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February 10, 2008

Obtaining Information from the Internal Revenue Service, Tax Fraud (criminal)

In U.S. v. Weisberg, DC, Western District of NY, 101 AFTR 2d ¶2008-417, a magistrate judge quashed a subpoena (in part) that a chiropractor issued on the IRS seeking to compel production of various records or documents allegedly relevant to his defense to Section 7203 criminal charges.  The court held that to extent the defendant was seeking IRS form letters and correspondence it sent to non-parties/other non-filers or tax protest organizations to which the defendant had granted a power of attorney over his tax matters, information was not sufficiently relevant to taxpayer's defense to warrant compelled production. The court also held that the production of that information would violate Section 6103. But, the court held that to extent the taxpayer was seeking IRS guidelines as to how it deals with non-filers generally, the IRS was ordered to comply and produce the same at trial.

This case highlights the importance of obtaining information from the IRS prior to litigation and the difficulty of obtaining certain information through formal process.  In fact, although the IRS aggressively and frequently demands that taxpayers’ turn over their records to the IRS, the IRS is not so willing to share with taxpayers when asked to do the same.  Certainly, in Weisberg’s case, he may not have had an earlier opportunity, but many other taxpayers do have that opportunity.  Thus, prior to entering into litigation with the IRS, a taxpayer should consider his options of how to obtain information from the IRS.  Under most circumstances, taxpayers would be surprised how much you can obtain prior to litigation.  The tools available that should be explored are: (i) Section 6103 involving disclosure to persons with a material interest; (ii) the Freedom of Information Act (FOIA); (iii) the Privacy Act of 1974; and (iv) general information available to all taxpayers without any formal process, such as the Internal Revenue Manual.  There is a plethora of information available in public forums on each of these categories.

See U.S. v. Weisberg, DC, Western District of NY, 101 AFTR 2d ¶2008-417 attached below.

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February 10, 2008

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