In a Q&A session such as a summons interview or grand jury session, witnesses may assert a Fifth Amendnment privilege only as to questions the answers to which might have a tendency to incriminate them. That is to say that there are questions that do not implicate the privilege and must be answered. Practitioners advising witnesses must be careful to properly assert the privilege and not to inadevertently allow answers that should be within the privilege. That is a bit dicey in grand jury proceedings where the attorney is outside the grand jury room, and the witness must stop the grand jury questioning in order to consult with his or her attorney. But the key issue for this blog is what answers would tend to incriminate the witness.
A recent case develops the issue quite nicely. In United States v. Elmes (S.D. FL 2009 - No. 0:09-mc-61726), the IRS issued a summons for the taxpayer's testimony and documents. The summons was issued in aid of collection of 2000 and 2001 income taxes that were already assessed; the IRS needed to develop facts relevant to the taxpayer's current financial condition and ability to pay. At the ensuing Q&A session, the witness declined to answer the majority of the questions, asserting First, Fourth and Fifth Amendment privileges.
The IRS brought a summons enforcement case. The court held two hearings, and at the second hearing evaluated the witness's claim of privilege on a question by question basis. The court held that, except as to 2 questions, the witness's assertion of privilege was improper and ordered her to answer.
Focusing on the Fifth Amendment (the only real potentially viable claim of privilege), the Court made the following holdings:
1. The Fifth Amendment privilege does not apply to questions relevant to current financial condition because there is no real and substantial hazard of criminal prosecution. (JAT Note, if the issue were whether prior recent statements as to her financial condition constituted criminal conduct, then her present financial condition might invoke the Fifth Amendment privilege, but that was not the casel in Elmes.)
2. The Court rejected a claim of privilege with respect to the production of documents. The taxpayer's generalized claim of privilege failed to state how the documents or the act of producing the documents could tend to incriminate. (JAT note: presumably the documents requested in the summons cleared the Hubble particularity hurdle.)
3. Section 7210, providing a criminal penalty for failure to comply with a summons, is not a basis for a Fifth Amendment claim; all the taxpayer has to do is comply with the summons by producing documents and answering the questions (subject to proper assertions of privilege) to avoid that criminal possibility.
4. The potential for committing perjury in the summons enforcement proceeding is not a valid Fifth Amendment claim.
The court concluded:
Due to the nuances of the applicable law, it is important for the Court to specify exactly what issues are being decided. The Court finds that Respondent cannot rely on a generalized fear of the IRS to invoke her Fifth Amendment privilege to avoid providing information regarding her current financial ability to pay outstanding tax liabilities from 2000 and 2001. That Respondent may face future criminal prosecution if she decides not to comply with the Summons or because she will not pay civil penalties is insufficient to withhold current financial information, which is not incriminating. The Court acknowledges that a different analysis will apply if the United States uses any information provided by Ms. Elmes in response to the Summons for a criminal prosecution unrelated to her 2000 and 2001 liabilities.
This is not a fishing expedition. The IRS is seeking basic financial information that millions of American taxpayers voluntarily provide to the government each year. Most of those with no more prompting than an April 15th deadline. Whether Ms. Elmes pays her taxes is ultimately an issue to be resolved between her and the IRS. While the Court respects Respondent's right to present a good-faith and vigorous defense on her own behalf, the Court also expects that the Respondent will comply with this Court's Orders once a decision has been made. Failure to do so will subject Ms. Elmes to possible sanctions such as the imposition of costs and incarceration separate and apart from her issues with the IRS.