Offshore Informant
Government Visits - Secrets to Compliance
Getting A Grip On Government Visits
[NOTE: Information here researched and based in-part on information supplied by retired U.S. Department of Justice legal counsel Colonel James H. Jeffries, III (U.S. Marine Corps, Ret.), graduate of the University of Kentucky (1959), graduate of the UK College of Law (1962) note Editor of the Kentucky Law Journal, and current practicing firearms lawyer in Greensboro, North Carolina.]
RULE ONE - How To Say Nothing
"There is no wholly satisfactory substitute for brains, but silence does pretty well."
U.S.A., Washington, D.C. - June 30, 2003: Perhaps one of the least favorite events for any person is a visit from the U.S. Treasury Department, Bureau of Internal Revenue Service, hereinafter "IRS", or perhaps any other government official for that matter.
Government visits may occur in one or more of at least four (4) very different ways, and your 'legal rights' and 'recommended responses' should vary accordingly 'except' with "RULE ONE" (see below), which has no room for variance.
For the sake of no arguments here we'll assume that you are all law-abiding U.S. citizens who honestly try to comply with all federal, state, and local laws pertaining to taxation, business, and financial laws.
If some of the items mentioned below seem excessively cautious, or even hostile toward the IRS, it is based on 'real world experiences' with an agency that has been found by the United States Congress, various federal judges, juries, federal and local law enforcement agencies, and even by some U.S. Presidents to be inept, indifferent to citizens' rights, and capable of the most outrageous abuses of the law.
The IRS operates under the rationale of requiring 'you' to comply with the law. Legal professionals, who you may hire, should operate under the rationale and premise of requiring the 'IRS' to comply with the law too.
Many require this of the IRS as professionals and as private citizens. I required it as a former U.S. Congressional Lobbyist and you should too as a patriotic law-abiding American citizen, afterall it 'is' the 'law'.
A U.S. citizen has no legal duty whatsoever to talk to, cooperate with or, assist any member of the IRS (or any other governmental official) however they must exercise extreme caution when exercising these rights.
There was a time when CPA and Bookkeeper-client information was once considered privileged information much like the attorney-client priviledge, but it is no longer being upheld in the courts when the IRS and/or the Department of Justice FBI is conducting a criminal investigation. Hence, anything you tell your CPAs or Bookkeepers is now free game to be obtained by officials and used to prosecute you whether you erred or misstated the information to them or not.
The other incredible revelation comes to the person who tells the government officials "No". The courts have now ruled that a statement of "No" may be held as a foundation in fact for a criminal charge of "obstruction of justice". So, although people can't say "No", what they 'can' say is, "I wish to speak to an attorney". This is their right and also the roadblock and stopping point that any government official cannot tread upon.
What's tragic is that almost 85% of criminal court cases developed and won by the government is attributable to people who inform on themselves. By uttering something other than "I want to speak to my attorney first" to government officials, people bury themselves time and time again without 'first' having spoken to their defense counsel.
People should remember that when encountering any contact by a government official it is 'not a social event' to be enjoyed. The official suspects you of something. Be careful, be smart, shut your trap, and contact your attorney before you begin giving anything other than your name, social security or other identification the government may have already assigned to you.
If you're asked what the name of your business is, what color you prefer to wear on Sundays or, any other personal business, refer to "Rule One" to speak to your attorney first. That's it.
You may be starved for attention and recognition but, you have no idea what you might be getting yourself into in return for talking yourself into a mistake where 'excuse me' or "I made a mistake' won't do you any good later in court.
There's a very good reason why defense lawyers always advise their clients to "not say anything to a government official" unless they are present with you.
Government officials are 'not' going to elect you as Queen of the May for making them smile because you're convinced you're cute, clever, and absolutely brilliant. They won't give you a medal nominating you as ambassador of good will either for being sweet, kind, and entertaining by talking to them either.
What they won't do is arrest you for saying, "I wish to speak to my lawyer first, send me a letter if you must, and please leave now." That one statement alone should stop them from pestering you and should stop you from giving any information to them that they will try to use against you later on.
A favorite retort to your statement that government officials may say is, "You're not being arrested yet so, why do you need an attorney?"
