tion provided by a FIU varies by country, it could include public, law
enforcement, and financial information. Information provided by a FIU
can only be used for investigative lead purposes; if a prosecution team
wants to use the information in court or other formal proceedings, the
FIU request should be followed by a formal treaty request under the ap-
propriate MLAT or tax treaty.
Generally, responses to an Egmont request are received faster than
responses to a MLAT or tax treaty request, and the information can help
the prosecution team develop a more factually detailed treaty request
and identify additional sources of foreign evidence for the case. Often,
information obtained in response to an Egmont request will lead you to
other foreign financial accounts, other foreign financial advisory firms, and
other sources of evidence for your case. It also may identify other links in
the country to which you sent your original Egmont request resulting in
supplemental requests to the same FIU.
Your Egmont request should be as specific as possible and provide as
much detail as possible about your investigation. Be sure to enumerate
all violations you are investigating (money laundering, fraud, terrorism,
tax, etc.). Some FIU countries will not accept tax cases or cases involving
a violation that is not a predicate offense in their country (although tax
evasion is a predicate offense for money laundering in many foreign juris-
dictions). Make certain that the request clearly indicates the connection
between the subject or subjects and the country to which the request
is being sent. For example, if you know the name of the Belize entity
used by a taxpayer to open and hold offshore bank accounts, include the
full name and address of that Belize company as well as the names of
any officers, directors, shareholders, etc., in your request. If you know the
taxpayer had accounts at a particular bank in Cyprus, include as much

16 U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, The Egmont Group of Fi-
nancial Intelligence Units, https://fincen.gov/resources/international/egmont-group-
financial-intelligence-units.
17 IRM 9.4.4 (Nov. 19, 2021).

December 2023 DOJ Journal of Federal Law and Practice 207

detail as possible regarding the financial accounts in your request. If you
know that the taxpayer was a shareholder or director of several domi-
ciliary companies or entities incorporated in the British Virgin Islands
(BVI), include detailed information about your taxpayer and each of the
BVI companies. A domiciliary company is basically a company in name
only, a shell company, which may have a bank account but not otherwise
be engaged in independent business activities.
Remember that information obtained from an FIU through an Egmont
request is for intelligence purposes only, and the information may not be
used as evidentiary material, presented in court, or used in any other
formal proceedings without the prior written authorization of FinCEN.
Remember also that an Egmont request may prompt an investigation by
the receiving country, the results of which prosecutors have been sent
informally in the past. Then, the prosecutor should follow that with a
formal MLAT or other treaty request to get the underlying records. If
you want to use the information in court, send a formal treaty request
under the appropriate MLAT or tax treaty and be aware that treaty
requests take many months to process in some countries.
How did the investigation team or IRS revenue agent first discover
the foreign evidence source? Did you request all information and foreign
evidence already collected? In many cases, we find that there are prior tax
treaty requests that were sent to a foreign country and the IRS already
received responses. If you come across records or documents that have
a “Treaty Information” watermark on them, we recommend contacting
IRS Exchange of Information through the IRS attorney or agent assigned
to the case to request original copies of the relevant treaty responses
in their entirety and the accompanying records certifications. Generally,
the administrative file tends to have excerpts of these treaty responses
rather than a copy of the original treaty response containing all pages.
Ask whether any other treaty responses exist relating to your taxpayer
or case, and IRS counsel can work with IRS Exchange of Information
to obtain permission to share the information and authorization to use
the information in the case if it is appropriate to do so. Prior treaty
responses already received by our U.S. competent authority can save time
and can help with drafting more detailed supplemental treaty requests to
obtain additional foreign evidence. It is worth requesting and collecting
all foreign evidence already acquired by the investigation team.
Did your foreign evidence source enter into any resolutions with the
Department? If the international evidence source is a foreign financial
institution or firm, google “name of the source + DOJ” to see whether
the source has any cooperation obligations and whether there is a De-
partment attorney you can contact to discuss the possibility of already

208 DOJ Journal of Federal Law and Practice December 2023

obtained records and potential requests for additional information. It can
also be very helpful to start a dialogue with a foreign financial institution’s
U.S. counsel, who have an interest in appearing to cooperate with the De-
partment, especially with respect to an institution that has an ongoing
cooperation obligation to the Department by virtue of another criminal or
civil resolution. While contacting U.S. counsel is fine, remember that you
cannot contact foreign representatives or foreign firms without obtaining
the proper clearances and authorizations due to sovereignty issues.
The Tax Division has a significant amount of information regarding
U.S. accounts at foreign financial institutions, and many of those for-
eign financial institutions have ongoing cooperation obligations under the
terms of a deferred prosecution agreement or a non-prosecution agree-
ment. The Swiss banks that completed the Tax Division’s Swiss Bank
Program are identified on the Tax Division’s web site,18 and other reso-
lutions can be located easily with a simple Google search. For example, a
Google search of “Swiss Life DOJ” provides links to the press release and
the deferred prosecution agreement entered into by the Swiss Life entities.
Likewise, searching “Bank Hapoalim DOJ” results in links to the press
release and agreements entered into by the Bank Hapoalim entities. These
public agreements and the related exhibits, particularly the criminal in-
formation or statement of facts, provide useful information and evidence
that can be used in your case regarding the actions and conduct of the
foreign financial institution or firm in addition to identifying Department
attorneys who may be able to provide you with foreign evidence and assist
with information requests to the respective foreign financial institution
or firm.
Do not be afraid to use non-traditional methods to obtain informa-
tion and evidence. Through internet searches, we have successfully located
court appointed liquidators and audit firms handling the liquidation of
some foreign financial firms, and many countries have records retention re-
quirements and regulatory procedures for financial institutions and firms
that are in liquidation (or have been liquidated). While Google searches
are useful in finding information regarding your international evidence
source, be cautious when the results include International Consortium of
Investigative Journalists (ICIJ) offshore leaks database material because
there may be privileged information within your search results. Our rec-
ommendation is to consult your supervisor before moving forward with
review of the potentially privileged information if you believe the ICIJ
information could be relevant and useful in your case. A final cautionary

18 U.S. Dep’t of Just. Tax Div., Swiss Bank Program, https://www.justice.gov/tax/

swiss-bank-program.

December 2023 DOJ Journal of Federal Law and Practice 209

note regarding Google searches is to consider whether your investigation is
covert or overt before you begin searching. If your investigation is covert,
you should conduct the searches on an untraceable computer.
In one case, the Tax Division had received a substantial amount of in-
formation from the Swiss Bank Program about an offshore company that
had criminal exposure in the United States. We received permission from
the Department’s Office of International Affairs to approach the com-
pany’s regulator in their headquarter country to ask them to advise the
company that we were interested in speaking with their U.S. counsel. We
heard back from their U.S. counsel within a day, and ultimately, the com-
pany did an extensive internal investigation and entered into a corporate
criminal resolution and paid tens of millions in criminal penalties.

III. Are there any U.S. contacts or

representatives for the foreign
source of evidence?
In some matters involving foreign evidence gathering, we have success-
fully located a U.S. contact or representative for the foreign source, then
through that U.S. representative, we have explored cooperation, potential
assistance, and evidence gathering options. Is there a U.S. branch or office
of the foreign source? Can you identify any U.S. attorneys who represent
the foreign source? If the foreign source has a third-party firm appointed
to handle liquidation (or another legal process), does that third-party
firm have a U.S. branch or office? For example, KPMG and Deloitte have
offices in Switzerland and Luxembourg that handle the liquidation pro-
cess for some financial institutions, and those firms also have offices in
the United States.
Even if a Department criminal resolution is with a foreign entity, its
U.S. operations have tended to be cooperative with subpoenas for domes-
tic records. While you may still need to seek approval to issue a subpoena
to the domestic entity to obtain evidence abroad19 or submit a formal
treaty request to the foreign nation to obtain the full scope of foreign
evidence relevant to your investigation or case, exploring potential coop-
eration and assistance with a U.S. representative of the foreign source will
often facilitate the process and may result in informal options that aid in
obtaining the information faster.
In one instance, we contacted known U.S. counsel for an international
financial institution that had a resolution with the Department about con-
duct committed by an office in another foreign country. We were quickly

19 U.S. Dep’t of Just., Just. Manual 9-13.525 (2023).

210 DOJ Journal of Federal Law and Practice December 2023

provided the names of local and U.S. counsel for that office. After de-
scribing the conduct to counsel, they proceeded to conduct an internal
investigation, which results we obtained via a treaty request. Counsel also
assisted in locating and making available foreign corporate witnesses.

IV. Can the target or taxpayer obtain the

foreign evidence?
In many investigations and cases involving international evidence, we
are trying to obtain records of foreign financial accounts and foreign fidu-
ciary firms, such as financial advisors and trust administrators. The client
of these firms, typically the target or U.S. taxpayer involved in our mat-
ters, can request and obtain records from his bank or fiduciary firm much
faster and more easily than us.
While the efforts of the taxpayers to obtain these records tend to be
minimal or nonexistent in most matters, we do have the ability to facil-
itate the process with respect to some foreign financial institutions and
firms. For the banks that entered into resolutions with the Department,
we may already have a sample instruction form that, if completed cor-
rectly and transmitted to U.S. counsel for the foreign bank or firm along
with a request for full account records, will result in the production of the
entire account file to the taxpayer or his representative. If you determine
that the foreign source of evidence has a resolution with the Department,
contact the appropriate Department attorney to see whether there is such
a process, including a sample instruction form and sample records request
language, for seeking records through U.S. counsel for the foreign bank
or firm.20 Additionally, we have had success in some cases with providing
contact information for the firm handling liquidation of a foreign finan-
cial institution to defense counsel who then obtains a copy of all account
records from the liquidator.
We recommend that you ask defense counsel to provide you with a
copy of the communication to the foreign bank’s U.S. counsel request-
ing the records and providing the completed instruction form so that the
Department attorney can confirm receipt with U.S. counsel for the for-
eign bank and ensure the request seeks all relevant records. This process
should be shared with defense counsel as early as possible in a case, and
it is recommended that you send the description of the process and any
sample forms via email to preserve a record of the communication. In

20 If the foreign source is a Swiss bank that entered into a resolution through the Tax
Division’s Swiss Bank Program, you can contact Kimberle Dodd, Thomas Sawyer, or
Nanette Davis to discuss options and potential assistance.

December 2023 DOJ Journal of Federal Law and Practice 211

some matters, those communications can be useful exhibits to later court
filings that demonstrate our efforts to facilitate gathering of the relevant
foreign evidence and the taxpayer’s unwillingness to cooperate in obtain-
ing the evidence over which they have possession, custody, and control.
If a U.S. person has control over records, even if those documents are not
in his possession or custody because they are overseas, a U.S. court has
jurisdiction to order him to get those records.
Bear in mind that productions of account records to the client by the
foreign firm or its representative do not usually include a records cer-
tification. If you want to use certain records in court, you will need to
plan in advance on how to get them admitted. We have successfully ob-
tained records certifications from foreign financial institutions and firms
that have cooperation obligations through their resolutions with the De-
partment, but the process typically takes several months and involves
providing U.S. counsel for the foreign bank or firm a copy of the specific
records we want certified along with a draft certification for review and
comment. If opposing counsel will not agree in advance regarding the ad-
missibility of the records, consider filing a motion in limine for an advance
ruling if the foreign records are important evidence.
A Title 31 subpoena is another tool that may be useful if your case
involves foreign accounts that should be reported on an FBAR. Persons
required to file an FBAR have record keeping requirements and must re-
tain for a period of five years records that “contain the name in which each
account is maintained, the number or other designation of the account,
the name and address of the foreign financial institution that maintains
the account, the type of account, and the maximum account value of
each account during the reporting period.”21 The scope of records you
are likely to gather from a Title 31 subpoena tends to be more limited
than the entire set of account records you may be able to obtain from the
foreign financial institution through a treaty request or from a U.S. tax-
payer who obtains a complete copy of his account records directly from
the foreign financial institution. When fraud, evasion, and willfulness are
at issue in your case, it is highly recommended that you obtain the entire
set of account records because the bank’s internal visit reports, internal
client management and banker’s notes, account opening and Know Your
Client (KYC) records, and correspondence files tend to have the best ev-
idence of intent, willfulness, and evasion. (Be aware that if an individual
is using a foreign fiduciary firm like an asset manager, the bank account
may be in the name of the fiduciary firm and much of the KYC docu-

21 U.S. Dep’t of the Treasury Fin. Crimes Enf’t Network, Record Keeping,
https://www.fincen.gov/record-keeping (last visited Nov. 15, 2023).

212 DOJ Journal of Federal Law and Practice December 2023

mentation and records of contacts will be with the fiduciary firm, rather
than the bank.)
Title 31 subpoenas should be done in any case where there is any
suspicion that a target has offshore accounts. We have samples for the
appropriate subpoena rider language, which should identify any known
bank accounts (even if just by bank location) plus include catch-all lan-
guage to cover the unknown accounts. We recommend where possible to
serve your Title 31 subpoenas before submitting your treaty requests, be-
cause you are likely to get information from the target that will be useful
in your treaty requests. For example, some countries, like Singapore, will
generally not respond favorably to a treaty request that does not iden-
tify an account by a specific account number, especially if there is broad
language in the request that looks like a “fishing expedition.” Be mindful
about the five-year lookback period and serve your Title 31 subpoenas
as early as possible in your investigation. Obviously, this will make your
investigation overt, so you will need to consider the strategic implications
of that disclosure.

V. Can you send a formal request for

assistance to the foreign nation?
The United States is a party to many bilateral and multilateral agree-
ments with other countries that can be utilized to exchange information
for use in tax cases. The most common bilateral agreements that can
be used to exchange tax information are MLATs, tax treaties, TIEAs,
estate and gift tax treaties, and FATCA IGAs. The most common mul-
tilateral agreements that can be used to exchange tax information are
the joint OECD and Council of Europe tax exchange agreement, the
Hague Evidence Convention, the Hague Service Convention, the Orga-
nization of American States (OAS) MLAT, the United Nations Conven-
tion against Corruption (UNCAC), and the United Nations Convention
against Transnational Organized Crime (UNTOC).
Chapter 41 of the Department’s Criminal Tax Manual provides de-
tailed guidance regarding obtaining foreign evidence and other types of
assistance in our tax cases, and it explains the types of assistance avail-
able under MLATs, TIEAs, income tax treaties, and letters rogatory.22
MLATs and tax treaties create an obligation between the treaty partners
to provide assistance in criminal matters and are designed to facilitate the
exchange of information and evidence for use in criminal investigations

22 U.S. Dep’t of Just. Tax Div., Criminal Tax Manual, https://www.justice.gov/

tax/foia-library/criminal-tax-manual-title-page-0 (Dec. 22, 2022).

December 2023 DOJ Journal of Federal Law and Practice 213

and prosecutions. Some MLATs have restrictions regarding assistance for
tax offenses, and you may need to use a different agreement such as a
TIEA or income tax treaty to obtain the foreign evidence needed for
your tax case.
In many circumstances, prosecutors have the choice of using the tax
treaty or the MLAT. Requests for assistance under these treaties are a
government-to-government exchange through the competent authorities.
The competent authority for MLATs is the justice component of the for-
eign government, and the competent authority for tax treaties is the tax
component. There are different factors that come into play when consid-
ering whether you want the justice or the tax component of the foreign
government responding to the request. Often in criminal matters, we pre-
fer the justice component because they frequently are better at getting
third-party information or dealing with matters where some type of court
process is required. But if you need tax information held by the foreign
government, you usually will want the tax component because they are
holding the information. If your case is a criminal tax investigation or
prosecution, we recommend contacting the appropriate attorney within
the Department’s Office of International Affairs (OIA)23 as early as pos-
sible to explore the options available for requesting information and evi-
dence from the foreign country. OIA has an internal Department web site
available through DOJNET (U.S. Department of Justice Intranet) with
very helpful country pages that contain country-specific legal guidance
and contact information for the OIA attorneys assigned to the country.
It is helpful to review the country page in advance of contacting the OIA
attorney so that you are familiar with the OIA guidance regarding ob-
taining assistance and evidence from that country. If there is a choice
between the MLAT or the tax treaty, you may want to reach out to both
OIA and IRS Exchange of Information to get an idea about which may
be faster or better in the specific case or investigation.
Depending on the country, you can use an MLAT to obtain public
and private documents, execute search warrants, and interview witnesses.
Some jurisdictions permit informal interviews of witnesses after the ini-
tial MLAT is sent. These can be facilitated by law enforcement-to-law
enforcement contacts. Foreign law enforcement agencies can also be use-
ful in tracking down witnesses or obtaining other information. As one
example, we needed a copy of a photograph of a defendant for an extra-
dition request. A cooperative foreign law enforcement agency searched
their border records and provided a copy of a photo from a passport that

23 U.S. Dep’t of Just. Off. of Int’l Aff’s, https://www.justice.gov/criminal/criminal-

oia.

