83 lines
4.9 KiB
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83 lines
4.9 KiB
Plaintext
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Most Powerful Weapon of IRS is Imaginary
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This article is reprinted from Full Disclosure. Copyright (c) 1986
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Capitol Information Association. All rights reserved. Permission is hereby
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granted to reprint this article providing this message is included in its
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entirety. Full Disclosure, Box 8275, Ann Arbor, Michigan 48107. $15/yr.
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The audit is the IRS' most powerful tool in promoting voluntary compliance
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with the tax system. The IRS uses audits to pressure taxpayers to disclose
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all of their financial records to the agency. This operation allows the IRS
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to transfer the burden of proof from the government to the individual.
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The question is, of course, how can the IRS do this when the 5th Amendment
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specifically provides that ``No person . . . shall be compelled in any
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criminal case to be a witness against himself.'' The first answer might well
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be that it is a civil, not a criminal matter, but according to Black Law
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Dictionary, any action by the government against an individual is a criminal
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matter*1. Even the IRS agrees with this: Section 342.11 (2) of the IRS
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Special Agent Handbook states, ``the right to refuse to answer incriminating
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questions applies not only to court trials, but to all kinds of criminal or
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civil proceedings, including administrative investigations. [George Smith v.
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U.S., 337 S. Ct 1000 (1949); McCarthy v. Arndstein; Counselman v. Hitchcock;
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U.S. v. Harold Gross, 276 F2d 816 (CA-2), 60-1 USTC 9401].
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The Handbook goes into more detail in Section 342.12 which states:
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Books and Records of An Individual
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(1) An individual taxpayer may refuse to exhibit his/her books and records
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for examination on the grounds that compelling him/her to do so might violate
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his/her right against self-incrimination under the Fifth Amendment and
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constitute an illegal search and seizure under the Fourth Amendment. [Boyd v.
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U.S., 116 U.S. 616, 6 S. Ct 524 (1886); U.S. v. Vadner, 119 F. Supp 330 (E.D.
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Pa.) 54-11 USTC 9173] However, in the absence of such claims, it is not error
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for a court to charge the jury that it may consider the refusal to produce
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books and records, in determining willfulness. [Louis C. Smith v. U.S., 236
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F.2d 260 (CA-8), 56-2 USTC 9380, cert denied 352 U.S. 909, 77 S.Ct. 148;
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Beard v. U.S., 222 F.2d 84 (CA-4)., 55-1 USTC 9400, cert denied 350 U.S. 846,
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76 S. Ct 48; Olson v. U.S., 191 F.2d 985 (CA-9), 51-2 USTC 9468; Myres v.
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U.S., 174 F.2d 320 (CA-8), 49-1 USTC 9275, cert denied 338 U.S. 49]
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(2) The privilege against self-incrimination does not permit a taxpayer to
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refuse to obey a summons issued under IRC 7602 or a court order directing
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his/her appearance. He/she is required to appear and cannot use the Fifth
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Amendment as an excuse for failure to do so, although he/she may exercise it
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in connection with specific questions. [Landy v. U.S., 283 F.2d 303, cert
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denied 365 U.S. 845] He/she cannot refuse to bring his/her records, but may
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decline to submit them for inspection on constitutional grounds. In the
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Vander case, the government moved to hold a taxpayer in contempt of court for
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refusal to obey a court order to produce his books and records. He refused to
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submit them for inspection by the Government, basing his refusal on the Fifth
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Amendment. The court denied the motion to hold him in contempt, holding that
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disclosure of his assets would provide a starting point for a tax evasion
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case.
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This clearly shows that IRS audits are not compulsory. However, one can not
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blindly refuse to participate. Several of the above referenced cases allow
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the jury to use the refusal to disclose records as a basis of determining
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willfulness, only if the defendant did not claim a constitutional basis for
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withhold the records. The other necessity when refusing to disclosure records
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is that court orders and summons not be ignored, but rather specific
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questions or specific requests for records be denied on constitutional
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grounds. That is, they can order you around physically, but can not force
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your disclosure of information.
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The system is obviously focused against those who don't know their rights.
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Some people, however, think it is better to cooperate with the IRS, the logic
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being that if you are nice to them, they will return the favor. This is not
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the case, however. In U.S. v. Dickerson [413 F.2d 1111] the court observed
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that ``only the rare taxpayer would be likely to know that he could refuse to
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produce his records to IRS agents,'' and ``who would believe the ironic truth
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that the cooperative taxpayer fares much worse than the individual who relies
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upon his constitutional rights.''
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*1 The distinction between a crime and a tort or civil injury is that the
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former is a breach and violation of the public right and of duties due to the
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whole community considered as such, and on its social aggregate or capacity;
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whereas the later is an infringement or privation of the civil rights of
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individuals merely.
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