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TO: ALL UNITED STATES ATTORNEYS; ALL FIRST ASSISTANT UNITED STATES
ATTORNEYS; ALL CRIMINAL CHIEFS
FROM: Carol DiBattiste, Director
SUBJECT: Press Releases in Cases Involving the IRS
ACTION REQUIRED: Please distribute to appropriate AUSAs and forward all
press releases in criminal tax cases to the Deputy Assistant Attorney
General (Criminal), Tax Division.
CONTACT PERSON: Bob Lindsay (202) 514-3011
The attached memorandum from the Assistant Attorney General for the Tax
Division discusses a recent case affecting disclosure of information related
to tax cases, Johnson v. Sawyer, 120 F.3d 1307 (5th Cir. 1997). In
Johnson v. Sawyer, the court held 26 U.S.C. § 6103 bars release
of information taken directly from IRS files, or tax returns or return
information that has accumulated in Department files as part of an
investigation or prosecution, regardless of whether the information has made
its way into the public record. Information taken directly from the public
record, however, still may be disclosed. Although other circuits have taken
somewhat different approaches, the Fifth Circuit's approach is similar to
rulings in three other circuits.
To avoid potential criminal or
civil liability, all press releases in cases involving tax matters should
contain only information that comes from the public record, and should refer
to specific public records as the source of the information, including such
seemingly-innocuous items as the person's name, date of birth and place of
residence. In addition, all press releases in criminal tax cases should be
forwarded, preferably by fax, to the Deputy Assistant Attorney General
(Criminal), Tax Division. The fax number is (202) 514-5479. The mailing
address is P.O. Box 501, Washington, D.C. 20044.
Because press
releases can result in both criminal and civil liability, please ensure that
this information is distributed to appropriate Assistants in your office.
Thank you very much for your cooperation.
Attachment
cc: All United States Attorneys' Secretaries
MEMORANDUM
TO: ALL UNITED STATES ATTORNEYS
ALL CRIMINAL CHIEFS
ALL CIVIL CHIEFS
FROM: Loretta C. Argrett
Assistant Attorney General
Tax Division
SUBJECT: Press Releases in Cases Involving the IRS
ACTION REQUIRED: Forward, preferably via fax, a copy of each press
release in criminal tax cases to the Deputy Assistant Attorney General
(Criminal), Tax Division, P.O. Box 501, Washington, D.C. 20044. FAX (202)
514-5479.
DUE DATE: None
RESPOND TO: See Below
CONTACT PERSON: Bob Lindsay (202) 514-3011
Summary
The purpose of this message is to provide guidance to United States
Attorneys' offices about the use of press releases publicizing indictments,
convictions, and sentences in criminal tax and other IRS-investigated cases,
in light of a recent circuit court opinion and several earlier decisions.
[This guidance also applies to civil tax cases.]
This recent
decision has increased the confusion about the information that may be
released in tax cases. On August 21, 1997, the United States Court of
Appeals for the Fifth Circuit ruled that the prohibitions against the
disclosure of tax returns and return information from IRS or DOJ files (26
U.S.C. § 6103) continue to apply even if the information has been
made public in an indictment or court proceeding. Johnson v. Sawyer,
5th Cir. No. 96-20667 ____F.3d___. The Fifth Circuit concluded that "[i]f
the immediate source of the information claimed to be wrongfully disclosed
is tax return information ..., the disclosure violates § 6103,
regardless of whether that information has been previously disclosed
(lawfully) in a judicial proceeding and has therefore arguably lost its
taxpayer confidentiality." Several other circuits have addressed this issue,
often reaching conflicting conclusions.
The practical effect of
these holdings is that you should exercise caution when preparing tax press
releases. Future press releases cannot be written with information from IRS
or the prosecutor's files, but must be based on, and contain only, public
record information. Thus, a press release announcing an indictment should
contain only information set forth in the publicly-filed indictment and
indicate that the source of the information is the indictment. Similarly, a
press release discussing a conviction should be based solely on information
made public at the trial or in pleadings publicly filed in the case, and
should indicate that the source of the information is the public court
record.
Background
Section 7431 of the Internal Revenue Code (26
U.S.C.) authorizes a civil action for damages against the United States for
the unauthorized disclosure of returns or return information. The minimum
damage award for each negligent disclosure is $1,000. The statute also
provides for punitive damages for any unauthorized disclosures that are due
to gross negligence or willfulness. A willful disclosure of returns or
return information in a manner not authorized by Section 6103 also is
punishable as a felony under 26 U.S.C. 7213.
"Return information" is
defined in Section 6103 of the Code to include virtually all information
collected or gathered by the IRS with respect to a taxpayer's tax
liabilities, or any investigation concerning such liability. It prohibits
any disclosure of either tax returns themselves or return information,
except as specifically authorized by that section. The statute authorizes
the IRS to disclose tax returns and return information to the Department of
Justice for use in criminal and civil tax cases on its own initiative
(Section 6103(h)(2) and (3)) and for use in non-tax criminal cases pursuant
to a court order (Section 6103(i)(1)). Sections 6103(h)(4) and 6103(i)(4)
permit the Department to disclose such returns or return information in
civil or criminal judicial proceedings relating to tax administration and in
non-tax criminal cases and civil forfeiture cases, respectively.