214 DOJ Journal of Federal Law and Practice December 2023

was recently used by the defendant to enter their country.
For civil matters, you should contact IRS Exchange of Information
and the Department’s Civil Division Office of Foreign Litigation (OFL)
& Office of International Judicial Assistance (OIJA) as early as possi-
ble in your case to discuss the options available for requesting evidence
and assistance from the foreign country. OFL/OIJA also has an internal
Department web site available through DOJNET (U.S. Department of
Justice Intranet) with evidence resources and contact information for the
office to obtain country-specific guidance regarding how to properly serve
or obtain evidence from an individual or company located abroad. It is
helpful to review the evidence resources provided on the OFL/OIJA site
in advance of contacting the office, and we also recommend referring to
those resources as your case progresses because they address the admissi-
bility of evidence obtained abroad and contain case law that may be useful
to you. If a tax treaty or TIEA is available to use in your civil case, we
recommend starting with that agreement and IRS Exchange of Informa-
tion before pursuing evidence or assistance under the Hague conventions
through OFL.
The U.S. Department of State also provides helpful country-specific
legal guidance regarding international judicial assistance that addresses
service of process, criminal matters, obtaining evidence in civil and com-
mercial matters, taking voluntary depositions of willing witnesses, au-
thentication of documents, and has other useful information for each
country.24 Rule 15 of the Federal Rules of Criminal Procedure governs
the rules and procedure for taking a deposition of a witness for use at
trial. For a Rule 15 deposition of a foreign witness, you will generally
have to obtain the court order required under Rule 15 and then imple-
ment the order via a MLAT request to the country of residence of the
witness. Close coordination with OIA is essential as the logistics of these
requests can be complicated. In such instances, the deposition does not
necessarily depend on the cooperation of the witness as the foreign au-
thorities may have the ability to compel the person to appear in court
to undergo the deposition. You may, however, have to obtain immunity
for the foreign witness, to overcome a self-incrimination privilege. That
immunity process is the same as for a domestic witness.
A relatively new mechanism for obtaining foreign financial account ev-
idence in our tax cases is the respective FATCA agreement for the foreign
country. This option is not covered by the general criminal and civil De-

24 U.S. Dep’t of State Bureau of Consular Aff., Judicial Assistance Country Informa-
tion, https://travel.state.gov/content/travel/en/legal/Judicial-Assistance-Country-
Information.html.

December 2023 DOJ Journal of Federal Law and Practice 215

partment guidance referenced above regarding obtaining foreign evidence
and assistance, and it has not been used in many cases as of this article. If
your investigation or case involves foreign financial accounts open during
periods after 2014, it is worth exploring whether the foreign financial in-
stitution involved has FATCA reporting obligations with respect to those
accounts, and if so, whether the applicable FATCA agreement, tax treaty,
or TIEA provides a means for the United States to request and obtain the
account records. For example, some countries without a MLAT, TIEA, or
income tax treaty may have an intergovernmental agreement (IGA) with
the United States to implement FATCA, and the IGA may contain pro-
visions for the United States to request additional information regarding
U.S. reportable accounts, such as account opening documents, account
statements, wire transfers, deposit slips, etc.
The U.S. Department of the Treasury has a list of the FATCA agree-
ments and understandings by jurisdiction that includes a PDF copy of
each agreement and understanding,25 and the IRS has a useful page on
its web site regarding FATCA that includes a tool to search foreign finan-
cial institutions that have a Global Intermediary Identification Number
(GIIN).26 Once you determine whether there is a possibility of request-
ing foreign financial account records through a FATCA agreement, you
should discuss the options and process with IRS counsel and IRS Ex-
change of Information. It may be the first time that IRS counsel has
explored seeking foreign evidence through a FATCA agreement, so we
recommend being prepared to share the relevant sections and language
of the specific FATCA agreement or understanding in advance of the
discussion.
There is a broad spectrum in the amount of time that it takes to trans-
mit a formal request for evidence through the U.S. competent authority
to a foreign country’s competent authority and then receive a complete re-
sponse. While some countries process these requests within a few months,
other countries have procedures for participation in the treaty process by
the persons concerned and third parties that may result in litigation in
the foreign country delaying the response for many months. It is criti-
cal to explore your treaty options early and discuss the best options for
your case with the OIA attorney, IRS Exchange of Information group
manager, or OIJA attorney assigned to the specific country. Be prepared

25 U.S Dep’t of the Treasury, Foreign Account Tax Compliance Act,

https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-
act.
26 Internal Revenue Service, Foreign Account Tax Compliance Act (FATCA),
https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-
fatca.

216 DOJ Journal of Federal Law and Practice December 2023

to describe the period relevant to your case so that you can determine
whether the treaty agreement is available for requesting the foreign evi-
dence you need. Also, be sure to closely review the treaty response when
you receive it to ensure that a sufficient records certification was pro-
vided along with the foreign evidence. In some cases, we need to go back
to the foreign competent authority because the response does not include
a records certification or the one provided is insufficient. You do not want
to discover a problem with your records certification late in your case. Fi-
nally, determine whether the agreement used to obtain the evidence from
abroad contains any provisions restricting the use of information or evi-
dence furnished pursuant to the treaty. Attorneys should closely review
any use restrictions applicable to information obtained through a formal
request for assistance to a foreign government as soon as the response is
received from the competent authority, and they also need to bear those
restrictions in mind throughout the entirety of the case.
In offshore facilitator cases, our evidence can primarily be from foreign
treaty sources. In many instances, the results of one treaty request will
lead to requests to additional countries or supplemental requests to the
same country. Some complex international cases involve treaty requests
sent to more than a dozen countries.
In addition, we have strategically employed non-prosecution agree-
ments that simultaneously protect a foreign witness from prosecution
while obligating them to come to the United States for grand jury and
trial preparation and testimony. Such agreements obviate the need for a
Rule 15 deposition via a MLAT request.
Be aware that U.S. citizens living abroad are subject to service of a
grand jury or trial subpoena for testimony and records, like U.S. residents.
Discuss with your supervisor whether you can seek a court order pursuant
to 28 U.S.C. § 1783 from the presiding grand jury or trial judge, which
must find that the witness or documents are “necessary in the interest
of justice.” Service of the subpoena is governed by the Federal Rules of
Civil Procedure, and failure to comply with the subpoena subjects the
witness to contempt procedures delineated in 28 U.S.C. § 1784.
In one case, we received court permission to serve a Title 31 subpoena
to a subject living abroad via email to his U.S. defense counsel (who had
previously refused to accept service on behalf of his client), the subject’s
mail forwarding service, and the subject’s email, as well as service via a
MLAT request. In that case, we never had to use the MLAT, because once
the defense attorney understood that service upon him had been made
pursuant to a court order, the subject complied with the subpoena. While
we do not start with alternative service, these options can be explored
when the traditional service rules fail.

December 2023 DOJ Journal of Federal Law and Practice 217

VI. Have you considered timing issues?
A recurring theme throughout this article is that gathering interna-
tional evidence is a lengthy process, and it is critical to start early in your
investigation or case. It should be noted that efforts to obtain evidence
from abroad are very worthwhile, and attorneys should not be discour-
aged from exploring all options to acquire the foreign evidence relevant
to their case.
Consider and evaluate whether you may need to send multiple treaty
requests to several different foreign countries or subsequent treaty re-
quests to the same foreign competent authority. Often in cases involving
foreign evidence, we identify additional sources after receiving a response
to a treaty request, then we send new treaty requests that also take
months to process. In some matters, we realize that the initial treaty
request did not cover the entire period relevant to the case or the origi-
nal response was incomplete, so we send a supplemental request seeking
additional evidence from the same foreign source.
If you are making a formal or official request to obtain foreign evidence
in your criminal case, you should file a motion to suspend the running of
the statute of limitations. Section 3292 of Title 18 provides for the sus-
pension of the statute of limitations to permit the United States to obtain
foreign evidence. Prosecutors should remember to document the submis-
sion of the foreign request with a sworn declaration or affidavit, preferably
from your case agent. You can attach the transmittal letter to the foreign
country that you should have received from OIA (or IRS Exchange of
Information in the case of a TIEA or tax treaty request) as an exhibit to
the declaration, but do not attach the full treaty request. You can redact
the transmittal cover letter to show the information sufficient to prove up
the transmission of the request to the foreign competent authority on the
specific date. While the maximum period for which the statute of limi-
tations may be suspended for an offense is up to three years, the period
begins to run when the United States requests evidence from a foreign
government (not the date the motion is made or granted).27 Additionally,
the period ends when the foreign court or authority takes final action on
the request.28 The Criminal Tax Manual provides more detailed guidance
and a sample motion to suspend the running of the statute of limitations
in Chapter 41.29 We recommend filing your tolling motion shortly after

27 18 U.S.C. § 3292.
28 18 U.S.C. § 3292(b). If the final action is taken before the expiration of the statute
of limitations would otherwise expire, you can toll the statute up to six months.
18 U.S.C. § 3292(c).
29 U.S. Dep’t of Just. Tax Div., Criminal Tax Manual, https://www.justice.gov/tax/

218 DOJ Journal of Federal Law and Practice December 2023

the official request to obtain foreign evidence is transmitted to the foreign
country’s competent authority.
Prosecutors should carefully review the transmittal letters and evi-
dence received from foreign sources as soon as it is received through OIA
or the IRS. We have not infrequently had instances where a foreign au-
thority has declared itself as having taken “final action” when in fact
there are still outstanding items under the treaty request. In such a case,
contact your OIA attorney or IRS Exchange of Information to document
the outstanding items (preferably in writing so you have a record) and
then have OIA or IRS Exchange of Information contact the competent
authority in the relevant country about the missing materials. (Remem-
ber that this may include records certifications!) You may be faced with
a motion to dismiss based on the expiration of the statute of limitations
that hinges on whether the foreign country has taken final action, and you
will want to document the correspondence regarding the missing items in
your opposition to any such motion.
In a number of cases, we have successfully fought a defense motion to
dismiss on the basis of the expiration of the statute of limitations by prov-
ing up the exclusion of time through the receipt of tolling orders under
section 3292. This generally entails an attorney declaration describing the
treaty request and the receipt of the relevant evidence and section 3292
order or orders. Attached to the declaration were the transmittal cover
letters to and from the foreign competent authorities and the orders. Re-
member, do not include a copy of the treaty requests themselves (but
you can attach a redacted version that shows the caption and the first
paragraph, which generally describes the submission of the request under
the treaty).
Prosecutors should also remember that OIA does not keep copies of
evidence received pursuant to treaty requests, so treat the evidence you
receive with care.
Civil attorneys attempting to gather evidence and information from
foreign sources should evaluate early whether opposing counsel and the
taxpayer are cooperative. If sending a pre-suit letter, determine whether
the taxpayer is willing to assist in obtaining the foreign evidence because
less time may be necessary for discovery if they cooperate. We find in most
cases, however, that the taxpayer is not cooperative, motions to compel
may be necessary, formal requests to foreign governments are pursued,
and a significant amount of time is needed for discovery. It is better to
consider these matters pre-suit and discuss them before the Rule 26(f)
conference than to agree to a discovery schedule that may not allow suffi-

foia-library/criminal-tax-manual-title-page-0.

December 2023 DOJ Journal of Federal Law and Practice 219

cient time for gathering, analyzing, and using the foreign evidence during
depositions, in pre-trial motions, and at trial. If the parties are unable
to agree, propose competing schedules and be prepared (by conferring
with IRS Exchange of Information and OFL regarding timing) to inform
the judge at the scheduling conference that if treaty requests are neces-
sary, you will need to add approximately nine months (or more based
on the input of IRS Exchange of Information and OFL) to the discovery
schedule.
While the process tends to be slow, we have many cases in which the
foreign evidence obtained was key in demonstrating intent, fraud, willful-
ness, and affirmative acts of tax evasion over multiple years. For example,
we received key evidence from multiple foreign countries in a case show-
ing that the taxpayer controlled the offshore accounts and communicated
with the foreign banks about account transactions.

VII. What evidence do you need to use?

It bears repeating that certain evidence obtained in the United States
or from abroad has restrictions on the use of the information. As you
develop your investigation and gather your evidence, take note of any
use restrictions or limitations, and comply with the restrictions to avoid
problems in your case. As discussed earlier, information obtained from
FinCEN is Bank Secrecy Act information, responses to an Egmont request
are only for intelligence purposes, and FATCA information from the IRS
is protected under 26 U.S.C. § 6103 the same as tax treaty and TIEA
information.
Responses to official treaty requests also may have limitations on the
use of evidence or assistance obtained due to the provisions of the spe-
cific treaty. MLATs have provisions restricting the use of information or
assistance furnished under the agreement, including conditions of confi-
dentiality. MLATs also contain provisions to ensure the admissibility in
proceedings in the requesting country of the evidence obtained to avoid
having to procure the testimony of a foreign witness. TIEAs and income
tax treaties usually contain confidentiality provisions and language re-
quiring that the information obtained under the agreements be used only
for tax purposes. This can be problematic for a prosecutor conducting
a grand jury investigation directed at both tax and non-tax offenses.
Some prosecutors decide to send formal treaty requests under the appli-
cable MLAT and the appropriate income tax treaty after consultation
with OIA and the IRS to secure use permission for both non-tax and tax
offenses. In certain countries, such as Switzerland, we can only use an
MLAT and the evidence obtained from such treaties for non-tax cases.
In a non-tax case, you may receive evidence that shows that there are

220 DOJ Journal of Federal Law and Practice December 2023

also tax offenses at play. In that instance, if the country will permit it,
you can do a supplemental MLAT treaty request to allow you to use that
evidence for tax charges or a tax treaty request that would provide the
evidence for use in tax charges.
Always consult with the appropriate authority to determine whether
any confidentiality and use restrictions apply to the evidence you obtained
and communicate those restrictions to your entire team. Explore options
with OIA and IRS Exchange of Information for obtaining permission to
use the information as needed or discuss other mechanisms to acquire the
information without problematic use restrictions attached to it. Generally,
once the evidence properly used in the investigation or case becomes a
matter of public record in the United States, it may be used for any
purpose.
Once you determine that the foreign evidence can be used as needed
in your case, consider how you will authenticate the foreign records. It
may be possible to get the opposing party to stipulate the authenticity
of the records, to succeed with a motion in limine, or you may be able to
get the custodian of the foreign records to appear as a witness to give the
necessary authenticating testimony. You can also seek a Rule 15 deposi-
tion to obtain necessary authentication. (This was necessary in one of our
cases where there had been an acquisition of the foreign company and the
records certification was inadequate.) The most common method we see
in tax cases is the use of a foreign certification for foreign business records
that is obtained by U.S. authorities through a formal treaty request or
from U.S. counsel for the foreign source. Start your planning early so that
you can use the foreign evidence you gathered to strengthen and prove
your case.

VIII. Conclusion
The ability to gather foreign evidence for use in our criminal and
civil tax cases has improved significantly. We have more tools in our
toolbox than ever, but obtaining evidence from foreign-based sources is
rarely accomplished within a span of weeks. Consider all known foreign
evidence sources early in your investigation or case, seek guidance from
Department and IRS attorneys knowledgeable of international evidence
issues, explore all options to gather the information, and plan ahead to
get the best use of your foreign evidence. Our efforts can result in a gold
mine of information.

December 2023 DOJ Journal of Federal Law and Practice 221

About the Authors
Kimberle Dodd joined the Tax Division in 2008 following a clerkship
and approximately seven years in private practice. She has worked on
international evidence and offshore matters, including extensive involve-
ment in the Tax Division’s Swiss Bank Program, since 2014. She currently
focuses on criminal and civil proceedings involving U.S. taxpayers with
foreign accounts as well as matters with foreign financial institutions and
foreign fiduciaries who assist U.S. taxpayers in maintaining undeclared
offshore financial accounts. She also regularly helps agents and attorneys
in exploring informal sources to gather international evidence and in mak-
ing formal treaty requests seeking foreign evidence and assistance from
other countries.
Nanette Davis joined the Tax Division as a trial attorney in 1995 af-
ter four years of private practice, served as an Assistant Section Chief
in the Northern Criminal Enforcement Section from May 2008 until Au-
gust 2014, and is now a Senior Litigation Counsel with the Tax Division.
Nanette has served as lead or co-lead counsel in numerous investigations
and jury trials, including some of the Division’s most complex criminal
cases. She has been a co-manager of the Swiss Bank Program and has
been litigating offshore matters for many years. She has also negotiated
criminal resolutions in corporate criminal matters involving foreign com-
panies, including financial institutions and insurance companies.

222 DOJ Journal of Federal Law and Practice December 2023

Monetary Claims Against the
Government: When Are They
Tax Refund Cases?
Jason Bergmann
Assistant Chief, Court of Federal Claims Section
Tax Division

Richard J. Markel
Trial Attorney, Court of Federal Claims Section
Tax Division
The Court of Federal Claims (CFC) is a specialized court with nation-
wide jurisdiction over certain monetary claims against the government.1
Under the Tucker Act,2 the CFC has jurisdiction over money claims, not
sounding in tort, arising under the Constitution, federal statutes, regula-
tions, and contracts.3 While such claims seeking $10,000 or less may also
be brought in district court,4 for claims exceeding $10,000 the jurisdiction
of the CFC is “exclusive.”5
Although claims for refund of tax are monetary claims against the
government based on a statute and thus fall under the Tucker Act, they
have their own jurisdictional rules. Section 1346(a)(1) of the Judicial Code
(Title 28) provides that the “district courts shall have original jurisdic-
tion, concurrent with” the CFC, over claims for the “recovery” of certain
tax-related sums.6 Thus, while many large-dollar claims against the gov-
ernment may only be filed in the CFC, claimants may choose to bring
tax claims qualifying under section 1346(a)(1) in district court.
For tactical reasons, parties with money claims against the govern-

1 10 Stat. 612 (1855).