Rule One:
Your best defensive response to all official inquiries and visits should be, "I wish to speak to my attorney first so, send me a letter if you must, but I must ask you to leave now."
Don't give in, don't say anything else, shut up, and let your attorney speak for you. Do yourself a favor. Remember "Rule One" (above).
Government officials are there to perform a task. Nothing you can say or do will make your case any better with them without first having a competent legal defense counsel to represent you.
Unfortunately, it is a sad state of affairs and commentary on our times what with the state of our federal government (and especially the IRS), that the appropriate legal advice from a defense lawyer to a citizen confronted by a federal, state or, local law enforcement officer can be capsulated here into a single sentence defined as "Rule One" (see above).

Practice saying, "I wish to speak to my attorney first so, send me a letter if you must, but I must ask you to leave now." This may be said nicely or harshly. Try being nice with your visitors, first!
If you are an American citizen, additional considerations may come into play.
Never surrender an 'original document' or 'legally-possessed item' of personal or real property (or other property for that matter) 'except' in response to a summons, subpoena, or court order, and then 'only after obtaining legal advice, first.
When faced with the prospect of providing information to the government, keep in mind that there are only two (2) legal options:
#1. Silence
#2. Complete Truthfulness
Lying (even by partial truths or literal but misleading true answers) is never an option.
A 'false statement' or 'flat refusal' to a federal officer in their official capacity is a 'federal felony' akin to "obstruction of justice" and/or, "perjury", and usually very easy to prosecute and prove more so than the matter they're investigating.
Do not say "no". Let your official visitor know that you wish to speak to your attorney first, before speaking to them, and that you will gladly accept anything they wish to put in writing for your attorney's review before responding to their inquiries.
If they wish to know 'who your defense counsel is', ask them to send their request in writing, and that your attorney will let them know.
If you're dealing with visitors from the IRS or Department of Justice Tax Division then you should seek out a tax controversy defense attorney with a background in white-collar criminal law.
How will you pay the back taxes, penalties, and fees assessed by the IRS?
There are some tax defense attorneys who are very well versed on special bankruptcy provisions that you may qualify for. Until speaking with those particular legal specialists first, don't take the word of any defense attorney that it won't work for you. Options are available and out there. You must search them out either on the internet and/or with appropriate professional legal referrals.
During your official visit with a government official, If you can't speak truthfully without incriminating yourself or injuring your legal interests, then remember RULE ONE. (See above)
Receiving IRS Telephone Calls . . .
If the inquiry is about your financial or tax affairs, you should attempt to determine if the call was actually initiated by a U.S. federal employee.
If it was, you should remind the caller that the information they are requesting is "privileged tax information" and that it is a "federal felony" for the IRS to disclose the information outside of the agency.
Your interest in this aspect is that you do not wish to aid and abet the commission of a felony, even one committed by a federal official.
Occasionally one or more IRS agents will make a telephone call inquiry. They are, of course, purely criminal investigators whose only function (and interest) is to put American citizens (including those like yourself) in jail. Remember RULE ONE. (See above)
When the IRS knocks on 'your' door . . .
Write down the names and badge numbers of all present. If anyone present is not an IRS special agent, inquire why that person is present (and later note the response in writing).
If there is more than one agent, inquire 'why'.
If anyone refuses to display official identification direct him or her to immediately leave the premises. If they refuse, call the local sheriff or police and make a trespassing complaint.
Do not allow anyone to search your records, premises or inventory for the information or items being sought unless they present you with a court order or search warrant, which will specifically 'name' what they are searching for.
If they have a warrant or court order to search your premises then make sure you physically 'view' the document to see that they 'only search for that item listed'.
If the order says they are searching for your records, they won't find them in the butter compartment of your refrigerator.
If they are looking for a needle in a haystack, well then you had better have fresh hay in a clean barn for them to look in.
You or your employee may want to consider doing the searching, retrieving, and 'copying' pursuant to what it is they are there for, but remember you are under no obligation or law to do any of that for them.
The same rules apply with respect to refusing to turn over original documents or items of personal property. If an IRS agent should physically insist on taking custody of an original record or legally possessed firearm or other item of property, resist verbally and vigorously, but 'not' physically.
