The Ninth Circuit agreed with the district court that enforcement of the summons was appropriate under the “foregone conclusion” exception to the Fifth Amendment, and that the taxpayer’s criminal defense attorneys must comply with the IRS summons because the IRS could independently authenticate the tax records contained in the identified collection of boxes and folders held by the law firm. United States v. Sideman & Bancroft, LLP, No. 11-15930 (9th Cir. January 8, 2013).
Read the decision: Sideman & Bancroft [PDF 86 KB]
The taxpayer (a lawyer in California) was the subject of an IRS criminal investigation. As part of this investigation, the IRS obtained a search warrant to locate the taxpayer’s tax documents; however, the IRS failed to locate the documents it sought on execution of the search warrant. It, however, found references to the taxpayer’s income tax return preparer (an accountant).
The IRS, as the next step in the investigation, contacted the accountant, who explained that she no longer had the documents because she had delivered them to the taxpayer’s civil attorney (who in turn, delivered them to the taxpayer’s attorney / law firm in the IRS criminal investigation).
The IRS issued a summons to the law firm in the criminal investigation based on information and a detailed description of the documents, which the IRS had obtained from the accountant. The law firm had refused to produce the documents because, as was asserted, this would violate the taxpayer’s Fifth Amendment rights.
The IRS filed a petition in federal district court to enforce the summons. Before the district court, the IRS offered a declaration from the accountant which included details about the taxpayer’s records (including a summary of the documents as well as the specific boxes and folders containing the documents).
The district court granted the IRS petition to enforce the summons, finding that the summonsed documents fell within the “foregone conclusion” exception to the Fifth Amendment.
The Ninth Circuit today agreed with the district court that the “foregone conclusion” exception to the Fifth Amendment applied to the tax documents because prior to the time when the IRS issued the subpoena, it knew with reasonable particularity of the existence of and the law firm’s possession of the documents and could independently establish their authenticity based on the accountant’s familiarity with them.