2 Tucker Act of 1887, ch. 359, 24 Stat. 505 (codified as amended at 28 U.S.C. § 1491).
3 28 U.S.C. § 1491(a).
4 Id. § 1346(a)(2) (also known as the “Little” Tucker Act). This provision does not
apply to claims governed by the Contract Disputes Act, 41 U.S.C. § 7101 et seq., over
which district courts have no jurisdiction.
5 See Eastern Enters., v. Apfel, 524 U.S. 498, 520 (1998) (recognizing that, under the
Tucker Act, “the Court of Federal Claims has exclusive jurisdiction to render judgment
upon any claim against the United States for money damages exceeding $10,000”).
6 28 U.S.C. § 1346(a)(1).

December 2023 DOJ Journal of Federal Law and Practice 223

ment sometimes prefer district courts to the CFC. Decisions of the CFC
are appealed to the Federal Circuit, while district court decisions in tax
cases are appealed to the regional circuits.7 When Federal Circuit prece-
dent is unfavorable, claimants have an incentive to bypass the CFC and
litigate in district court instead.8 In some cases, claimants with cases
pending in the CFC have sought to dismiss their own claims, or transfer
them to district court, to flee adverse Federal Circuit precedent.9 The
judges’ experience may also inform a claimant’s choice of forum. District
court judges are “generalist[s]” who “hear[] a wide variety of cases,” while
CFC judges are “specialist[s] in money disputes with the government.”10
Moreover, while juries are available for district-court cases brought under
section 1346(a)(1), all CFC trials are to the bench.11
But whatever their motivations, claimants sometimes stretch section
1346(a)(1) to file monetary claims against the government in district
courts instead of in the CFC. While claims to recover overpayments of
federal income tax undoubtedly fall undersection 1346(a)(1), claims seek-
ing other sums can be less clear. Consequently, the scope of district court
jurisdiction under section 1346(a)(1) has been litigated in various con-
texts, with mixed results. As discussed below, such cases have involved
claims against the government for surface-mining reclamation fees paid to
the Interior Department, for payments made by health insurers into the
Transitional Reinsurance Program under the Affordable Care Act (ACA),
for penalties assessed for failures to file timely Reports of Foreign Bank
and Financial Accounts (FBARs), and for interest on tax overpayments.12
Where cases “within the exclusive jurisdiction of the CFC” are “filed
in the district court,” the Justice Manual advises government attorneys
to “be vigilant in moving to dismiss or transfer cases.”13 This article

7 See id. § 1291 (regional circuits have jurisdiction over appeals of final decisions from
district courts); id. § 1295(a)(2) (regional circuits have jurisdiction over appeals of
cases “brought in a district court under section 1346(a)(1)”); id. § 1295(a)(3) (Federal
Circuit has jurisdiction over appeals of final decisions of the Court of Federal Claims).
8 “[C]ontrolling precedent and potential appellate venue often prove decisive factors
in deciding in which forum to file tax litigation.” Thomas D. Greenway, Choice of
Forum in Federal Tax Litigation, 62 Tax Lawyer, No. 2, at 329 (2009).
9 See, e.g., Mendu v. United States, 153 Fed. Cl. 357, 368 (2021) (noting that the
plaintiff’s “peculiar insistence to dismiss his own complaint appears to be for no reason
other than to . . . avoid the Federal Circuit’s binding precedent”).
10 See Matthew H. Solomson, Court of Federal Claims: Jurisdiction,
Practice & Procedure, at 12-8 (BNA 2016); Greenway, supra note 8, at 331.
11 See United States v. Sherwood, 312 U.S. 584, 587 (1941) (holding that the Seventh
amendment does not guarantee a “jury trial in suits brought in the Court of Claims”).
12 See infra Sections II.A–C.
13 United States Dep’t of Just., Justice Manual: Civil Resource

224 DOJ Journal of Federal Law and Practice December 2023

discusses the law that applies to such motions.
The article will first discuss tax refund claims under section 1346(a)(1)
and how they differ from non-tax claims under the Tucker Act. The article
will then examine the language of section 1346(a)(1) and the authorities
applying that language to money claims against the government. Finally,
the article will address a unique avenue for appealing decisions on transfer
motions and the options it provides to the United States.

I. The features of tax refund claims under

section 1346(a)(1) and non-tax illegal
exaction claims under the Tucker Act
A claimant seeking a refund of tax under the Internal Revenue Code
must satisfy specific jurisdictional requirements before filing suit in court.
Claims for the return of other, non-tax amounts paid to the government,
known as “illegal exaction” claims, are not governed by the same frame-
work.

A. Tax refund claims under section 1346(a)(1)

Section 1346(a)(1) provides that district courts have concurrent juris-
diction with the CFC over:
Any civil action against the United States for the recovery of
[1] any internal-revenue tax alleged to have been erroneously
or illegally assessed or collected, or [2] any penalty claimed to
have been collected without authority or [3] any sum alleged
to have been excessive or in any manner wrongfully collected
under the internal-revenue laws[.]
Section 1346(a)(1) is part of an integrated statutory scheme, through
which Congress has provided a limited waiver of sovereign immunity that
permits taxpayers to bring suit in district court for refunds of tax, penal-
ties, and interest.14 To meet the terms of the waiver in section 1346(a)(1),
a taxpayer must satisfy certain jurisdictional prerequisites.15 Those pre-
requisites include filing a timely administrative refund claim with the IRS
and fully paying the tax liability at issue.16

Manual, § 47.
14 See 28 U.S.C. § 1346(a)(1); I.R.C. §§ 6511, 6532, 7422.
15 United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4–5 (2008);
United States v. Dalm, 494 U.S. 596, 601–02 (1990).
16 I.R.C. §§ 6511(a), 7422(a); Clintwood Elkhorn, 553 U.S. at 4–5; Dalm, 494
U.S. at 601–02; Flora v. United States (Flora II ), 362 U.S. 145, 177 (1960);
Flora v. United States (Flora I ), 357 U.S. 63, 75 (1958).

December 2023 DOJ Journal of Federal Law and Practice 225

 Section 7422(a) of the Internal Revenue Code requires that a “claim
for refund or credit” be “duly filed” before a taxpayer files suit seeking
any of the relief described in sections 7422(a) and 1346(a)(1). The cen-
tral language of section 1346(a)(1)—describing the claims for which that
provision waives sovereign immunity—is shared with section 7422(a):
(a) No suit prior to filing claim for refund. – No suit or
proceeding shall be maintained in any court for the recovery
of any internal revenue tax alleged to have been erroneously
or illegally assessed or collected, or of any penalty claimed to
have been collected without authority, or of any sum alleged
to have been excessive or in any manner wrongfully collected,
until a claim for refund or credit has been duly filed with the
Secretary, according to the provisions of law in that regard,
and the regulations of the Secretary established in pursuance
thereof.17
Under section 6511(a) of the Code, the requisite administrative claim
must be filed “within 3 years from the time the return was filed or 2
years from the time the tax was paid.” Section 6532(a) of the Code then
establishes a timeline for filing a refund suit in court. Section 6532(a)(1)
provides that the taxpayer may not file a judicial action until “the ex-
piration of 6 months from the date of filing” the administrative claim
unless the IRS “renders a decision thereon within that time.” The tax-
payer must file any judicial action within two years of the date of mailing
by the service of a notice of disallowance of the administrative claim for
refund or credit.18
The Supreme Court has observed that section 1346(a)(1) is “a key-
stone in a carefully articulated and quite complicated structure of tax
laws,” and compliance with that framework is necessary to obtain a waiver
of sovereign immunity and, with it, subject matter jurisdiction in court.19

B. Non-tax illegal exaction claims

The Tucker Act authorizes money claims against the government
“founded either upon the Constitution, or any Act of Congress or any
regulation of an executive department, or upon any express or implied
contract with the United States, or for liquidated or unliquidated dam-
ages in cases not sounding in tort.”20 A claimant may maintain an “illegal

17 I.R.C. § 7422(a) (emphasis added for words identical to § 1346(a)(1)).

18 Id. at § 6532(a)(1).
19 Flora II at 157.
20 28 U.S.C. § 1491.

226 DOJ Journal of Federal Law and Practice December 2023

exaction” claim under the Tucker Act when he or she “paid money over
to the Government, directly or in effect, and seeks return of all or part
of that sum.”21 An illegal exaction claim “involves money that was ‘im-
properly paid, exacted, or taken from the claimant in contravention of
the Constitution, a statute or a regulation.’”22
An illegal exaction claim will lie where the government extracts a
payment based on a “faulty claim[] of statutory authority” or regulatory
authority.23 The claimant need not fully pay the disputed amount before
pursuing a non-tax claim.24 Thus, while full payment is a prerequisite to
bringing a tax refund claim under section 1346(a)(1), “the full payment
rule does not apply to” other illegal exaction claims.25
Unlike tax refund claims, which have their own statutes of limita-
tions, non-tax illegal exaction claims are subject to the general six-year
statute for claims against the government.26 Nor, as a general matter,
must claimants exhaust administrative remedies before filing such illegal
exaction claims.27 Thus, while non-tax illegal exaction claims are similar
to tax refund claims—in that both seek the return of money allegedly
paid contrary to law—the two are governed by different jurisdictional
frameworks.

II. The scope of district court jurisdiction

under section 1346(a)(1)
Section 1346(a)(1) provides district courts with jurisdiction over non-
tort claims for the recovery of: (1) “any internal-revenue tax erroneously
or illegally assessed or collected”; (2) “any penalty claimed to have been

21 Aerolineas Argentinas v. United States, 77 F.3d 1564, 1572–73 (Fed. Cir. 1996)
(quoting Eastport S.S. Corp. v. United States, 372 F.2d 1002, 1007 (1967)).
22 Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005) (quoting Eastport
S.S., 372 F.2d at 1007).
23 Auto Club Ins. Ass’n v. United States, 103 Fed. Cl. 268, 273–74 (2012).
24 See, e.g., Consol. Edison Co. of N.Y. v. U.S. Dep’t of Energy, 247 F.3d 1378,
1384–86 (Fed. Cir. 2001) (holding that claim for illegal exaction of partially paid
assessments of nuclear decommissioning costs constituted an “adequate remedy in
the Court of Federal Claims,” because if the claimant prevailed it would bar the
Government from collecting additional sums).
25 Ibrahim v. United States, 112 Fed. Cl. 333, 336 (2013).
26 Townsend v. United States, 126 A.F.T.R.2d 2020-6103, 2020 WL 5552043, at *3
(Fed. Cl. 2020); see also 28 U.S.C. §§ 2401, 2501.
27 But see St. Vincent’s Med. Ctr. v. United States, 32 F.3d 548, 549–50
(Fed. Cir. 1994) (holding that where Congress has provided a “specific and compre-
hensive scheme for administrative and judicial review” of a particular type of money
claim, Tucker Act jurisdiction is preempted and claimants must use those procedures).

December 2023 DOJ Journal of Federal Law and Practice 227

collected without authority”; and (3) “any sum alleged to have been ex-
cessive or in any manner wrongfully collected under the internal revenue
laws.” The meanings of these three avenues into district court have been
litigated in various circumstances.

A. Claims to recover “any internal-revenue tax”

Whether a payment qualifies as an “internal-revenue tax” under sec-
tion 1346(a)(1) is not often discussed. In most cases, the answer is so clear
that district court jurisdiction is taken for granted with little analysis.28
However, the meaning of “internal-revenue tax” was litigated in con-
nection with claims to recover surface-mining reclamation fees paid to the
Interior Department, which the government argued were improperly filed
in district court. In two such cases, two circuits interpreted “internal-
revenue tax” differently and split on whether the fee qualified under sec-
tion 1346(a)(1).
In Horizon Coal Corp. v. United States, the government argued that
“the term ‘internal-revenue tax[]’ . . . encompasses only those taxes im-
posed under the Internal Revenue Code, set forth in Title 26 of the
United States Code.”29 But the Sixth Circuit took a “broader view of
‘internal-revenue tax.’”30 “Reject[ing] the government’s jurisdictional ar-
gument,” the panel held that the term “refer[s] not to the Internal Rev-
enue Code, but to revenue generated within the boundaries of the United
States, as opposed to ‘external’ revenue, which is derived from foreign
sources through means such as import and customs duties.”31
In Wyodak Resources Development Corp. v. United States, a case also
involving surface-mining reclamation fees, the Tenth Circuit reached the
opposite result.32 Based in part on the legislative history of the 1954 en-
actment of the “present version of § 1346(a)(1),” the panel was persuaded
that “Congress intended the phrase ‘internal-revenue tax’ to mean taxes
collected by the IRS.”33 The panel held that “[s]uits for the recovery of

28 See, e.g., Meredith Corp. v. United States, 447 F. Supp. 3d 805, 823 (S.D. Iowa
2020) (finding jurisdiction under § 1346(a)(1) over claim for $9 million federal income
tax refund); Cook Oil Co. v. United States, 919 F. Supp. 1556, 1560 (M.D. Ala.
1996) (corporate taxpayer, which sought a refund of diesel fuel excise taxes, was “the
paradigmatic taxpayer for whom § 1346 was enacted”).
29 Horizon Coal Corp. v. United States, 43 F.3d 234, 239 (6th Cir. 1994).
30 Id.
31 Id. (noting that “[t]he term ‘internal revenue’ appears to have been used histori-
cally to distinguish revenues from internal sources by way of taxes as contrasted with
revenues from customs and foreign sources”).
32 Wyodak Res. Dev. Corp. v. United States, 637 F.3d 1127, 1129 (10th Cir. 2011).
33 Id. at 1132–34.

228 DOJ Journal of Federal Law and Practice December 2023

other fees and taxes, even if they can be characterized as ‘internal rev-
enue,’ do not fall within the statute’s ambit.”34
Wyodak reasoned that, because sections 1346(a)(1) and 7422 of the
Internal Revenue Code “use the phrase ‘internal-revenue tax’ (or in the
latter case ‘internal revenue tax’), and in both instances the language was
added by the Revenue Act of 1921,” the phrase “must mean the same
thing” in each.35 According to the Tenth Circuit, “[b]y using the same
definition in both statutes, the provisions work together to require that
all tax refund claimants seeking relief in district court must first exhaust
their administrative remedies with the Secretary of the Treasury.”36 While
Horizon Coal had given “two different meanings to” the same phrase,
the Sixth Circuit had provided no reason for reaching “such a tortured
interpretation.”37
More recent Supreme Court guidance on what constitutes a “tax”
came from National Federation of Independent Business v. Sebelius, the
first Supreme Court challenge to the Affordable Care Act (ACA).38 The
Court had appointed an amicus curiae to argue that the case was barred
by the Anti-Injunction Act,39 which prohibits suits to “restrain[] the as-
sessment or collection of any tax.”40 The Court ultimately rejected that
argument, holding that the Anti-Injunction Act did not bar the claim to
enjoin the assessment of the ACA’s shared responsibility payment because
it was not a “tax” under the Internal Revenue Code.41
The Court’s guidance shows that determining what constitutes a tax
or penalty requires resorting, in certain contexts, to labels.42 Notably,
while the Court held that the “label” of “the payment as a ‘penalty,’
not a ‘tax,’” was “fatal to the application of the Anti-Injunction Act,”
the label did “not determine whether the payment may be viewed as
an exercise of Congress’s taxing power” under the Constitution, which

34 Id. at 1134.
35 Id. at 1131; see also Revenue Act of 1921, Pub. L. No. 67-98, 42 Stat. 227. See tit.
XIII, § 1318, 42 Stat. at 315 (predecessor of 26 U.S.C. § 7422); tit. XIII, § 1310(c), 42
Stat. at 311 (predecessor of 28 U.S.C. § 1346).
36 Wyodak, 637 F.3d at 1135.
37 Id. at 1131.
38 Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012) [hereinafter Sebelius].
39 Id. at 543.
40 I.R.C. § 7421(a).
41 Sebelius, 567 U.S. at 543–46.
42 See, e.g., Optimal Wireless LLC v. IRS, No. 22-5121, 2023 WL 5023433, at *1
(D.C. Cir. Aug. 8, 2023) (relying on “labels” to hold that a different exaction under
the ACA was a “tax” for purposes of the Anti-Injunction Act).

