- Larry A. Campagna, Partner, Chamberlain, Hrdlicka, White, Williams & Aughtry, Houston, TX, here.
- Nanette L. Davis, Assistant Chief, Northern Criminal Enforcement Section Tax Division U.S. Department of Justice, Washington, DC
- Mark E. Matthews, Partner, Caplin & Drysdale, Chartered, Washington, DC, here.
- Pamela J. Naughton, Partner, Sheppard Mullin Richter & Hampton LLP, Shelton, CT, here.
- Alexander P. Robbins, Attorney, Criminal Appeals DivisionU.S. Department of Justice, Washington, DC
- Moderator: Jenny L. Johnson, Partner, Holland & Knight, LLP, Chicago, IL here.
Tax Notes has a summary of the program, Jaime Arora, Options Remain for Taxpayers Despite Government Wins on Required Records Doctrine, 2013 TNT 162-4 (8/31/13). I do not provide a link to that copyrighted article, but do summarize some parts of the article that I found particularly interesting:
1. Ms. Davis said that consensus enforcement of required records subpoenas "has not changed the landscape as much as the defense bar fears it has."
2. Ms. Davis said that, even if it obtains enforcement of the required records subpoena (or summons), the Government must prove tax due and owing. [JAT Note: Technically, some of the relevant tax crimes do not require a tax due and owing (e.g., tax perjury, Section 7206(1)), but, in most cases, the Government would probably not prosecute a tax crime or FBAR crime implicating only tax issues where there is no substantial tax due and owing or, perhaps, no provable substantial tax due and owing.]
3. Ms. Davis discussed the Government's evidentiary problems in introducing in a criminal case foreign bank records. If the bank were a U.S. bank, that is usually done by calling a bank "custodian" who can testify that the records are the bank's records which are maintained in the ordinary course of business and explain the meaning and contents of the records. See FRE 803(6), here. That is dicey for foreign banks beyond the ability to issue compulsory process. [JAT Note: foreign banks may have an incentive to produce such a custodian to authenticate and explain the records (for example, UBS agreed to do that as part of its DPA, and one might expect that ultimately the IRS will extract that type of commitment from other Swiss banks in the cross-hairs).]
4. What if the foreign bank is not cooperating? Ms. Davis indicated that the taxpayer, in response to the required records subpoena, may produce incomplete records. That might then permit the Government to make an MLAT treaty request (certainly, even if incomplete, the records would likely show the bank(s) and the account(s) involved. The Government might then get a complete record set through the treaty request. With a complete record set and the imprimatur of a foreign government treaty request, the Government might be situated to invoke the residual hearsay exception in FRE Rule 807, here.
5. Well, one might ask whether the taxpayer's delivery of the documents pursuant to the required records subpoena would be sufficient to authenticate whatever the taxpayer produces in response (assuming that the taxpayer has not been given, directly or indirectly, act of production immunity. Ms. Davis said (as reported) that proving trustworthiness might be difficult, but :"it's not to say we wouldn't try to argue it."
6. Pamela Naughton noted that, if a bank custodian cannot be produced to testify as to the meaning of the documents (complex transactions, etc.), the fall back would be an IRS agent who analyzed the records testifying "basically [to] a whole lot of hearsay." [JAT note: with the residual hearsay exception, excludable hearsay ain't what it used to be.]
JAT Note: Only criminal tax lawyers / white collar crime lawyers can love this stuff. But the point was the merely obtaining enforcement of the required records subpoena does not assure that there will be criminal prosecution or conviction. There are other hurdles the prosecutors must clear. On the other hand, if DOJ Tax has properly analyzed its case and adopted strategies to clear hurdles such as discussed above (which it presumably will do so as not to negatively impact its needed high conviction rate), then maybe it can clear the hurdles.