Several circuits have addressed the question of when the non-disclosure
restrictions of Section 6103 no longer apply to return information. The
Ninth Circuit has held that once return information has been made public in
a judicial proceeding, the non-disclosure restrictions no longer apply to
that information. Lampert v. United States, 854 F.2d 335 (9th Cir.
1988). The Sixth Circuit has held that the return information disclosed by
the filing of a notice of federal tax lien loses it confidentiality and is
not protected by Section 6103, but emphasized that a notice of federal tax
lien "is designed to provide public notice and is thus qualitatively
different from disclosures made in judicial proceedings, which are only
incidentally made public." Rowley v. United States, 76 F.3d 796, 801
(6th Cir. 1996). In an unpublished opinion, the Third Circuit has held that
a press release did not contain unauthorized disclosures of return
information because the information in the press release was public
information. Barnes v. United States, 73 A.F.T.R. 2d (PH) ¶
94-581, at 1160 (3rd Cir. 1994). On the other hand, the Tenth and the Fourth
Circuits have held that public disclosure of return information does not
lift the non-disclosure bar on further disclosure of such information.
Rodgers v. Hyatt, 697 F.2d 899 (10th Cir. 1983); Mallas v. United
States, 993 F.2d 1111 (4th Cir. 1993). While the Seventh Circuit did not
resolve the issue of whether return information disclosed in court loses its
confidentiality, it concluded that information in a court opinion is not
return information and, when the source of the information disclosed is the
court opinion, no violation has occurred. Thomas v. United States,
890 F.2d 18 (7th Cir. 1989) In Johnson v. Sawyer, supra, the
Fifth Circuit followed "the approach of the Fourth and Tenth Circuits,
modified by the Seventh Circuit's 'source' analysis." Under the Fifth
Circuit's analysis, section 6103 is violated only when tax return
information -- which is not a public record open to public
inspection—is the immediate source of the information claimed to be
wrongfully disclosed.
The starting point in determining what
information may be included in a press release publicizing an indictment,
conviction, or sentence is acknowledgment that the Section 6103 prohibitions
on disclosure are source-based. That is, the statute bars the public
disclosure of information taken directly from IRS files, or returns and
return information that have been accumulated in Department files as part of
an investigation or prosecution. It does not, however, ban the
disclosure of information that is taken from the public court record.
Thus, for example, the statute, as interpreted by the majority of the
circuits, prohibits the disclosure from IRS or Department files of a
tax-crime defendant's name, or the fact that he was under investigation or
has been indicted for a particular tax crime. To the extent that this same
information has been placed in the public court record (e.g.,
included in an indictment or other pleading), its dissemination from
the public court record does not violate the
statute.
Recommendations
United States Attorneys may (and
should) continue to issue press releases in criminal tax cases. In light
of the judicial interpretations of Section 6103 discussed above, however, a
press release should contain only information the immediate
source of which is the public record of the judicial proceeding, and
the press release should attribute the information to the public court
record.
A post-indictment press release may relate information set
forth in the publicly-filed indictment, and should state that the
information is from the publicly-filed indictment (for example: "according
to the indictment, during the years 1993 and 1994, John Doe received income
in excess of $100,000 which he failed to report on his income tax returns.
The indictment further charges . . ."). Facts (including minor details) that
do not appear in the indictment (such as the defendant's age, full name, and
address) should not be included in the press release unless they are
obtained from and attributed to public records.
Post-conviction press releases should make it clear that the information
being released came from the publicly-filed indictment, public filings in
the case, or public testimony. Care should be taken to avoid statements that
are ambiguous as to source. Statements that could be based on information in
IRS or Department files should not be made unless the information in the
statements are obtained from and attributed to specific public sources. (For
example, the source of the facts in this statement—"Doe shielded his
income in offshore bank accounts"—could be from the IRS special agent's
files, trial testimony, or the indictment. If the source of the facts in the
statement is trial testimony, the indictment, or other public record,
disclosure is permissible.) Thus, statements of facts that could have come
from the IRS files should not be made unless attributed to a specific public
source.Assistant United States Attorneys and Public Information Officers
issuing a press release or responding to press inquiries should secure the
source document from the public record and make it clear that the immediate
source of the information they are providing is the public court record, and
identify the source.
These rules apply to the use in press releases
of any return information provided to the Department in any criminal [or
civil] case. United State Attorneys should apply these guidelines in all
cases in which tax return information has been made available to the
attorney for the Government. Return information obtained for use in non-tax
criminal cases and related civil forfeiture cases pursuant to a Section
6103(i) order is subject to the same disclosure restrictions as return
information provided by the IRS for use in criminal tax cases. In addition,
return information provided to the United States Attorney's office by the
IRS in money laundering or narcotics cases that the IRS has determined are
"related to tax administration," pursuant to Section 6103(b)(4), is also
subject to the same non-disclosure rules.
Request
The Tax Division requests that a copy of each press
release in a criminal tax case be sent to the Deputy Assistant Attorney
General (Criminal), Tax Division, P.O. Box 501, Washington, D.C. 20044,
preferably by faxing the release to (202) 514-5479. The Division is actively
seeking to obtain more publicity for successful results in criminal tax
cases and maintains a tax-interested press list for faxing press releases
reflecting favorable outcomes in such cases. The Division would be happy to
forward press releases from individual United States Attorneys' offices to
those in the media who have shown an interest in such matters, thereby
widening the publicity given to successful tax prosecutions.
[cited in
USAM 1-7.400]
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