December 2023 DOJ Journal of Federal Law and Practice 229

is determined using a “functional approach.”43 Finding the form of the
shared responsibility payment to be dispositive, the Court held that it
was not a tax.44 The Court explained that the Anti-Injunction Act was
a “creature[] of Congress’s own creation,” for which the statutory text
provided “the best evidence of Congress’s intent.”45 The Internal Revenue
Code consistently differentiated between taxes and assessable penalties,
and the shared responsibility payment was labeled as a “penalty” instead
of a “tax.”46
Although Sebelius did not consider the meaning of “tax” in section
1346(a)(1) specifically, it has been instructive, nonetheless. In Electri-
cal Welfare Trust Fund v. United States, the Fourth Circuit considered
whether a suit to recover a different fee imposed under the ACA could be
brought in district court.47 This time, the challenge was to the mandatory
transitional reinsurance contribution paid to the Department of Health
and Human Services,48 which the plaintiff argued was an internal-revenue
tax.49 Analyzing the payment in light of the statutory test from Sebe-
lius, the district court held that the reinsurance contribution was not an
internal-revenue tax and dismissed the case for lack of jurisdiction.50
The Fourth Circuit affirmed the dismissal.51 The Trust Fund “con-
cede[d] that Congress labeled its assessment as a ‘contribution’ in the
statutory text,” instead of a tax or penalty.52 The Fourth Circuit ex-
plained that it could not ignore a label that proved to be jurisdictionally
fatal.53
To buttress its reasoning, the panel recognized “the textual connec-
tion” between sections 1346(a)(1) and 7422 of the Internal Revenue Code,
holding that the two must be read in pari materia.54 Because section 7422

43 Sebelius, 567 U.S. at 564–65.

44 Id. at 543–46, 564.
45 Id. at 544.
46 Id. at 546; see also I.R.C. § 5000A(b)(1) (imposing “penalty with respect to such
failure [to maintain minimum essential coverage]”).
47 Elec. Welfare Tr. Fund v. United States, 907 F.3d 165 (4th Cir. 2018).
48 Id. at 167 (quoting 42 U.S.C. § 18061(b)(1)(A), these were “payments from ‘health
insurance issuers, and third party administrators on behalf of group health plans’ . .
. [that are] collected and then reallocated to insurers who covered the new high-risk
individuals”).
49 Id.
50 Id.
51 See id. at 169–70.
52 Id. at 169.
53 Id.
54 Id. at 168–69. This holding relied on two prior Supreme Court opinions: Dalm, 494
U.S. at 601, which held that Ҥ 1346(a)(1) must be read in conformity with other

230 DOJ Journal of Federal Law and Practice December 2023

requires a claimant to “duly file[]” with the Treasury Secretary “a claim
for refund or credit” before bringing suit in any court, “an ‘internal-
revenue tax must be one for which requesting a refund from the ‘Secre-
tary’ is sensible.”55 So, “because the payment here was made not to the
Treasury, but to HHS under the Transitional Reinsurance Plan, it was
not an internal-revenue tax.”56
The Fourth Circuit thus held that Ҥ 1346(a)(1) applies only to taxes
and other sums collected by the Internal Revenue Service under the In-
ternal Revenue Code.”57 The panel explained that, because there are
numerous government fees and non-tax exactions that bear no relation to
the Internal Revenue Code, a broader interpretation of section 1346(a)(1)
would be “limitless.”58 “If every such exaction were to be regarded as a
tax,” the CFC’s exclusive jurisdiction over illegal exaction claims un-
der the Tucker Act would be undone, and “the district courts would be
swamped with lawsuits.”59
So, what qualifies as an “internal-revenue tax” under section 1346(a)(1)?
In district courts in the Sixth Circuit, it is all “revenue generated within
the boundaries of the United States.”60 In the Fourth and Tenth Cir-
cuits, the phrase includes only taxes collected by the IRS under the In-
ternal Revenue Code.61 Elsewhere, the question is open, but the Fourth
and Tenth Circuits appear to have the better reasoned view, due to their
consistency with Supreme Court authority.62

statutory provisions which qualify a taxpayer’s right to bring a refund suit,” including
I.R.C. § 7422; and Flora I, 357 U.S. at 65, which observed that the “essential language”
of § 1346(a)(1) “seems to have been copied from . . . the predecessor of the present
claim-for-refund statute [§ 7422].”
55 Id. at 168.
56 Id. at 169.
57 Id. at 170.
58 Id. at 169.
59 Id. at 169–170.
60 Horizon Coal Corp. v. United States, 43 F.3d 234, 239 (6th Cir. 1994); see
Ohio v. United States, 154 F.Supp.3d 621, 629 (S.D. Ohio 2016) (“[U]nless and un-
til the Sixth Circuit applies a different gloss to the term ‘internal-revenue tax’ from
28 U.S.C. § 1346(a)(1), this Court remains bound by Horizon Coal . . . .”).
61 Wyodak Res. Dev, Corp. v. United States,, 637 F.3d 1127, 1134 (10th Cir. 2011);
Elec. Welfare Tr. Fund v. United States, 907 F.3d 165, 170 (4th Cir. 2018).
62 See United States v. Dalm, 494 U.S. 596, 601 (1990); Sebelius, 567 U.S. 519, 543–46,
564 (2012).

December 2023 DOJ Journal of Federal Law and Practice 231

B. Claims to recover “any penalty claimed to have
been collected without authority”
The second type of claim over which district courts have jurisdiction
is one “for the recovery of . . . any penalty claimed to have been collected
without authority.”63 Unlike the first clause (referring to “an internal-
revenue tax”) and third clause of section 1346(a)(1) (referring to “any
sum . . . collected under the internal-revenue laws”), the “any penalty”
clause does not directly refer to “internal-revenue.” No cases appear to
have discussed the significance (if any) of the absent language, and at least
one case took for granted that the “internal-revenue” language following
“any sum” also modified “any penalty.”64 That sensible construction of
the “any penalty” clause appears proper under the noscitur a sociis canon
of statutory interpretation.65
The meaning of the “any penalty” clause has been addressed by two
recent cases involving penalties for failing to report foreign financial ac-
counts. In the Bank Secrecy Act (BSA),66 Congress confronted the prob-
lem posed by the use of foreign bank accounts—particularly in countries
with secretive banking laws—to violate American law.67 To that end, the
BSA requires U.S. persons to file an annual report of FBAR disclosing all
of their foreign accounts if their balances collectively exceed $10,000.68
The FBAR is not a tax form, and it is not filed with the IRS. Rather, ac-
count holders file the FBAR with the Financial Crimes Enforcement Net-
work (FinCEN), the bureau of the Treasury Department with “[o]verall
authority for enforcement and compliance” of the FBAR requirement.69
The BSA authorizes the Treasury Secretary to impose penalties for both

63 28 U.S.C. § 1346(a)(1).
64 See DeCecco v. United States, 485 F.2d 372, 373 (1st Cir. 1973) (quoting
28 U.S.C. § 1346(a)(1) “The fine fits the Tucker Act definition of a ‘penalty claimed
to have been collected without authority . . . under the internal-revenue laws’.”).
65 Noscitur a sociis translates to “it is known by its associates.” Black’s Law Dic-
tionary 1087 (7th ed. 1999). This “commonsense canon . . . counsels that a word
is given more precise content by the neighboring words with which it is associated.”
United States v. Williams, 553 U.S. 285, 294 (2008); see also King v. St. Vincent’s
Hosp., 502 U.S. 215, 221 (1991) (“[T]he meaning of statutory language, plain or not,
depends on context.”). This doctrine helps “to avoid ascribing to one word a meaning
so broad that it is inconsistent with its accompanying words, thus giving unintended
breadth to the Acts of Congress.” Gustafson v. Alloyd Co., 513 U.S. 561, 575 (1995)
(internal quotation marks omitted).
66 P.L. No. 91-508, 84 Stat. 1114 (1970).
67 H.R. Rep. No. 91-975 (1970), as reprinted in 1970 U.S.C.C.A.N. 4394, 4397.
68 31 U.S.C. § 5314(a); 31 C.F.R. § 1010.306(c).
69 31 C.F.R. §§ 1010.306(c), 1010.810(a). Note that FinCEN has delegated FBAR
enforcement authority to the IRS. 31 C.F.R. § 1010.810(g).

232 DOJ Journal of Federal Law and Practice December 2023

willful and non-willful violations of the reporting requirement.70 The as-
sessment of such penalties has spawned litigation in both district courts
and the CFC.
In the first case, Bedrosian v. United States, the Third Circuit sug-
gested sua sponte that section 1346(a)(1) may apply to a claim to re-
cover partially paid FBAR penalties.71 In dictum, the panel stated that
it was “inclined to believe” that the claim to recover FBAR penalties “was
within the scope of § 1346(a)(1)” and “thus did not supply the District
Court with jurisdiction at all because [the plaintiff] did not pay the full
penalty before filing suit.”72 The panel criticized the parties’ contention
that “a civil penalty under the FBAR statute” is “not assessed ‘under
the internal-revenue laws,’ because the FBAR statute is in Title 31 of
the United States Code, not Title 26 (the Internal Revenue Code),” stat-
ing that the argument “elevat[ed] . . . form over substance.”73 The panel
suggested that “‘internal-revenue laws’ are defined by their function and
not their placement in the U.S. Code.”74 However, the government had
counterclaimed for the unpaid portion of the FBAR penalties at issue,
so there was no doubt that the district court had jurisdiction over the
case under 28 U.S.C. § 1345.75 For that reason, “given the procedural
posture” of the case, the Third Circuit left “a definitive holding” on the
proper interpretation of section 1346(a)(1) “for another day.”76
The second case, Mendu v. United States, also concerned a partially
paid FBAR penalty.77 There, the plaintiff had sued in the CFC to re-
cover $1,000 that he had paid against a $752,920 FBAR penalty, and the
government counterclaimed for the balance.78 Relying on the Bedrosian
discussion, the plaintiff moved to dismiss his own complaint, arguing that
his failure fully to pay the FBAR penalty deprived the CFC of jurisdic-
tion.79
The CFC denied the plaintiff’s motion, holding that “an FBAR penalty
is not an internal-revenue tax and, therefore, is not subject to the Flora
full payment rule.”80 The CFC recognized that the “FBAR penalty is

70 31 U.S.C. § 5321(a)(5).
71 Bedrosian v. United States, 912 F.3d 144 (3d Cir. 2018).
72 Id. at 149 n.1; see Flora II, 362 U.S. 145, 164 (1960).
73 Bedrosian, 912 F.3d at 149.
74 Id. at 149 n.1.
75 Id. at 150.
76 Id. at 149 n.1.
77 Mendu v. United States, 153 Fed. Cl. 357 (2021).
78 Id. at 362.
79 Id. at 363.
80 Id. at 365.

December 2023 DOJ Journal of Federal Law and Practice 233

authorized in Title 31 (‘Money and Finance’) of the United States Code,
not the Internal Revenue Code (I.R.C.), which is found in Title 26.”81
Believing “the distinction” to be “not a mere technicality,” the CFC
found that “Congress’s placement of FBAR penalties outside Tile 26 dis-
tinguishes FBAR penalties from internal-revenue laws.”82 Because “the
FBAR penalties are not located within Title 26,” they were not sub-
ject to “various cross-references that equate ‘penalties’ with ‘taxes,’ nor
were they subject to the ‘administrative collection procedures’ under the
Internal Revenue Code.”83 In reaching its decision, the CFC found the
Bedrosian discussion to be “not persuasive.”84
The disagreement between Bedrosian and Mendu is most likely aca-
demic. Because the government has taken the position that suits to re-
cover partially paid FBAR penalties are not subject to a full-payment
requirement, the issue should be litigated only when raised by courts sua
sponte, or when plaintiffs seek to dismiss their own complaints. And, be-
cause the government generally counterclaims for the balance of unpaid
FBAR penalties, section 1346(a)(1) is not a necessary avenue for district
court jurisdiction over FBAR penalty litigation. Nonetheless, the diver-
gent analyses in these two opinions does foretell the possibility of future
litigation over the import of the “internal-revenue” language in section
1346(a)(1), in different circumstances.

C. Claims to recover “any sum alleged to have been

excessive or in any manner wrongfully collected”
The third, “any sum” clause of section 1346(a)(1) has been the most
litigated element of the statute, usually arising in connection with claims
for overpayment interest under the Internal Revenue Code.
As a general matter, the “any sum” clause is a “catchall” phrase that
“refer[s] to amounts which are neither taxes nor penalties,” and thus
“the function of the phrase is to permit suit for recovery of items which
might not be designated as either ‘taxes’ or ‘penalties’ by Congress or
the courts.”85 Interest is an “obvious example” of an amount that, al-
though neither a tax nor a penalty, constitutes a “sum” under the jurisdic-
tional statute.86 But the “any sum” clause is not limited to interest alone.
For example, the Federal Circuit has held that the “any sum” clause of

81 Id.
82 Id.
83 Id. at 365–66.
84 Id. at 366–69.
85 Flora II, 362 U.S. 145, 149 (1960).
86 Id.

234 DOJ Journal of Federal Law and Practice December 2023

I.R.C. § 7422 encompassed a taxpayer’s claim to recover an overpayment
of an arbitrage rebate paid to the United States under I.R.C. § 148(f).87
There are two types of interest under the Internal Revenue Code—in-
terest on “underpayments” and interest on “overpayments”.88 Underpay-
ment interest, also known as deficiency interest, is owed by the taxpayer
to the government and is “assessed, collected, and paid in the same man-
ner” as tax.89 Thus, claims seeking the recovery of underpayment interest
are subject to the same limitations period as claims for refund of tax and
to the requirement to file an administrative claim.90 In contrast, overpay-
ment interest is owed by the government to the taxpayer. “[T]hat form of
interest is paid by the United States, not as a refund of interest previously
paid by the taxpayer on demand of the Service, but simply because the
Government has had the use of money found to belong to the taxpayer.”91
Because the Internal Revenue Code treats underpayment interest as
tax, claims by taxpayers to recover underpayment interest paid to the
United States necessarily qualify as claims for which district courts have
jurisdiction under section 1346(a)(1). Whether district courts also have
jurisdiction to hear overpayment interest claims has been heavily liti-
gated, with mixed results.
In E.W. Scripps Co. & Subsidiaries v. United States, the Sixth Circuit
held that, “through the ‘any sum’ provision of § 1346(a)(1), the federal
government has waived its sovereign immunity” for overpayment interest
claims brought in district court.92 Relying on the “alleged to have been
excessive” portion of the “any sum” clause, the panel reasoned that, if
the United States fails to pay overpayment interest it owes to the tax-
payer, then the government “has retained more money than it is due, i.e.,
an ‘excessive sum.’”93 And, based on the earlier Sixth Circuit opinion in
Horizon Coal,94 the panel held that, “although § 1346(a)(1) and § 7422(a)
use parallel language, the two provisions serve different functions and thus
have their own independent meanings.”95 Thus, according to the Sixth
Circuit, the fact that the administrative-claim requirement in section
7422 may not apply to claims for overpayment interest “does not pre-

87 Strategic Hous. Fin. Corp. Travis Cnty. v. United States, 608 F.3d 1317, 1326
(Fed. Cir. 2010).
88 See I.R.C. §§ 6601, 6611, 6621.
89 Id. § 6601 (a), (e)(1).
90 See id. §§ 6511(a), 6532(a)(1), 7422(a).
91 Alexander Proudfoot Co. v. United States, 454 F.2d 1379, 1384 (Ct. Cl. 1972).
92 E.W. Scripps Co. & Subsidiaries v. United States, 420 F.3d 589, 598 (6th Cir. 2005).
93 Id. at 597.
94 Horizon Coal Corp. v. United States, 43 F.3d 234, 239–40 (6th Cir.1994).
95 E.W. Scripps, 420 F.3d at 598.

December 2023 DOJ Journal of Federal Law and Practice 235

vent statutory interest from being included within the ‘any sum’ clause
of § 1346(a)(1).”96
Three other circuits, however, recently held that section 1346(a)(1)
does not apply to claims for overpayment interest, soScripps is now
the minority view. In Pfizer, Inc. v. United States, the Second Circuit
held that “overpayment interest . . . does not fall with[in] the mean-
ing of ‘any sum’ in this jurisdictional provision.”97 In Bank of America
Corp. v. United States, the Federal Circuit agreed, holding that the Court
of Federal Claims had “exclusive jurisdiction” over claims for overpay-
ment interest, to which section 1346(a)(1) did not apply.98 Finally, in
Paresky v. United States, the Eleventh Circuit held that “overpayment
interest” does not fall within “the statute’s ‘any sum’ category.”99
Disagreeing with Scripps, the three circuits each held that the “any
sum” clause “refers to an amount previously paid to the government by
a taxpayer” and “therefore does not include overpayment interest.”100
Based on statutory context, they agreed that all three prongs of section
1346(a)(1) “address types of taxpayer claims that seek to recover funds
that the taxpayer has already paid to the IRS.”101 And because the “al-
leged to have been excessive” language is in the past-perfect tense, the
“sum” at issue must have been “excessive” or “wrongfully collected” at
some point in the past.102 Because overpayment interest is not paid by
the taxpayer or collected by the government, it did not qualify as “any
sum.”103
The weight of authority supports the notion that the “any sum” clause
of section 1346(a)(1) covers only amounts assessed and collected by the
government. With this clause as well, the Sixth Circuit again is an out-
lier.104

96 Id.
97 Pfizer, Inc. v. United States, 939 F.3d 173, 179 (2d Cir. 2019).
98 Bank of America Corp. v. United States, 964 F.3d 1099, 1109 (Fed. Cir. 2020).
99 Paresky v. United States, 995 F.3d 1281, 1289 (11th Cir. 2021).
100 E.g., id. at 1287.
101 Pfizer, 939 F.3d at 178.
102 Id. at 179; Paresky, 995 F.3d at 1288.
103 Pfizer, 939 F.3d at 178; Paresky, 995 F.3d at 1288.
104 See also Estate of Culver v. United States, No. 1:19-cv-462, 2019 WL 4930224 (D.
Colo. Oct. 7, 2019) (declining to follow Scripps, which relied on a “strained reading
of § 1346(a)(1)”).

