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.
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
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
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.
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.
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.
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 JM 1-7.400]