Follow Up on Fifth Amendment Limits

Yesterday, two practitioners and myself had a lively discussion about the decision in United States v. Elmes (S.D. FL 2009 - No. 0:09-mc-61726, dated December 17, 2009) involving summons enforcement. The blog and the comments may be viewed here. That discussion centered around the court's rejection of the witness's Fifth Amendment privilege. The decision that was the focus of the discussion was entered by the court on December 17, 2009. As to some key points of interest, that December 17 opinion we were discussing was a bit cryptic. Today, in Lexis-Nexis, an earlier opinion (dated December 7, 2009 appeared. United States v. Elmes (S.D. FL 2009 - No. 0:09-mc-61726, dated December 7, 2009). This December 7, opinion may be viewed or downloaded here.

This newly published (but prior) opinion adds a lot of flavor to yesterday's discussion.

Regarding the Fifth Amendment, the Court then has a fair discussion of the general ground rules. Specifically, as it relates to our discussion in the prior blog, the Court says that the witness asserting the Fifth Amendment must show a real fear of potential incrimination. Then the Court says that, in consideration of the ground rules, the Court held an in camera hearing. The Court's discussion of that hearing and its outcome is self explanatory:

The Court asked Respondent, in sum and substance, the following questions:

. In the past ten years, have you resided out of the United States for periods of six months or longer?
. How much cash do you have on hand that is not included in a bank account?
. What personal bank accounts do you have?

Respondent did not invoke her Fifth Amendment privilege in response to the above questions and instead she provided the Court with answers. Therefore, the Respondent is directed to also provide such information to the IRS. In addition, Respondent should provide the IRS with all documents in her possession related to the above questions.

The Court also asked Respondent, in sum and substance, the following questions:

. Do you have an employer?
. Who is your husband's employer?
. What is your employer's address, work telephone number, occupation and number of years with current employer?
. What is your husband's employer's address, work telephone number, occupation [*16] and number of years with current employer?
. Are you a party to any lawsuits?
. Do you anticipate any increase or decrease in your income?
. Are you the beneficiary of any trust, estate or life insurance policy?
. Do you have any bank accounts in foreign countries?
. Do you own any investments, like stocks, bonds, mutual funds, stock options, certificates of deposit, IRA accounts, PO, 401k plans?
. Do you have any credit cards?
. Do you have any credit cards in foreign countries?
. Do you have any life insurance policies?
. In the past ten years have any assets been transferred by you to someone else for less than full value?
. Do you own, rent or lease any real estate?
. Do you own or lease any vehicles?
. What personal assets do you own including furniture, personal effects, artwork, jewelry, collections, antiques or other assets?
. What is your monthly income and what is the source of that income?
. What are your total living expenses?
. In the event you are self-employed, what is the name of your business?
. Does the business engage in E-commerce, internet sales?
. Does your business have credit cards?
. What credit cards does your business accept?
. How much cash on hand does the business have?
. What business accounts do you have?
. What accounts receivable does your company have?
. What business assets do you have?
. What is the business's total monthly income and total monthly expenses?

Respondent invoked her Fifth Amendment privilege and declined to answer the twenty-seven questions listed immediately above. The Court concludes that Respondent does not have a valid Fifth Amendment privilege with respect to these twenty-seven questions for two reasons. First, these questions relate to Respondent's current financial situation. At the August 26, 2008 interview, the Revenue Officer explained that the purpose of the interview was to determine Respondents' "ability to pay what you owe on the income taxes for the years 2000 and 2001." Exhibit 1 to DE 4 at 12:19-21. The Summons relates to Respondent's nonpayment of her 2000 and 2001 taxes. Therefore, information regarding the Respondent's current financial status does not provide a real and substantial hazard of criminal prosecution. See United States v. Redhead, 194 Fed. Appx. 234, 236 (5th Cir. 2006) ("The documents requested by the IRS pertain only to Redhead's asset holdings, and thus, are not inherently incriminating in nature."); United States v. McMillian, 2007 WL 646952, *3 (M.D. Fla. Feb. 27, 2007) ("But asking him about his current assets for collecting on his past due obligations does not implicate the Fifth Amendment's self-incrimination protections.") (emphasis in original).

Second, Respondent invoked the same, blanket reason to justify her invocation of the Fifth Amendment for each question. In essence, Respondent's argument is that there is a real hazard of criminal prosecution because the IRS will "lie" and "twist" any information provided by Ms. Elmes in a future criminal prosecution. The Court finds that this justification is speculative. Respondent may not rely on a general distrust of the IRS to refuse to comply with an otherwise valid summons. Moreover, Respondent invoked a similar justification each time she asserted the Fifth Amendment. Invoking the same, generalized fear twenty-seven separate times is no different than asserting a blanket claim of self-incrimination.

Accordingly, the Respondent is directed to provide answers to the IRS for the twenty-seven questions noted above. In addition, Respondent should provide the IRS with all documents in her possession related to the above questions.

Finally, the Court asked Respondent, in sum and substance, the following questions:

. Why didn't you file tax returns for the years 2002 through 2007?
. Do you plan on filing those returns?

With respect to these two questions, the Court finds that Respondent properly invoked the Fifth Amendment. By responding to these questions, Ms. Elmes may provide information which could lead to a criminal prosecution for failure to file tax returns for the years 2002 through 2007.