236 DOJ Journal of Federal Law and Practice December 2023

III. Appeals from decisions on motions to
transfer to the Court of Federal Claims
In 1988, Congress gave the Federal Circuit “exclusive jurisdiction of
an appeal from an interlocutory order of a district court . . . granting
or denying, in whole or in part, a motion to transfer an action” to the
CFC for want of jurisdiction.105 This special interlocutory appeal applies
only to motions to transfer to the CFC under 28 U.S.C. § 1631 for want
of jurisdiction, and not to motions to transfer under other sections of
the Judicial Code.106 When a motion to transfer is filed, “no further
proceedings shall be taken in the district court until 60 days after the
court has ruled upon the motion.”107 And, if “an appeal is taken” on the
motion’s denial, the district court “proceedings shall be further stayed
until the appeal has been decided by” the Federal Circuit.108
The filing of a motion to transfer automatically stays “proceedings
in the district court” to “assure that trial proceedings on the merits do
not go forward until the jurisdictional question is resolved.”109 The right
to a special interlocutory appeal thus allows parties “to ascertain at an
early stage of district court litigation involving the Tucker Act whether
the case is within the exclusive jurisdiction of the Claims Court.” The
interlocutory appeal is “within the exclusive jurisdiction” of the Federal
Circuit, “[t]o ensure uniform adjudication of Tucker Act issues in a single
forum.”110
The availability of this special interlocutory appeal provides the
United States with options when defending monetary claims brought in
district courts, for which the CFC arguably has exclusive jurisdiction un-
der the Tucker Act. When the United States moves to transfer district
court actions to the CFC, the jurisdiction of the district courts may be
governed by Federal Circuit authority, because the Federal Circuit has
exclusive jurisdiction over interlocutory appeals from decisions resolving
motions to transfer.111 To invoke the Federal Circuit’s appellate jurisdic-

105 28 U.S.C. § 1292(d)(4)(A), enacted by the Judicial Improvements and Access to

Justice Act, Pub. L. No. 100-702, § 502, 102 Stat. 4642 (1988).
106 F.D.I.C. v. Maco Bancorp, Inc., 125 F.3d 1446, 1448 (Fed. Cir. 1997) (holding that
special interlocutory appeal did not apply to orders transferring to Court of Federal
Claims “for convenience of parties and witnesses” under 28 U.S.C. § 1404(a) or “for
cure of wrong venue” under 28 U.S.C. § 1406).
107 28 U.S.C. § 1292(d)(4)(B).
108 Id.
109 H.R. Rep. No. 100-889, as reprinted in 1988 U.S.C.C.A.N. 5982, 6012 (1988).
110 Id.
111 28 U.S.C. § 1292(d)(4)(A).

December 2023 DOJ Journal of Federal Law and Practice 237

tion, the appeal must be interlocutory; if the United States appeals from
a district court judgment instead, a regional circuit will hear the appeal.
However, when the United States moves to dismiss district court actions
for want of jurisdiction, there are no automatic appeals to the Federal
Circuit, and the district courts’ jurisdiction will be governed by authority
from the regional circuits.
Consequently, the choice between filing a motion to transfer for want
of jurisdiction under 28 U.S.C. § 1631 and a motion to dismiss for lack of
subject-matter jurisdiction under Rule 12(b)(1) may affect the outcome
of the jurisdictional question, particularly where Federal Circuit author-
ity conflicts with one or more regional circuits. Thus, even for monetary
claims brought in district courts within the Sixth Circuit, the broad con-
struction of section 1346(a)(1) in Horizon Coal and Scripps would not
control if the United States chose to file motions to transfer and noticed
interlocutory appeals of those motions’ denials to the Federal Circuit.112

IV. Conclusion
When parties with monetary claims against the government bypass
the CFC and instead sue in a district court, government attorneys should
carefully examine the alleged basis for district court jurisdiction under
section 1346. And, as the Justice Manual cautions, when claims “within
the exclusive jurisdiction of the CFC” are “filed in the district court,”
government attorneys should “be vigilant in moving to dismiss or transfer
cases.”113
As this article has shown, the application of section 1346(a)(1) to
claims against the government is not entirely settled, and the difference of
views affects all three of the statute’s prongs. But the special interlocutory
appeal provides an advantage to government attorneys who litigate these
cases, and it allows the United States to bypass unfavorable authorities
from the regional circuits and appeal adverse decisions on transfer motions
to the Federal Circuit instead.

About the Authors

Jason Bergmann is an Assistant Chief in the Court of Federal Claims
Section of the Tax Division. For over fifteen years, he has represented the

112 This procedural nuance can lead to seemingly odd results. See, e.g., Texas Health
Choice, L.C. v. Off. of Pers. Mgmt., 400 F.3d 895, 898 (Fed. Cir. 2005) (noting that
Federal Circuit had jurisdiction over appeal of motion to transfer but not motion to
dismiss, even though “motion to transfer venue [was] premised on a want of jurisdic-
tion, the same substantive ground presented in OPM’s motion to dismiss”).
113 Justice Manual, supra note 13, § 47.

238 DOJ Journal of Federal Law and Practice December 2023

United States in civil tax cases in both the Court of Federal Claims and
various district courts.
Richard J. Markel is a Trial Attorney in the Court of Federal Claims
Section of the Tax Division. He defends the United States in tax and
FBAR cases in the Court of Federal Claims. He is also a Certified Pub-
lic Accountant and has previously written about the confluence of civil
procedure and tax law at 27 Geo. Mason L. Rev. 345 (2019).
The authors would like to thank summer law intern, Jacqueline
Muallem (University of Notre Dame, J.D. 2024), for her research
assistance for this article.

December 2023 DOJ Journal of Federal Law and Practice 239

Page Intentionally Left Blank

240 DOJ Journal of Federal Law and Practice December 2023

They Don’t Make ‘Em Like
They Used To: Statutory
Jurisdictional Requirements in
the Age of the Clear-Statement
Rule
Marie E. Wicks
Attorney, Appellate Section
Tax Division
Department of Justice

Michael W. May
Assistant Chief, Civil Trial Section, Southwestern Region
Tax Division
Department of Justice
“Jurisdiction . . . is a word of many, too many, meanings.”1
Subject-matter jurisdiction is the lifeblood of a case; its presence is
necessary for a court to have authority to determine the merits of a
claim. Therefore, its absence can be a basis for dismissal at any time,
even on appeal. But the scope of what was previously considered juris-
dictional limitations on claims continues to shrink—a direct result of the
Supreme Court’s recent efforts to “bring some discipline” to statutory
jurisdictional labels by invoking a rule providing that a statute is ju-
risdictional only if Congress clearly states that it is jurisdictional. If no
clear statement exists, then the requirement is a mere claim-processing
rule which may be subject to waiver, forfeiture, and equitable tolling.
This article describes the current landscape of jurisdictional versus
non-jurisdictional claim-processing rules in certain tax and non-tax civil
cases. We will address statutes related to cases that the Tax Division
primarily handles (that is, most tax litigation), as well as statutes that
compose the work of the U.S. Attorney’s Office (USAO). Because the ju-
risdictional questions discussed in this article can arise in various statutes,

1 Kontrick v. Ryan, 540 U.S. 443, 454 (2004) (quoting Steel Co. v. Citizens for Better
Env’t, 523 U.S. 83, 90 (1998)).

December 2023 DOJ Journal of Federal Law and Practice 241

our hope is that this article provides context for your analysis of statutory
procedural requirements in your case. This article also identifies potential
approaches in the wake of recent Supreme Court decisions, which dovetail
with the Court’s recent efforts to rein in statutory jurisdictional labels and
underscore the perils of the “drive-by jurisdictional ruling.” Approaches,
such as arguing that the statute is mandatory if not jurisdictional, rely-
ing on the scope of the waiver of the United States’ sovereign immunity,
or moving under both Rules 12(b)(1) and 12(b)(6) of the Federal Rules
of Civil Procedure, may be useful alternatives. Ultimately, the landscape
of jurisdictional requirements in the age of the clear-statement rule con-
tinues to evolve subject to binding Circuit Court and Supreme Court
precedent.

I. The current landscape of jurisdictional

versus non-jurisdictional rules
A jurisdictional requirement, when not met, deprives a court of au-
thority to hear the case.2 Accordingly, a court has to consider sua sponte
whether it has jurisdiction, even when jurisdiction has not been raised
by the litigants. Thus, an argument that a court lacks jurisdiction can-
not be waived or forfeited. And when a court determines that it lacks
jurisdiction, the case must be dismissed; it does not matter whether the
claimant has a compelling argument that the statutory deadline should
be equitably tolled. Claim-processing rules, on the other hand, “seek to
promote the orderly progress of litigation” without stripping the court of
authority to hear the case.3

A. The Supreme Court’s efforts to “bring some

discipline” to statutory jurisdictional labels
1. A need for clarity: Kontrick and Arbaugh
In recent years, the Supreme Court has been tightening the reins on
what it interprets as a jurisdictional statutory requirement. In years past,
it was not unusual for the Court to refer to a time bar as “jurisdictional.”4

2 See United States v. Wong, 575 U.S. 402, 408–09 (2015).

3 Id. at 410 (internal citation omitted).
4 See, e.g., United States v. Dalm, 494 U.S. 596, 611 (1990); United States v. Robin-
son, 361 U.S. 220, 226–27 (1960) (cited in Arbaugh v. Y&H Corp., 546 U.S. 500, 510
(2006)); see also United States v. Mottaz, 476 U.S. 834, 851 (1986) (“The limitations
provision of the Quiet Title Act reflects a clear congressional judgment that the na-
tional public interest requires barring stale challenges to the United States’ claim to
real property, whatever the merits of those challenges.”). But see Wilkins v. United

242 DOJ Journal of Federal Law and Practice December 2023

The late 1990s and early 2000s saw a series of decisions, including Kon-
trick v. Ryan,5 and Arbaugh v. Y&H Corp.,6 which illuminated a need
for clarity in determining whether a requirement is jurisdictional.
In Kontrick, the Court held that Federal Rule of Bankruptcy Proce-
dure 4004(a)—which sets the time frame in which a party may object
to a debtor’s discharge—is a non-jurisdictional claim-processing rule.7
Thus, an untimely objection to discharge did not deprive the Court of
jurisdiction to consider the merits, because the debtor failed to raise the
untimeliness issue in his answer or other response and therefore waived
it.8
In Arbaugh, the Court examined whether Title VII’s “employee-num-
erosity requirement” was essential for subject-matter jurisdiction over a
claim or was simply a necessary prerequisite to stating a claim under Title
VII.9 Noting that courts—including the Supreme Court—had been lax in
their use of the term “jurisdictional,” the Court admonished that such
“drive-by jurisdictional rulings” are to be avoided because they fail to
distinguish between lack of subject-matter jurisdiction and dismissal for
failure to state a claim.10 If, on the other hand, “the Legislature clearly
states that a threshold limitation on a statute’s scope shall count as
jurisdictional, then courts and litigants will be duly instructed and will
not be left to wrestle with the issue.”11 The Court would continue to
apply this clear-statement rule in subsequent cases.

2. The clear-statement rule takes shape: Wong

The Court expounded upon its interpretation of statutory time bars in
United States v. Wong.12 This case concerned the Federal Tort Claims Act
(FTCA), which provides, in section 2401(b), that a tort claim against the
United States “shall be forever barred” unless brought in writing “to the
‘appropriate Federal agency within two years after such claim accrues’”

States, 598 U.S. 152, 162–62 (2023) (finding that Mottaz did not definitively determine
that the Quiet Title Act statute of limitations is jurisdictional).
5 Kontrick v. Ryan, 540 U.S. 443 (2004).
6 Arbaugh, 546 U.S. 500.
7 Kontrick, 540 U.S. at 447.
8 Id. at 459 (“Ordinarily, under the Bankruptcy Rules as under the Civil Rules, a
defense is lost if it is not included in the answer or amended answer.”).
9 Arbaugh, 546 U.S. at 503–06.
10 Id. at 511–12. A “drive-by jurisdictional ruling,” for instance, would be a dismissal
of a case for lack of jurisdiction when the court’s “decision did not turn on that
characterization, and the parties did not cross swords over it.”
11 Id. at 515–16 (emphasis added).
12 United States v. Wong, 575 U.S. 402 (2015).

December 2023 DOJ Journal of Federal Law and Practice 243

and also “brought to federal court ‘within six months’ after the agency
acts on the claim.”13 Wong established that these time frames could be
equitably tolled.14 In doing so, the Court reiterated the clear-statement
rule that crystallized in Arbaugh.
Cognizant of the “harsh consequences” of a jurisdictional character-
ization, the Court admonished that “the Government must clear a high
bar to establish that a statute of limitations is jurisdictional.”15 Though
Congress need not “‘incant magic words,’” it must nonetheless draft a
clear enough statement that “traditional tools of statutory construction
. . . plainly show that Congress imbued a procedural bar with jurisdic-
tional consequences.”16 Emphatic language and mandatory terms are not
enough to render a deadline jurisdictional: “Congress must do something
special, beyond setting an exception-free deadline, to tag a statute of
limitations as jurisdictional and so prohibit a court from tolling it.”17

3. Boechler and the ambiguous parenthetical

In 2022, the Supreme Court held for the first time that a tax statute
was subject to the clear-statement rule, demonstrating that no tax-law ex-
ception to the clear-statement rule exists. In Boechler v. Commissioner,
the Court unanimously found that the statutory deadline for petition-
ing the Tax Court under Internal Revenue Code (I.R.C.), 26 U.S.C. §
6330(d)(1), in a collection due process case was not jurisdictional, but a
claim-processing rule.18 Section 6330(d)(1) states that within 30 days of a
determination under that section, a taxpayer “may . . . petition the Tax
Court for review of such determination (and the Tax Court shall have
jurisdiction with respect to such matter).”19
The primary dispute focused on identifying the proper antecedent for
“such matter,” nested within the parenthetical alongside “the Tax Court
shall have jurisdiction.” “[T]he last-antecedent rule,” the Court reasoned,
“instructs that the correct antecedent is usually ‘the nearest reasonable’
one.”20 While Boechler tied “such matter” to “the phrase immediately
preceding the jurisdictional parenthetical,” the Commissioner’s interpre-

13 Id. at 405 (quoting 28 U.S.C. § 2401(b)).

14 Id.
15 Id. at 409.
16 Id. at 410 (quoting Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145, 153 (2013)).
17 Id.
18 Boechler, P.C. v. Comm’r of Internal Revenue, 596 U.S. 199, 204–06 (2022).
19 I.R.C. § 6330(d)(1).
20 Boechler, 596 U.S. at 205 (internal citation omitted).

244 DOJ Journal of Federal Law and Practice December 2023

tation “stretche[d] back one phrase more.”21 Because “multiple plausible
interpretations exist—only one of which is jurisdictional,” the Court rea-
soned that “it is difficult to make the case that the jurisdictional read-
ing is clear.”22 The Court further concluded that, as an ordinary claim-
processing rule, the 30-day time limit in section 6330(d)(1) could be eq-
uitably tolled.23

4. A snapshot of the present: October 2022 Term

The October 2022 Term brought some significant decisions in the
realm of statutory jurisdictional requirements, further signaling that the
clear-statement rule is here to stay.
In January 2023, the Court issued its opinion in Arellano v. Mc-
Donough, in which it determined that there could be no equitable tolling
in the effective date of an award of disability compensation to a U.S.
military veteran.24 In its reasoning, the Court in McDonough relied on
United States v. Brockamp (which held that I.R.C. § 6511’s framework of
deadlines for tax refund actions could not be equitably tolled).25
The Court assumed that the presumption of equitable tolling ap-
plied and then found that 38 U.S.C. § 5110(b)(1) could not be equi-
tably tolled.26 The Court was persuaded by the fact that in section 5110,
“Congress accounted for equitable factors in setting effective dates,” and
that
“[i]f Congress wanted the VA to adjust a claimant’s entitle-
ment to retroactive benefits based on unmentioned equitable
factors, it is difficult to see why it spelled out a long list of
situations in which a claimant is entitled to adjustment—and
instructed the VA to stick to the exceptions ‘specifically pro-
vided.’”27
“When Congress has already considered equitable concerns and limited
the relief available,” the Court concluded, “‘additional equitable tolling
would be unwarranted.’”28
Two months later, in Wilkins v. United States, the Court decided
that the Quiet Title Act’s (28 U.S.C. § 2409a(g)) 12-year statute of lim-

21 Id.
22 Id. (citing Sossamon v. Texas, 563 U.S. 277, 287 (2011)).
23 Id. at 209–11.
24 Arellano v. McDonough, 598 U.S. 1, (2023).
25 United States v. Brockamp, 519 U.S. 347, 350 (1997).
26 See Irwin v. Dep’t of Veterans Affs., 498 U.S. 89, 90–91 (1990).
27 Arellano, 598 U.S. at 8–11 (quoting 38 U.S.C. § 5110(a)(1)) (emphasis added).
28 Id. at 10 (quoting United States v. Beggerly, 524 U.S. 38, 48–49 (1998)).

