Friday, March 8, 2013

DOJ Tax Disavows Intent to Expand Required Records Exception to Act of Production Fifth Amendment Privilege (3/8/13)

Some practitioners have expressed concern that DOJ Tax would try to expand into other areas (including the general requirement that a taxpayer maintain records related to tax liablity) the Courts of Appeals' application of the Required Records Doctrine to overcome a Fifth Amendment privilege applying to the act of the production of offshore bank records.  Tax Notes Today addresses that subject in an article reporting on an ABA Tax Section webinar.  Shamik Trivedi, No Intention to Expand Required Records Doctrine, Keneally Says, 2013 TNT 44-3 (3/6/13).  Here are excerpts I thought particularly interesting:
[In the required records doctrince cases] [t]he government briefs discuss how retaining foreign bank account reports is a regulated area and "speak to the ability to impose requirements," Keneally [DOJ Tax AAG] said, adding that the arguments are not so broad that they affect other areas of record retention. "We're not making those arguments right now. I'm unaware of making any intention to make those arguments," she said.  
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Under 31 U.S.C. section 5322, taxpayers must keep and maintain records concerning an offshore financial account, such as an FBAR, for five years, and they must be made available for inspection during that time. The Supreme Court has held that individuals are not required to produce materials that are testimonial and incriminating, but when the government has asserted the required records doctrine, lower courts have negated that protection if an administrative regime imposes a record-keeping requirement on the individual. 
In response to Keneally's point that FBAR retention is a regulated area and that the government is not intending to expand its use of the doctrine, Paula M. Junghans of Zuckerman Spaeder LLP said the government is not repudiating the result "if the courts go farther than you ask them to." 

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