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November 01, 2013

District Court Procedures for Return of Seized Property in Connection with Criminal Tax Evasion Investigation of CEO

The criminal tax attorneys at Nardone Law Group regularly update their clients in Columbus, Ohio and across the United States on recent court cases involving criminal tax evasion. This article addresses a recent district court case—Gourmet Express, LLC v. U.S., et al—from the Northern District of California in which the court ordered the U.S. government to reproduce documents that were seized by the IRS during a warrant search of a CEO’s home in connection with a criminal tax evasion investigation of that CEO. The court laid out the procedures under Federal Rules of Criminal Procedure Rule 41(g), which requires the district court to balance four discretionary factors to determine whether to allow the government to retain the documents or to order them returned. After balancing the factors under Rule 41(g), the district court found that the government’s retention of the documents was not reasonable where the LLC, also known as the movant, sought only the reproduction documents versus the return of them and where the government failed to show that all of the material collected were “returns” or “return information” under 26 U.S.C.§ 6103.

Motion to Return Property Under Rule 41(g): A Tool to Obtain Seized Documents

When the IRS seizes documents under a search warrant during a criminal tax evasion investigation, Rule 41(g) provides a movant the ability to move a court for the property’s return. The rule weighs the competing interests of disclosure versus who has been aggrieved by an unlawful search and seizure of property or by the deprivation of property. Generally, in a criminal tax case, a Rule 41(g) motion should be presumptively granted if the government no longer needs the property for evidence. The district court held that since the movant sought only the reproduction of the documents, rather than the return of the seized documents, this would not deprive the United States of the evidence. Thus, this would ordinarily require that the documents be reproduced. Although the district court ordered that the documents be reproduced, the district court granted the government leave to file a motion for stay the enforcement of the order to show that the information was protected from disclosure under 26 U.S.C. § 6103.

The importance of this case is that it provides a blueprint for obtaining documents seized by the government in a criminal tax evasion investigation. Often times, the IRS will seize documents, including business records and tax information, and take several years to fully investigate you without returning those documents. Taxpayers in such a situation should carefully review Rule 41(g) and consult with an experienced criminal tax defense lawyer to discuss their options in obtaining the seized documents.

Contact Nardone Law Group

If you have concerns about civil or criminal tax matters, you should contact one of the experienced criminal tax attorneys at Nardone Law Group. We help individuals through all aspects of criminal tax matters, from criminal investigation by state and federal taxing authorities to criminal defense. The tax lawyers at Nardone Law Group can help you understand your rights and responsibilities when it comes to federal, state, and local taxes.  Contact Nardone Law Group today for a consultation.

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« Notice of Federal Tax Lien: Taxpayer Options for Resolution and Collection Alternatives | Main | IRS May Apply Certain Tax Liability Payments in Government’s Best Interest »

November 01, 2013

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