December 2023 DOJ Journal of Federal Law and Practice 245

itations was a non-jurisdictional claim-processing rule.29 Larry Wilkins
and his neighbor, Jane Stanton, reside on a road leading into the Bitter-
root National Forest in rural Montana. They brought this quiet title suit
because the government made the road available for public use.30 As a
result, visitors and strangers trespassed on their private land and even
shot Wilkins’s cat.31 The Court examined Quiet Title Act precedent and
concluded that “[t]his Court has never definitively interpreted § 2409a(g)
as jurisdictional.”32 It cautioned against “divining definitive interpreta-
tions from stray remarks” in prior cases, which would result in “[f]ar
more uncertainty” than the Court’s approach of only looking at whether
precedent has definitively determined whether a statutory time bar is
jurisdictional.33
A dissent by Justice Thomas, joined by Chief Justice Roberts and
Justice Alito, insisted that the majority disregarded the “express recog-
nition of the jurisdictional character of the Act’s time bar” found in the
Quiet Title Act precedents.34 The majority, the dissent explained, in-
stead treated the time bar like “any run-of-the-mill procedural rule” as
opposed to “a condition on a waiver of sovereign immunity” for which
“the Court presumes that procedural limitations are jurisdictional.”35 In
the dissent’s view, a statute of limitations “requiring that a suit against
the Government be brought within a certain time period . . . is one of the
terms of [the United States’] consent to be sued and, therefore, define[s]
th[e] court’s jurisdiction to entertain the suit.”36
Also during the October 2022 Term, the Court examined whether a
statutory exhaustion requirement was jurisdictional and held that it was
not.37 In Santos-Zacaria v. Garland, the Court reiterated that an exhaus-
tion requirement is “a quintessential claim-processing rule.”38 The Court

29 Wilkins v. United States, 598 U.S. 152, 165 (2023).

30 Id. at 155.
31 Id.
32 Id. at 165 (emphasis added).
33 Id.
34 Id. at 166 (Thomas, J., dissenting); see id. at 170 (citing Block v. North Dakota ex
rel. Bd. of Univ. and Sch. Lands, 461 U.S. 273 (1983); United States v. Mottaz, 476
U.S. 834 (1986)).
35 Id. at 166.
36 Id. at 167 (quoting United States v. Dalm, 494 U.S. 596, 608 (1990)) (internal
quotations omitted).
37 Santos-Zacaria v. Garland, 598 U.S. 411, 417 (2023).
38 Id. at 417–18. “Indeed, we have yet to hold that any statutory exhaustion re-
quirement is jurisdictional when applying the clear-statement rule that we adopted in
Arbaugh.”

246 DOJ Journal of Federal Law and Practice December 2023

looked to other immigration Code sections, which were enacted around
the same time as 8 U.S.C. § 1252 (indeed, even within the same section)
and pointed out that Congress used clear jurisdictional language in those
other sections.39 The “linguistic contrast” between section 1252(d)(1) and
those other sections was interpreted as “meaningful, not haphazard” given
the presumption that exhaustion requirements are not jurisdictional.40

B. What is jurisdictional in the era of the

clear-statement rule?
The Supreme Court has repeatedly articulated certain salient charac-
teristics that a statutory requirement ought to possess to pass muster as
jurisdictional.

1. Clear-statement rule
First, the relevant statute must clearly state that it is jurisdictional.
In this regard, prior decisions dismissing cases that fail to meet a statu-
tory requirement for “lack of jurisdiction” are not enough. Older opinions
that might be considered “drive-by jurisdictional ruling[s]” will have lim-
ited precedential effect.41 The Supreme Court has established that it “will
‘treat a procedural requirement as jurisdictional only if Congress “clearly
states” that it is.’”42 In other words, “‘traditional tools of statutory con-
struction must plainly show that Congress imbued a procedural bar with
jurisdictional consequences.’”43 If multiple interpretations of a phrase in a
statute exist—only one of which renders the provision jurisdictional—the
statute likely does not satisfy this factor.44

2. Separation of a procedural requirement from a

jurisdictional grant
If the relevant jurisdictional grant appears in a totally separate Code
section from the time limitation, the time limitation may be found to be
non-jurisdictional.45 But the opposite is not the case: The appearance of
a jurisdictional grant in the same provision as the time limit does not

39 Id. at 418–19.
40 Id. at 419.
41 Wilkins v. United States, 598 U.S. 152, 160 (2023) (quoting Arbaugh v. Y&H
Corp., 546 U.S. 500, 511 (2006)).
42 Id. at 157 (quoting Boechler, P.C. v. Comm’r of Internal Revenue, 596 U.S. 199,
203 (2022)) (emphasis added).
43 Id. (quoting United States v. Wong, 575 U.S. 402, 410 (2015)).
44 See Boechler, 596 U.S. at 206.
45 See Wilkins, 598 U.S. at 159.

December 2023 DOJ Journal of Federal Law and Practice 247

necessarily guarantee that the time limit is jurisdictional. In Boechler,
the Court declined to read I.R.C. § 6330(d)(1) as jurisdictional, finding
instead that the presence of the jurisdictional language within a paren-
thetical in the same provision created ambiguity that could be read in
multiple ways (not all of them jurisdictional); hence, its jurisdictional na-
ture was not clearly stated.46 Rather, the key element is that the statute
draws a “clear tie between the deadline and the jurisdictional grant.”47

3. What about stare decisis?

The Supreme Court has stated that courts should not undo a “defini-
tive early interpretation” of a provision as jurisdictional under principles
of stare decisis.48 What constitutes a “definitive early interpretation” may
be difficult to discern, however. In Wilkins, for example, the majority
viewed the Quiet Title Act precedents as “drive-by jurisdictional rulings”
even though an earlier opinion stated that if the time limit was not met,
“the courts below had no jurisdiction to inquire into the merits.”49 The
dissent, on the other hand, placed considerably more weight on the prior
cases’ precedential effect, noting that the “John R. Sand standard [of
a ‘definitive early interpretation’] is amply met here.”50 The takeaway
from Wilkins is that a “definitive early interpretation” requires some-
thing more than a passing mention of jurisdiction and is strongest when
the precedential case actually hinged on whether the provision at issue is
jurisdictional.

46 Boechler, 596 U.S. at 206–07 (“What of the fact that the jurisdictional grant and
filing deadline appear in the same provision, even the same sentence? This does not
render the Commissioner’s reading clear either. A requirement ‘does not become ju-
risdictional simply because it is placed in a section of a statute that also contains
jurisdictional provisions.’ . . . Rather than proximity, the important feature is the one
that is missing here: a clear tie between the deadline and the jurisdictional grant.”)
(quoting Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145, 155 (2013); citing Wein-
berger v. Salfi, 422 U.S. 749, 763–64 (1975)).
47 Id. at 207.
48 Wilkins v. United States, 598 U.S. 152, 159 (2023) (quoting John R. Sand & Gravel
Co. v. United States, 552 U.S. 130, 138 (2008)).
49 Id. at 160 (citing Block v. North Dakota ex rel. Bd. of Univ. and Sch. Lands,
461 U.S. 273, 292 (1983)) (internal quotations omitted); see also id. at 162 (citing
United States v. Mottaz, 476 U.S. 834 (1986) and finding that, even though the opin-
ion referred to the waiver of sovereign immunity as jurisdictional and the statute of
limitations as a condition of the waiver, “[n]either step in the Court’s analysis ‘turn[ed]
on’ whether any time limits were ‘technically jurisdictional’”).
50 Id. at 170 (Thomas, J., dissenting).

248 DOJ Journal of Federal Law and Practice December 2023

II. Jurisdictional in tax cases
Over the past decade, courts’ application of the clear-statement rule
in analyzing tax statutes has whittled down the list of statutory require-
ments considered jurisdictional. The Supreme Court’s unanimous decision
in Boechler brought the clear-statement rule into the arena of tax admin-
istration.51 Though the dust from Boechler is still settling, its impact on
tax statutes is already discernible.
In particular, statutory deadlines after Boechler are more vulnerable
to challenge because Boechler itself involved a statutory deadline to file a
Tax Court petition in a collection due process case. The most prominent
example is section 6213(a) of the I.R.C., which sets forth a 90-day time
limit for a taxpayer to petition the Tax Court for a redetermination of
a tax deficiency. For over 100 years, the Tax Court has treated untimely
deficiency petitions as subject to dismissal for lack of subject-matter ju-
risdiction.52 Circuit courts of appeal have adopted this consideration for
nearly as long, and some have recently confirmed their view of section
6213(a)’s time limit as jurisdictional.53 On July 19, 2023, however, the
Third Circuit Court of Appeals (relying on Boechler ) held that the 90-day
deadline is not jurisdictional, thereby creating a circuit split.54
Notwithstanding those developments, the time limits associated with
tax refund suits thus far appear to have retained their jurisdictional (or
at least mandatory) character.55 Courts’ jurisdiction over refund suits
depends on section 1346(a)(1), which is “a keystone”56 provision that
“must be read in conformity with other statutory provisions which qualify
a taxpayer’s right to bring a refund suit upon compliance with certain

51 Boechler, P.C. v. Comm’r of Internal Revenue, 596 U.S. 199 (2022).

52 See Hallmark Rsch. Collective v. Comm’r of Internal Revenue, No. 21284-21, 2022
WL 17261546, at *16–*22 (T.C. Nov. 29, 2022) (thoroughly setting forth the extensive
history of treatment of the statutory deadline in section 6213(a) as jurisdictional).
53 Id.; see generally Allen v. Comm’r of Internal Revenue, No. 22-12537, 2022
WL 17825934 (11th Cir. Dec. 21, 2022) (summary affirmance of Tax Court dis-
missal of case filed under section 6213(a) for lack of jurisdiction); Organic Cannabis
Found. v. Comm’r of Internal Revenue, 962 F.3d 1082 (9th Cir. 2020); Ben-
ham v. Comm’r of Internal Revenue, No. 19-1938, 2021 WL 320765 (6th Cir. Jan.
8, 2021).
54 Culp v. Comm’r of Internal Revenue, 75 F.4th 196, 200–02 (3d Cir. 2023). The
court also held that the 90-day deadline is subject to equitable tolling. Id. at 202–05
The government has since petitioned for rehearing en banc. Petition for Rehearing En
Banc, Culp v. Commissioner, No. 22-1789 (3d Cir. Oct. 3, 2023).
55 See infra, part IV.
56 Flora v. United States, 362 U.S. 145, 157 (1960).

December 2023 DOJ Journal of Federal Law and Practice 249

conditions.”57 One of those is section 7422(a):
No suit or proceeding shall be maintained in any court for the
recovery of any internal revenue tax . . . until a claim for refund
or credit has been duly filed with the Secretary, according to
the provisions of law in that regard, and the regulations of the
Secretary established in pursuance thereof.58
Those provisions of law according to which a claim is “duly filed” include
section 6511(a) and section 6532(a).59 Section 6511(a) sets the deadline
for a taxpayer seeking a refund to file an administrative claim with the
Internal Revenue Service (IRS): A “[c]laim for credit or refund of an
overpayment of any tax imposed by this title . . . shall be filed by the
taxpayer within 3 years from the time the return was filed or 2 years
from the time the tax was paid, whichever of such periods expires the
later, or if no return was filed by the taxpayer, within 2 years from the
time the tax was paid.”60 The Supreme Court in Brockamp held that
the time limitation in section 6511(a) cannot be equitably tolled, because
“Congress wrote the time limit in ‘unusually emphatic form,’ and its ‘de-
tailed technical’ language ‘c[ould not] easily be read as containing implicit
exceptions.’”61 Moreover, the Brockamp Court pointed out that section
6511 “reiterate[d]” the time limitation “‘several times in several different
ways,’” and contained multiple exceptions.62 The Court also found per-
suasive “[t]he ‘nature of the underlying subject matter—tax collection,”
which “underscore[d] the linguistic point[]’ . . . because of the ‘administra-
tive problem’ of allowing equitable tolling when the ‘IRS processe[d] more
than 200 million tax returns’ and ‘issue[d] more than 90 million refunds’
each year.”63 Indeed, as the Supreme Court reiterated in a subsequent
case, “[W]e cannot imagine what language could more clearly state that
taxpayers seeking refunds of unlawfully assessed taxes must comply with

57 United States v. Dalm, 494 U.S. 596, 601 (1990).

58 I.R.C. § 7422(a). The Supreme Court has said that section 7422(a)’s “[f]ive
‘any’s’” indicates “that Congress meant the statute to have expansive reach.”
United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 7 (2008).
59 Certain nuances exist regarding the concept of “duly filed.” The Federal Circuit has
held that—while the “fact of filing” within the statutory time allotted is a jurisdictional
requirement—when a filing is timely made, “the adequacy of the filing” is not juris-
dictional in nature. See Dixon v. United States, 67 F.4th 1156, 1161 (Fed. Cir. 2023)
(citing Brown v. United States, 22 F.4th 1008, 1011–12 (Fed. Cir. 2022)).
60 I.R.C. § 6511(a).
61 Boechler, P.C. v. Comm’r of Internal Revenue, 596 U.S. 199, 209 (2022) (quoting
United States v. Brockamp, 519 U.S. 347, 350 (1997)).
62 Id. at 209 (quoting Brockamp, 519 U.S. at 351–52).
63 Id. at 209–10 (quoting Brockamp, 519 U.S. at 352).

250 DOJ Journal of Federal Law and Practice December 2023

the Code’s refund scheme before bringing suit, including the requirement
to file a timely administrative claim.”64
Twenty-five years after Brockamp, the Court in Boechler underscored
these distinguishing characteristics of section 6511(a), thereby leaving
Brockamp’s holding and analysis untouched, if not strengthened.65 And
while the prohibition of equitable tolling does not automatically render
a statutory time limitation jurisdictional, courts have interpreted Brock-
amp’s holding in a jurisdictional light.66
Another provision in the refund suit realm is I.R.C. § 6532(a), which
provides the limitations period on a taxpayer’s ability to bring a refund
suit in district court or the Court of Federal Claims (either six months
from the date the claim is filed with the IRS or two years following the
IRS notice of disallowance of the claim). Though few courts have recently
been called to examine the jurisdictional character of section 6532(a),
those that have considered this have generally held that it is jurisdic-
tional.67 On the contrary, subsection (c) of section 6532, setting forth a
limitations period for wrongful levy claims, has been held by the Ninth
Circuit—applying the clear-statement rule—to be non-jurisdictional and
subject to equitable tolling.68

64 United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 8 (2008).

65 Boechler, 596 U.S. at 208–09.
66 See Forrest v. United States, No. 2020-1923, 2022 WL 2564038, at *1 (Fed. Cir. July
8, 2022), cert. denied, 143 S. Ct. 750 (2023); Dixon v. United States, 67 F.4th 1156,
1161 (Fed. Cir. 2023) (citing United States v. Dalm, 494 U.S. 596, 608–10 (1990));
Chisum v. United States, No. 22-377, 2023 WL 4147151, at *5 (Fed. Cl. June 23, 2023)
(citing Brockamp, 519 U.S. at 354) (concluding that “Ms. Chisum’s tax refund claim
. . . is time-barred and fails to establish this Court’s jurisdiction,” and granting “the
motion to dismiss Ms. Chisum’s claim for a tax refund . . . for lack of subject matter
jurisdiction.”); Sims v. Internal Revenue Serv., No. 2:21-CV-4210, 2022 WL 4484592,
at *4 (S.D. Ohio Sept. 27, 2022); see also Hallmark Rsch. Collective v. Comm’r of
Internal Revenue, No. 21284-21, 2022 WL 17261546, at *5 (T.C. Nov. 29, 2022).
67 The Federal Circuit has consistently held that the time constraints in section
6532(a) are jurisdictional. See Lofton v. United States, No. 2023-1181, 2023 WL
3881362 (Fed. Cir. June 8, 2023). Some district courts in other jurisdictions have
shared this reasoning. See McCray v. Internal Revenue Serv., No. 4:23-CV-567, 2023
WL 3863342, at *3 (E.D. Mo. Oct. 13, 2023) (“Compliance with these requirements is
jurisdictionally required of the taxpayer before initiating the lawsuit.”); Sierra v. In-
ternal Revenue Serv., No. 1:22-CV-01226, 2022 WL 17904544, at *3 (E.D. Cal. Dec.
23, 2022). But see Wagner v. United States, 353 F. Supp. 3d 1062, 1067–68 (E.D.
Wash. 2018) (finding, in light of the Ninth Circuit’s reasoning in Volpicelli v. United
States, 777 F.3d 1042, 1068 (9th Cir. 2015), that section 6532(a) is not jurisdictional
because it lacks a clear statement of Congress’s intent that it be jurisdictional).
68 Volpicelli, 777 F.3d at 1044–45. But see i3 Assembly, LLC v. United States, 439 F.
Supp. 3d 71, 84–85 & n.11 (N.D.N.Y. 2020) (citing Williams v. United States, 947 F.2d
37, 40 (2d Cir. 1991)) (concluding, based on Second Circuit precedent, that deadline