Advise the IRS agent calmly that your first call after he leaves will be to your lawyer and 'his' first call will be to the Inspector General of the U.S. Treasury Department. Successive calls will then also be made to the IRS Office of Internal Affairs, the IRS agent's SAC (Special Agent in Charge), the United States Attorney, the FBI and the Sheriff - the latter three (3) - to report the 'theft of your property by a federal agent'. Then you 'act' on what you just mentioned to them.
In short, if an agent is stupid enough to violate your Fourth Amendment right to be "secure in your papers and effects" in front of God and everybody, then they need to have their whole day ruined for committing 'unlawful acts' on you and your property.
A tracing inquiry is usually directed at a third-party recipient of funds, which has passed through your hands at some point and generally is not targeted at you. However, if you sense that the inquiry is, in fact, targeted at you, you should immediately terminate the inquiry, ask the agents to leave the premises (after which they are legally trespassers), request them to put their inquiry in writing, and seek legal counsel. Remember RULE ONE. (See above)
Failure to cooperate in a tracing request can put you at risk of going to court later on, but going to court (or the expense of defending it) compares very favorably with a prison sentence (or the cost of defending a criminal indictment).
And your freedom is not realistically at risk if the IRS is trying to further a criminal investigation of you through the pretext of a tracing inquiry.
The majority of all inmates talk their way into prison; you have no legal obligation to help put yourself there. This type of confrontation is an IQ test. Don't flunk it; remember RULE ONE. (See above)
Being tape-recorded by the IRS . . .
Clients occasionally inquire about tape-recording their telephone or in-person conversations with IRS employees (and others). This is legal under federal law so long as one party to the conversation (you) knows of the interception.
However, 'state laws' vary on the issue and you should be certain that such consensual recording is legal under the law of the state where the recording is taking place.
Also remember that 'you' should never record a conversation (telephone or otherwise) where no one present knows of the recorded interception. This is a felony violation of the federal wiretapping statute, and you are creating the very evidence needed to prove it.
You can, of course, legally tape-record any transaction in any jurisdiction when all parties are aware of the taping. Any such tape should itself reflect that all present are aware of the taping.
You should never knowingly consent to your own interview or conversation being tape-recorded without making a tape of your own.
More important, the taping of your interview is a strong signal to invoke RULE ONE (see above) and immediately seek legal counsel.
The IRS Third-Party Inquiry . . .
A third-party inquiry is broader than a simple tracing inquiry, but otherwise involves the same principles and recommended reactions.
It could be a telephone call, but will ordinarily be a personal visit by one or more special agents who are after more detailed information than just the acquisition and disposition of one or more tax returns, which have passed into or through your filings. All other factors remain the same and your responses should be the same as for the in-person tracing inquiry.
Needless to say, if the inquiry is not about a third-party transaction but rather is directed solely at you, invoke RULE ONE (see above) and seek legal counsel immediately.
Remember, refusing to talk to federal criminal investigators and seeking legal counsel are not admissions of guilt or signs of a guilty conscience. They are manifestations that you are an American citizen aware of your legal rights, and an individual who will not be bullied, coerced or frightened into giving up those rights.
The agents already believe you are guilty; their job is to prove it. Your job is to avoid helping them prove it.
Now, on the other hand if you remember RULE ONE (see above) but, decide to not cooperate with a 'court order' and fail to seek out legal representation you may later be faced with what is called a "contempt of court" charge. This usually results in a short term - not to exceed eighteen (18) months or until you're brought back (IF you even are brought back before the court) - at a nicely suited federal prison 'camp' that might be compared to a motel/hotel in a military picnic ground setting once you are processed.
If you were looking for a vacation, you might consider the federal government footing the bill there for you rather than giving up your castle and everything you ever worked for all your life! Remember RULE ONE (see above) and 'do' seek competent legal tax counsels.
You may always choose the option to do what most CEOs do by having your secretary, spouse or, friend 'pack a going-away kit' for them with your toothbrush in it or, you may be sure to count on the federal government supplying you with everything you need tax-free on your interim vacation where you'll meet the most interesting people, just like yourself.