December 2023 DOJ Journal of Federal Law and Practice 251

 Stepping away from the refund suit context, Boechler ’s effect on the
jurisdictional nature of other tax deadlines has not been drastic, likely
because many deadlines have already been held to be non-jurisdictional
in light of the Court’s more rigorous application of the clear-statement
rule. Among the statutes that have been found to be jurisdictional by
multiple courts are the two-year statute of limitations set forth in I.R.C. §
7433(d)(3)69 and the filing deadline in section 6226 (pertaining to Tax
Court petitions for readjustment of partnership items).70
Boechler ’s effect on statutory requirements that are not time lim-
its is more difficult to discern. Many of these requirements have gener-
ally retained their jurisdictional character post-Boechler in circuits where
binding authority holds that the requirement is jurisdictional. For exam-
ple, the administrative exhaustion requirement in I.R.C. § 7433(d)(1) re-
quires that taxpayers exhaust all administrative remedies before suing for
damages alleging unauthorized collection activities by the IRS.71 While
a number of circuits treat section 7433(d)(1)’s administrative exhaustion
requirement as non-jurisdictional, the Fifth Circuit maintains that this
is a jurisdictional requirement.72 In circuits where section 7433(d)(1) is

in section 6532(c) could not be equitably tolled); Becton Dickinson & Co. v. Wolcken-
hauer, 215 F.3d 340, 348 (3d Cir. 2000); cf. Gold Forever Music, Inc. v. United States,
920 F.3d 1096, 1097 (6th Cir. 2019) (“[T]he statute of limitations does not bar Gold
Forever’s wrongful levy action.”).
69 Bowen v. United States, No. 22-CV-6275, 2023 WL 3995469 (W.D.N.Y. June 14,
2023); United States v. Simones, No. 1:20-CV-00795, 2021 WL 4319591, at *2 (D.N.M.
Sept. 23, 2021), aff ’d, No. 21-2110, 2022 WL 1714885 (10th Cir. May 27, 2022);
Ahmed v. United States, 811 F.App’x 845 (4th Cir. 2020). But see Keohane v. United
States, 669 F.3d 325, 330 (D.C. Cir. 2012) (observing that the panel did not “think
section 7433(d)(3) qualifies as jurisdictional under the Supreme Court’s current tests”).
70 SNJ Ltd. v. Comm’r of Internal Revenue, 28 F.4th 936, 947 (9th Cir. 2022). The
Bipartisan Budget Act of 2015 repealed theTax Equity and Fiscal Responsibility Act
as of December 31, 2017. Id. at 939–40 (citing Pub. L. No. 114–74, 129 Stat. 584
(2015)).
71 I.R.C. § 7433(a) states: “If, in connection with any collection of Federal tax with
respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly
or intentionally, or by reason of negligence, disregards any provision of this title, or
any regulation promulgated under this title, such taxpayer may bring a civil action for
damages against the United States in a district court of the United States. Except as
provided in section 7432, such civil action shall be the exclusive remedy for recovering
damages resulting from such actions.”
72 See Gilliam v. United States, No. 22-10993, 2023 WL 2612626 (5th Cir. Mar. 23,
2023) (affirming dismissal for lack of jurisdiction based on taxpayer’s failure to exhaust
administrative remedies as required by 7433(d)(1)); Courtney v. United States, No.
22-60131, 2022 WL 4078240 (5th Cir. Sept. 6, 2022). But see Syswerda v. Mnuchin,
No. 20-2129, 2021 WL 5567536 at *3 (6th Cir. Sept. 23, 2021) (“But the exhaustion
requirement [of section 7433(d)(1)] is not jurisdictional; instead, it is a mandatory

252 DOJ Journal of Federal Law and Practice December 2023

deemed to be a mandatory (if not jurisdictional) requirement, alternative
arguments may be effective, including arguing in the alternative failure
to state a claim under Rule 12(b)(6) as well as making an argument (dis-
tinct from the jurisdictional argument) that the United States’ sovereign
immunity stands as a bar to the suit (both of which are discussed in part
IV, infra).73

III. Jurisdictional in non-tax cases

The Court’s recent jurisprudence distinguishing between claim-proce-
ssing rules and jurisdictional prerequisites has implications in a wide array
of cases involving the United States. Statutory requirements for bringing
suits that were traditionally seen as jurisdictional should now be viewed as
merely claim-processing rules. This trend has occurred most notably for
statutes of limitations and other timing rules. Wilkins, discussed above,
provides a perfect example of this.74 Other statutes of limitations have
recently been held to be claim-processing rules.
Requirements other than timing may also constitute claim-processing
rules rather than jurisdictional prerequisites, as detailed below. A Supreme
Court case from the most recent term highlights this possibility in its anal-
ysis of a narrow Bankruptcy Code provision. Another case from nearly a
decade ago found a registration requirement in the Copyright Act to be

claim-processing rule that must be enforced if properly raised by the government.”

(citing Hoogerheide v. Internal Revenue Serv., 637 F.3d 634, 636–39 (6th Cir. 2011));
Hassen v. Gov’t of Virgin Islands, 861 F.3d 108, 114 (3d Cir. 2017) (citing Hooger-
heide, 637 F.3d at 637) (“[E]xhaustion under section 7433(d) is a nonjurisdictional
requirement that imposes an obligation a plaintiff must fulfill before filing a suit for
damages.”); Gray v. United States, 723 F.3d 795, 798 (7th Cir. 2013) (“Although
a plaintiff must exhaust administrative remedies to recover damages under section
7433, exhaustion is not a jurisdictional requirement.”); Galvez v. Internal Revenue
Serv., 448 F.App’x 880, 887 (11th Cir. 2011); see also Manchanda v. Internal Revenue
Serv., No. 22-753-CV, 2023 WL 2803765 (2d Cir. Apr. 6, 2023) (affirming dismissal
of claim under section 7433 for failure to exhaust administrative remedies without
stating whether the requirement is jurisdictional).
73 Notably, courts have agreed that claims brought under section 7433 that do not
pertain to “collection of federal tax” fall outside the applicable waiver of sovereign
immunity and are subject to dismissal for lack of jurisdiction. See Agility Network
Servs., Inc. v. United States, 848 F.3d 790, 793–94 (6th Cir. 2017); Ivy v. Comm’r
of Internal Revenue, 877 F.3d 1048, 1050 (D.C. Cir. 2017); Hadsell v. U.S. Dep’t of
Treasury by Internal Revenue Serv., 587 F. Supp. 3d 1002, 1009 (N.D. Cal. 2022), aff ’d
sub nom. Hadsell v. United States, No. 22-15760, 2023 WL 4418589 (9th Cir. July 10,
2023).
74 Wilkins v. United States, 598 U.S. 152, 160–61 (2023); see also Kontrick v. Ryan,
540 U.S. 443, 454 (2004) (finding a bankruptcy timing rule to be claims-processing
rather than jurisdictional).

December 2023 DOJ Journal of Federal Law and Practice 253

claim-processing rather than a jurisdictional prerequisite.
Nevertheless, some procedural prerequisites may still be jurisdictional.75
Because this remains a developing area, each case should be examined
carefully.

A. Time to bring suits against the United States as

claim-processing rules
The distinction between claim-processing and jurisdiction has arisen
often in the context of the time limits in which to bring suits, espe-
cially against the United States. The trend has been to find that time
limits are generally not jurisdictional. This trend may have begun with
Irwin v. Department of Veterans Affairs, the case that ruled on the time
to bring an employment-discrimination suit, and it has continued with the
two statutes of limitations found in 28 U.S.C. § 2401. How other statutes
of limitations might be viewed is still an open question, but the trend
suggests those will be claims-processing too.

1. Time to bring employment-discrimination suits

against the government
Irwin—a case often cited as supporting a holding that timing rules
are claims-processing rules—does not employ that terminology.76 That
case involved an employee who filed an administrative equal opportunity
claim after being fired from the Veterans Administration (VA).77 The
VA denied his claim, and he sued.78 That suit was dismissed for lack of
jurisdiction for being untimely under Title VII of the Civil Rights Act of
1964.79
Although it affirmed the dismissal, the Court found that the particular
timing requirement to bring such suits was subject to equitable tolling.80
The Court held that equitable tolling was presumed to apply to the gov-
ernment just as to private litigants although that presumption could be
rebutted.81 At the same time, the Court considered the timing require-
ment to be a part of the government’s waiver of sovereign immunity for
suits under Title VII.82 Thus, overall, the case appears to support the

75 Wilkins, 598 U.S. at 166 (Thomas, J., dissenting).

76 Irwin v. Dep’t of Veterans Affs., 498 U.S. 89 (1990).
77 Id. at 90–91.
78 Id. at 91.
79 Id.
80 Id. at 95–96.
81 Id.
82 Id. at 95.

254 DOJ Journal of Federal Law and Practice December 2023

conclusion that the time limit for cases filed under Title VII is a claim-
processing rule.

2. Time for FTCA suits under 28 U.S.C. § 2401(b)

The trend of treating time limits as claim-processing rules has con-
tinued with other suits against the government. In Wong, a 5-4 decision
from 2015 discussed in part I.A, supra, the Court clarified that the time
limit in 28 U.S.C. § 2401(b) to bring suit under the FTCA is not jurisdic-
tional but a claim-processing rule.83 In two consolidated cases, in which
plaintiffs had missed the deadline but sought equitable tolling, the Court
applied its recent guideline that a requirement was jurisdictional only if
Congress “clearly stated” as much.84 The Court emphasized that time
limits were presumptively subject to equitable tolling and not generally
jurisdictional.85 Notably, the Court rejected the government’s argument
that time limits that form a part of a waiver of sovereign immunity are
generally jurisdictional.86

3. General six-year statute in 28 U.S.C. § 2401(a)

Title 28, United States Code, section 2401(a) provides a general statute
of limitations for suits against the United States: “Except as provided by
chapter 71 of title 41, every civil action commenced against the United States
shall be barred unless the complaint is filed within six years after the right
of action first accrues.”
Whether this limit is jurisdictional is an open question that appears
to be closing. The Supreme Court has not ruled on this specific statute,
but most of the Circuit Courts of Appeal have held it to be not juris-
dictional.87 This is especially true for circuits that have examined the

83 United States v. Wong, 575 U.S. 402, 420 (2015).

84 Id. at 409.
85 Id. at 408–410.
86 Id. at 419. Assuming a claimant crosses the timeliness hurdle, the claimant must
establish all elements of an FTCA claim under 28 U.S.C. § 1346(b). In a recent case,
the Supreme Court clarified that “in the unique context of the FTCA, all elements of
a meritorious claim are also jurisdictional.” Brownback v. King, 141 S. Ct. 740, 749
(2021) (“[A] plaintiff must plausibly allege all six FTCA elements not only to state
a claim upon which relief can be granted but also for a court to have subject-matter
jurisdiction over the claim.”).
87 N. Dakota Retail Ass’n v. Bd. of Governors of the Fed. Rsrv. Sys., 55 F.4th 634,
642 (8th Cir. 2022) (abrogating earlier contrary holdings), cert. granted sub nom. Cor-
ner Post, Inc. v. Bd. of Governors, FRS, No. 22-1008, 2023 WL 6319653 (U.S. Sept.
29, 2023); DeSuze v. Ammon, 990 F.3d 264, 269–70 (2d Cir. 2021); Jackson v. Modly,
949 F.3d 763, 776 (D.C. Cir. 2020) (overruling precedents to the contrary); Matushk-
ina v. Nielsen, 877 F.3d 289, 292 n.1 (7th Cir. 2017); Chance v. Zinke, 898 F.3d 1025,

December 2023 DOJ Journal of Federal Law and Practice 255

question at length recently, often focusing on the Court’s holding in
Wong.88 Despite that trend, the Fifth Circuit has recently stated that
the time limit in section 2401(a) is jurisdictional as a component of the
United States’ waiver of sovereign immunity.89 Opinions from other cir-
cuits could also be construed as finding this requirement jurisdictional,
although those mostly pre-date Wong.90

B. Do procedural requirements remain jurisdictional?

While the trend holding timing requirements to be claim-processing
rules as opposed to jurisdictional prerequisites seems clear, the status of
procedural prerequisites remains less certain. This section details some
examples. Just last term, the Court found such a requirement to be
a claim-processing rule in the bankruptcy context. It has also found a
copyright registration requirement to be such a rule. Suits brought un-
der 28 U.S.C. § 2410 may also still be an area in which the procedural
requirements remain jurisdictional, although there is little case law ana-
lyzing this subject. Several justices have also suggested that when such
requirements constitute a component of a waiver of sovereign immunity,
they may begin with a presumption that they are jurisdictional.

1. A claim-processing rule in bankruptcy

The Court recently held in MOAC Mall Holdings LLC v. Transform
Holdco LLC, that a procedural requirement in the Bankruptcy Code was

1033 (10th Cir. 2018); Herr v. U.S. Forest Serv., 803 F.3d 809, 817–18 (6th Cir. 2015);
Cedars-Sinai Med. Ctr. v. Shalala, 125 F.3d 765, 770 (9th Cir. 1997).
88 See, e.g., N. Dakota Retail Ass’n, 55 F.4th at 642; Jackson, 949 F.3d at 776 (over-
ruling precedents, including Mendoza v. Perez, 754 F.3d 1002, 1018 (D.C. Cir. 2014),
that held section 2401(a) was jurisdictional); DeSuze, 990 F.3d at 269–70; Herr, 803
F.3d at 817–18.
89 See Am. Stewards of Liberty v. Dep’t of Interior, 960 F.3d 223, 231 (5th Cir. 2020);
see also Ades v. United States, No. 22-10044, 2022 WL 1198206, at *1 (5th Cir. Apr.
22, 2022). Neither of these cases addresses Wong, acknowledges the circuit split, nor
cites its earlier opinion that allowed equitable tolling for suits brought under section
2401(a). See Clymore v. United States, 217 F.3d 370, 374 (5th Cir. 2000), as corrected
on reh’g (Aug. 24, 2000). Other courts cite the Clymore opinion to suggest the Fifth
Circuit holds section 2401(a) not to be jurisdictional. See, e.g., Herr, 803 F.3d at
817–18.
90 See Ctr. For Biological Diversity v. Hamilton, 453 F.3d 1331, 1334 (11th Cir. 2006)
(citing Spannaus v. U.S. Dep’t of Justice, 824 F.2d 52, 55 (D.C. Cir. 1987), overruled );
Lavery v. Marsh, 918 F.2d 1022, 1027 (1st Cir. 1990) (suggesting time limits are
jurisdictional as part of waiver of sovereign immunity but finding section 2401(a)
was not the right statute of limitations); United States v. Sams, 521 F.2d 421, 428
(3d Cir. 1975); Battle v. Sec’y U.S. Dep’t of Navy, 757 F. App’x 172, 174 (3d Cir. 2018)
(citing Sams).

256 DOJ Journal of Federal Law and Practice December 2023

a claim-processing rule and not jurisdictional.91 That case addressed the
issue of whether section 363(m) of the Bankruptcy Code, which involved
certain sales or assignments of leases, was jurisdictional.92 The Court ex-
amined the language and context of the statute and found nothing clearly
dictating that it governed a court’s adjudicatory power.93 The Court also
highlighted this particular case as an example of the importance of the
distinction between the jurisdictional and claim-processing labels and the
seemingly draconian results that a requirement being jurisdictional can
effect.94

2. Copyright registration requirement not

jurisdictional
Another early decision applied the claim-processing framework to a
procedural requirement for copyright cases in 17 U.S.C. § 411(a). In Reed
Elsevier, Inc. v. Muchnick, the district court certified a class and ap-
proved a settlement of their claims arising from the copyright infringe-
ment of unregistered works.95 On appeal, the case was dismissed for lack
of jurisdiction because the class claimants had not registered the works
in question, a prerequisite to such a suit under section 411:96 “[N]o civil
action for infringement of the copyright in any United States work shall
be instituted until preregistration or registration of the copyright claim
has been made in accordance with this title.”97
In reversing the appeals court, the Court held that this “registration
requirement is a precondition to filing a claim that does not restrict a
federal court’s subject-matter jurisdiction.”98 In other words, it is a claim-
processing requirement. In reaching this decision, the Court relied on its
clear-statement rule.99 The Court found no such clear language in section
411(a).100

91 MOAC Mall Holdings LLC v. Transform Holdco LLC, 143 S. Ct. 927, 935 (2023).
92 Id. at 934.
93 Id. at 937–38.
94 Id. at 936.
95 Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 158–59 (2010).
96 Id. at 159–60.
97 17 U.S.C. § 411(a).
98 Reed Elsevier, Inc., 559 U.S. at 157.
99 Id. at 161–62.
100 Id. at 163.

December 2023 DOJ Journal of Federal Law and Practice 257

3. Are 28 U.S.C. § 2410’s procedural requirements
jurisdictional?
According to the Justice Manual, the USAOs handle most section 2410
cases, though the Tax Division handles section 2410 suits with the fol-
lowing characteristics: “for interpleader or in the nature of interpleader;
quiet title actions raising nominee, alter ego, and transferee issues; ac-
tions raising tax protest issues; and actions that raise substantive tax
issues.”101 Thus, the question of whether section 2410 contains jurisdic-
tional requirements may arise in cases handled by either office.
Case law suggests the prerequisites for cases under 28 U.S.C. § 2410
remain jurisdictional. To be clear, section 2410 is not a jurisdictional
grant to district courts, but merely a waiver of sovereign immunity by the
United States for suits of certain types, such as quiet title, foreclosure,
and interpleader.102 With a waiver of sovereign immunity, a district court
lacks jurisdiction over a suit to which section 2410 applies if its conditions
are not met.103 Admittedly, though, we found little case law analyzing
whether the conditions in section 2410 were claim-processing rules or
jurisdictional prerequisites.104
The primary condition of the waiver is that the suit involve property
“on which the United States has or claims a mortgage or other lien.”105

101 U.S. Dep’t of Just., Justice Manual, 6-5.300.

102 28 U.S.C. § 2410; see also Macklin v. United States, 300 F.3d 814, 819
(7th Cir. 2002) (finding 28 U.S.C. § 1340 conferred jurisdiction to challenge validity
of lien filing procedure using waiver of sovereign immunity in section 2410); Hudson
Cnty. Bd. of Chosen Freeholders v. Morales, 581 F.2d 379, 382 (3d Cir. 1978) (section
2410 “does not of itself confer jurisdiction on district courts”).
103 See Kulawy v. United States, 917 F.2d 729, 733 (2d Cir. 1990); Hughes v. United
States, 953 F.2d 531 (9th Cir. 1992); Hussain v. Bos. Old Colony Ins. Co., 311 F.3d
623, 635 (5th Cir. 2002).
104 One example is Bartolomeo USC, L.L.C. v. United States Department of Housing
and Urban Development, in which the Fifth Circuit Court of Appeals held that the
district court correctly dismissed the section 2410 claim with prejudice because it
considered the jurisdictional question and merits question as overlapping. Bartolomeo
USA, L.L.C. v. U.S. Dep’t of Hous. & Urban Dev’t, No. 21-10493, 2021 WL 5458117,
at *2 (5th Cir. Nov. 22, 2021) (citing Brownback v. King, 141 S. Ct. 740, 749 (2021)).
Also, although the statute at issue in Wilkins—28 U.S.C. § 2409a—is adjacent to
section 2410 in the Code, we have found no indication in case law thus far suggesting
that the holding in Wilkins has affected the jurisdictional nature of section 2410. See
generally Wilkins v. United States, 598 U.S. 152 (2023). The statute of limitations
found in 2401(a) applies to suits brought under Section 2410. See Macklin, 300 F.3d
at 821. See discussion regarding the time limit in section 2401(a) as a claims-processing
rule. We found no case that squarely addressed that limitation with respect to section
2410 or whether section 2410’s procedural requirements were claims-processing.
105 28 U.S.C. § 2410(a).

258 DOJ Journal of Federal Law and Practice December 2023

Some courts have found a lack of jurisdiction when the lien giving rise to
the suit has expired or been released on the basis that this condition is no
longer satisfied.106 Other courts refine or disagree with that by holding
that if a lien is released as a result of the sale of the property subject to
the lien after the filing of suit, the court retains jurisdiction on the facts
as they existed at the time the suit was filed.107 In all these cases, the
discussion is of jurisdiction, as opposed to claims processing, and there is a
notable absence of any discussion of the trend regarding claims-processing
versus jurisdiction.
This requirement that the United States claim a mortgage or lien has
led courts to agree that the waiver in section 2410 allows a challenge to
the procedural validity of a filed federal tax lien, but it does not permit a
challenge to the underlying tax assessment which gave rise to the lien.108
Some courts have expanded this so far as to permit challenges not just
to procedural problems with the notice of lien filing but to procedural
challenges to the underlying assessment or levy and seizure procedures.109
Again, in all cases, the discussion is of the parameters of the courts’
jurisdiction over such suits.
Suits under section 2410 also face other conditions. The suit must
fall into one of the enumerated categories in the section.110 The statute
provides specific pleading requirements, such as identifying “with par-
ticularity” the interest of the United States, and the details of filing of

106 See Koehler v. United States, 153 F.3d 263, 266–67 (5th Cir. 1998); Love v. United
States, 503 F. App’x 747, 748 (11th Cir. 2013).
107 See Kulawy, 917 F.2d at 733–34 (sale by government of subject property af-
ter filing of 2410 suit could not “oust the court of jurisdiction validly invoked”);
Kabakjian v. United States, 267 F.3d 208, 211 (3d Cir. 2001) (distinguishing Koehler
on basis liens were “released” only after suit was filed even though property was sold
pursuant to seizure prior to suit being filed).
108 See, e.g., Progressive Consumers Fed. Credit Union v. United States, 79 F.3d
1228, 1233–34 (1st Cir. 1996); McCarty v. United States, 929 F.2d 1085, 1087–88
(5th Cir. 1991); Arford v. United States, 934 F.2d 229, 232 (9th Cir. 1991); Ku-
lawy v. United States, 917 F.2d 729, 733 (2nd Cir. 1990); Robinson v. United
States, 920 F.2d 1157, 1161 (3d Cir. 1990); Schmidt v. King, 913 F.2d 837, 839
(10th Cir. 1990); Aqua Bar & Lounge, Inc. v. U.S. Dep’t of Treasury Internal Revenue
Serv., 539 F.2d 935, 939–40 (3d Cir. 1976).
109 Guthrie v. Sawyer, 970 F.2d 733, 735 (10th Cir. 1992) (couching the question in
terms of jurisdiction and waiver of sovereign immunity); see also Johnson v. United
States, 990 F.2d 41, 42 (2d Cir. 1993).
110 28 U.S.C. § 2410(a) identifies those as suits (1) to quiet title, (2) to foreclose a
mortgage or other lien, (3) to partition, (4) to condemn, or (5) of interpleader. See
Murray v. United States, 686 F.2d 1320, 1327 (8th Cir. 1982) (“On the ground that
the present action is not one to quiet title, we affirm the district court’s ruling that
jurisdiction does not exist under Section 2410.”).

December 2023 DOJ Journal of Federal Law and Practice 259

the notice of lien.111 Section 2410 directs the manner in which such suits
must be served on the United States, as well as the amount of time the
United States must be given to answer.112 According to the case law we
found, all of these procedural requirements are conditions of the waiver
of sovereign immunity and jurisdictional.113

4. Are other procedural requirements more likely to

be jurisdictional?
When it comes to cases against the United States, procedural require-
ments that comprise a part of the waiver of sovereign immunity may yet
begin with a presumption that they are jurisdictional. “In the context of a
waiver of sovereign immunity, the Court presumes that procedural limita-
tions are jurisdictional.”114 Admittedly, this statement is from the dissent
in Wilkins. Nevertheless, it is supported by the review above. The cases
reviewed above in which the Court held the requirements were claims-
processing rather than jurisdictional primarily involved timing rules or
statutes of limitations for suits against the United States. When ana-
lyzing the requirements in particular cases, especially those against the
United States, it would seem appropriate to begin with the distinction of
whether the requirement is one of timing, or more procedural in nature.115

IV. Suggested alternatives to “jurisdictional”

A. Mandatory if not jurisdictional
A claim-processing rule that is not jurisdictional may still be manda-
tory and not subject to equitable tolling.116 In other words, “a court must
enforce the rule if a party ‘properly raise[s]’ it.”117 A party cannot “wait[]
too long to raise the point,” however, because mandatory claim-processing

111 28 U.S.C. § 2410(b).

112 Id.
113 See Hattrup v. United States, 845 F. App’x 733, 736 (10th Cir. 2021) (including
pleading requirements in section 2410(b) as conditions of waiver of sovereign immunity
and jurisdictional); Dahn v. United States, 127 F.3d 1249, 1251 (10th Cir. 1997). But
see Perez v. United States, 312 F.3d 191, 194–95 (5th Cir. 2002) (refusing to require
strict compliance with specific pleading requirements from pro se plaintiff).
114 Wilkins v. United States, 598 U.S. 152, 166 (2023) (Thomas, J., dissenting).
115 See, infra, part IV.B.
116 See Nutraceutical Corp. v. Lambert, 139 S. Ct. 710, 714 (2019) (“The mere fact
that a time limit lacks jurisdictional force, however, does not render it malleable in
every respect.”).
117 Fort Bend Cnty., Texas v. Davis, 139 S. Ct. 1843, 1849 (2019) (quoting Eber-
hart v. United States, 546 U.S. 12, 19 (2005) (per curiam)).

260 DOJ Journal of Federal Law and Practice December 2023

rules may be forfeited.118 In this way, “[m]andatory claim-processing rules
are less stern,” yet still obligatory if properly invoked.119 Thus, it is gen-
erally advisable to argue in the alternative that even if a statutory time
limitation is not jurisdictional, it is nonetheless mandatory.
Generally, courts presume that federal statutes of limitations are sub-
ject to equitable tolling.120 “Whether a rule precludes equitable tolling
turns not on its jurisdictional character but rather on whether the text
of the rule leaves room for such flexibility.”121 When the text of the rule
“show[s] a clear intent to preclude tolling,” courts cannot “make excep-
tions merely because a litigant appears to have been diligent, reasonably
mistaken, or otherwise deserving.”122 Both Arellano and Brockamp exem-
plify statutes that have overcome this presumption of equitable tolling.123

B. The scope of the applicable waiver of the United

States’ sovereign immunity
Sovereign immunity is a separate basis to dismiss a suit that is a dis-
tinct concept from subject-matter jurisdiction, yet an applicable waiver
is necessary for such jurisdiction to exist.124 Simply stated: The United
States, as a sovereign, may not be sued without its consent, and the
terms of its consent define the parameters of the court’s jurisdiction.125
Where, by statute, the sovereign consents to be sued, the statute is to
be “strictly interpreted,” and the suit may be maintained only if brought
in compliance with the precise terms of the statute.126 Any such consent
must be “unequivocally expressed” by the statute, and is to “be strictly
construed in favor of the United States.”127 Accordingly, “[l]egislative his-

118 Id. (quoting Eberhart, 546 U.S. at 15).

119 Hamer v. Neighborhood Hous. Servs. of Chicago, 583 U.S. 17, 20 (2017).
120 Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 95–96 (1990).
121 Nutraceutical Corp., 139 S. Ct. at 714.
122 Id.
123 Arellano v. McDonough, 598 U.S. 1, 7 (2023); United States v. Brockamp, 519
U.S. 347, 350 (1997); See supra part I.A for a discussion of Arellano, and part II for
a discussion of Brockamp.
124 See Brownback v. King, 141 S. Ct. 740, 749 (2021). Wright and Miller’s treatise
on federal practice characterizes sovereign immunity as a “prerequisite for jurisdic-
tion.” 14 Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 3654 (4th ed. updated Nov. 17, 2022).
125 U.S. Dep’t of Energy v. Ohio, 503 U.S. 607, 615 (1992); United States v. Testan,
424 U.S. 392, 399 (1976).
126 United States v. Sherwood, 312 U.S. 584, 590 (1941).
127 United States v. Idaho, 508 U.S. 1, 7 (1993) (citations omitted);
United States v. Nordic Village, Inc., 503 U.S. 30, 34 (1992) (citations omitted).

December 2023 DOJ Journal of Federal Law and Practice 261

tory cannot supply a waiver that is not clearly evident from the language
of the statute.”128 Any ambiguities present concerning a “waiver of the
government’s sovereign immunity will be strictly construed, in terms of
[the ambiguity’s] scope, in favor of the sovereign.”129 In this way, “the
government’s consent to be sued is never enlarged beyond what a fair
reading of the text requires.”130
In the October 2022 Term, the Supreme Court applied this sovereign
immunity clear-statement rule in the context of a bankruptcy statute’s
abrogation of the sovereign immunity of Indian tribes and of a statuto-
rily created oversight board within the territorial government of Puerto
Rico.131 Thus, sovereign immunity remains a viable and powerful defense
when applicable and properly asserted.
An express statutory waiver of sovereign immunity often contains con-
ditions, such as deadlines and administrative exhaustion requirements.
Careful consideration should be given toward the issue of whether condi-
tions on a waiver of sovereign immunity constitute jurisdictional require-
ments or mere claim-processing rules. Since Irwin, the Court has stated
that, generally, time limitations fall within the ambit of claim-processing
rules: “Once Congress waives sovereign immunity, . . . judicial application
of a time prescription to suits against the Government, in the same way
the prescription is applicable to private suits, ‘amounts to little, if any,
broadening of the congressional waiver.’”132 In Wilkins, for example, a
majority of the Court interpreted the Quiet Title Act’s time limitation
as a non-jurisdictional claim-processing rule; the dissent, on the other
hand, considered it a condition on the United States’ waiver of sovereign
immunity and jurisdictional in character.133
In certain contexts, however, the argument that a statute of limita-
tions sets a boundary on the waiver of the sovereign immunity might still
be viable. Take United States v. Dalm, for instance, which held the tax
refund suit statute of limitations to operate as a jurisdictional limita-

128 Fed. Aviation Admin. v. Cooper, 566 U.S. 284, 290 (2012) (citing Lane v. Peña,
518 U.S. 187, 192 (1996)).
129 Lane, 518 U.S. at 192; see also Fed. Aviation Admin., 566 U.S. at 290.
130 Fed. Aviation Admin., 566 U.S. at 290 (citing Ruckelshaus v. Sierra Club, 463
U.S. 680, 685–86 (1983)).
131 See Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 599
U.S. 382, 387–88 (2023); Fin. Oversight & Mgmt. Bd. for Puerto Rico v. Centro de
Periodismo Investigativo, Inc., 598 U.S. 339, 346–47 (2023).
132 Scarborough v. Principi, 541 U.S. 401, 421 (2004) (citing Irwin v. Dep’t of Veterans
Affairs, 498 U.S. 89, 95 (1990)).
133 Wilkins v. United States, 598 U.S. 152, 164–65 (2023); id. at 166–68 (Thomas, J.,
dissenting).

262 DOJ Journal of Federal Law and Practice December 2023

tion to suit.134 The majority in Wilkins distinguished Dalm (cited by the
dissent) as “involv[ing] a separate provision of a separate statute” and
unable to “render [the statute at issue in Wilkins] jurisdictional when
Quiet Title Act cases . . . failed to do so.”135 In describing Dalm in this
way, the Court implicitly acknowledged that Dalm’s holding still stands,
at least in the tax refund context. In short—context matters—and courts
are likely to place more weight on precedential treatment of the time
limitation at issue rather than the treatment of time limitations in other
statutory contexts.

C. Consider moving under Rule 12(b)(1) and 12(b)(6)

When considering a motion to dismiss for lack of subject-matter ju-
risdiction under Federal Rule of Civil Procedure 12(b)(1), consider also
including dismissal under Rule 12(b)(6) for failure to state a claim upon
which relief could be granted. In many cases in which the court held
that the statutory requirement was a claim-processing rule as opposed
to a jurisdictional requirement, it nonetheless dismissed the case because
the plaintiff failed to properly assert a claim upon which relief could be
granted.136
In sum, many statutory requirements that used to be considered ju-
risdictional are now being declared claim-processing rules that can be
waived or forfeited. These new developments can be successfully over-
come with proper planning and analysis of the clear-statement rule and
applicable precedent, and with careful attention paid toward alternative
arguments.

About the Authors

Marie Wicks is an attorney in the Tax Division’s Appellate Section
and is serving as Counsel to the Deputy Assistant Attorney General for
Appellate and Review. She joined the Tax Division as a Trial Attorney in
the Northern Civil Trial Section in 2017 and joined the Appellate Section
in 2022.

134 United States v. Dalm, 494 U.S. 596, 608–10 (1990).

135 Id. at 165 n.7 (citing Dalm, 494 U.S. at 601–02).
136 See, e.g., Hassen v. Gov’t of Virgin Islands, 861 F.3d 108, 116 (3d Cir. 2017);
Galvez v. Internal Revenue Serv., 448 F. App’x 880, 887 (11th Cir. 2011) (“Having
avoided the Scylla of the exhaustion requirements in [sections] 7432 and 7433 acting as
jurisdictional bars to suit, the taxpayers nonetheless run into the Charybdis of failure
to state a claim.”); Quinn v. United States, No. 20-CV-3261, 2021 WL 738756, at *7
(S.D.N.Y. Feb. 25, 2021) (“In the alternative, even if [section] 6532(a) is subject to eq-
uitable tolling, the Court must still dismiss the Complaint.”); see also Bowen v. United
States, No. 22-CV-6275, 2023 WL 3995469 (W.D.N.Y. June 14, 2023).

December 2023 DOJ Journal of Federal Law and Practice 263

 Mike May is an assistant chief in the Tax Division’s Civil Trial Sec-
tion—Southwestern Region. He joined the Tax Division as a Trial Attor-
ney in 2009 and has litigated nearly every type of civil case handled by
the Tax Division.

264 DOJ Journal of Federal Law and Practice December 2023

Note from the Editor-in-Chief
Al “Scarface” Capone once said, “They can’t collect legal taxes from
illegal money.” But, of course, he wound up sentenced to federal prison
for 11 years for tax evasion.1
While Capone may not have understood federal tax law, United States
Department of Justice attorneys do. This issue of the DOJ Journal of
Federal Law and Practice is dedicated to issues involved in tax cases. To
that end, our authors cover some wide ground, including investigating
and prosecuting tax cases, and complex problems related to the attor-
ney–client privilege, foreign evidence gathering, and pro se tax defen-
dants. I’m pleased that this issue has so much applicability to non-tax
cases too, due to the excellent work of our subject matter experts. They
receive my highest praise.
A big thank you goes out to Katie Bagley for acting as point-of-
contact, recruiting our authors, and ensuring that we publish an accurate,
quality product. Shout-outs go to Managing Editor Kari Risher and our
University of South Carolina Law Clerks, who always display a meticulous
attention to detail when putting an issue together.
As this year winds down, I want to thank all our readers. I hope your
year has been a good, productive one. We on the Publications Team at
the Office of Legal Education wish you all the best this holiday season.
And we’ll see you back here in 2024.

Chris Fisanick
Columbia, South Carolina
December 2023

1 Kelly Phillips Erb, Al Capone Convicted on This Day In 1931 After Boasting
‘They Can’t Collect Legal Taxes from Illegal Money,’ Forbes, (Oct. 17, 2020),
https://www.forbes.com/sites/kellyphillipserb/
2020/10/17/al-capone-convicted-on-this-day-in-1931-after-boasting-they-cant-collect-
legal-taxes-from-illegal-money/?sh=53a5d1eb1435.

December 2023 DOJ Journal of Federal Law and Practice 265