Only 'federal prisons' come occupied with inmates who were at one time federal judges, U.S. Attorneys, federal agents, politicians, movie stars, bankers, doctors, lawyers, and a more civil breed and higher caliber of inmate nowadays. I do believe that there are even a few Indian chiefs in there as well, last time I checked. You'll think you're at a Convention Center or Music Hall when you arrive, after you discover the secrets about whose staying at your federally funded park-like motel-hotel.
Barbara Walters did a TV Special Report on the Watergate Hotel burglars in Washington, D.C. who were hired by the U.S. Central Intelligence Agency and the F.B.I. once. Her interview with former FBI counter-intelligence agent G. Gordon Liddy took place outside the picnic-like grounds of the Federal Prison Camp located at Lompoc, California amidst the some of the most popular florist firm's 'flower fields' there.
Filmed on the TV were these federal felons driving into the fenceless prison's parking lot most of whom were millionaires, getting out of exotic automobiles, dressed in sportswear, and bringing a few of their golf clubs into the 'camp' (prison) with them. That's why they nicknamed it "Club Fed".
Remember RULE ONE (see above) and legal representation before giving away your castle today or tomorrow.
The IRS Undercover Solicitation . . .
This may be a contact by IRS, which if you are fortunate, you never learn was made.
It is a sad fact that a high percentage of non-violent crimes committed in the United States (perhaps even a majority) are manufactured by the IRS -- crimes that would never have occurred but for the fact of an offer from or solicitation by an IRS informant or undercover agent to an unwitting citizen.
Technically, most of these IRS-sponsored offenses do not rise to legal entrapment. But they would never have happened if the IRS had not planted the idea and created the opportunity. This is done for the simplest and ugliest of all bureaucratic reasons: agent and agency self-preservation and budget and case statistics.
Sometimes you will know you are being shopped, perhaps by recognizing the agent or perhaps by the sheer stupidity of their approach. You are probably also being recorded, possibly even videotaped.
Your response should be precisely the same whether it ultimately turns out that you were speaking to a government microphone or to the village idiot.
You should firmly, but not politely, advise the proponent that what he/she is proposing is illegal and that he/she is no longer welcome on your premises or at your table. Then remember RULE ONE (see above).
Do not engage in a discussion of the law or alternative solutions to the "customer's" proposal; terminate the conversation.
Politeness is not called for when someone is either intentionally or ignorantly soliciting you to commit a federal felony.
And, your politeness on a federal tape-recording in a subsequent criminal prosecution can often be construed as acquiescence in or lack of strong feeling about committing a crime.
Some past tax attorney clients, who are truly tired of being harassed this way, are fully prepared to make a citizen's arrest in such circumstances and then call the local sheriff to come collect the offender (attempts and solicitations to commit an offense are also crimes under federal and state law). If this appeals to you, make sure first that the law of your state permits a citizen's arrest.
Know the amount of legal force you can use to affect such an arrest. Then cuff the son of a bitch and give them a taste of what they're probably trying to do to you.
A criminal solicitation by someone you've known for years, and who you know cannot be an agent, is especially dangerous. It probably means that your acquaintance has gotten their own tail in a crack and is now making cases for the IRS in an attempt to lighten his own load.
Finally, bear in mind that an undercover approach may be made by a female agent or, by a mixed couple at any time, anywhere.
The IRS Compliance Inspections . . .
Inspectors of the regulatory enforcement branch of the IRS conduct compliance inspections.
These individuals have "no criminal law enforcement authority -- or training". Recently, some have been issued badges, perhaps in an effort to bolster morale or create an appearance of authority for low-paid personnel who wish to exert intimidation tactics on citizens.
Theoretically, "inspectors" are charged with the civil and regulatory aspects of taxation law. They do not have the "power of arrest" or the "authority to serve subpoenas or warrants". Nor may they make seizures of any kind.
It is said "theoretically" because in some recent instances inspectors have been observed accompanying "special agents" on raids and even "illegally carrying firearms". In short, there are some cop wannabes among the inspector force whose intrinsic suspicion of some citizens, as criminals must be guarded against.
The legally authorized purpose of compliance inspection (and tax filing enquiries) is to ensure that citizens are generally complying with the tax statutes.
The true job of inspectors is to spot and correct discrepancies in compliance with tax statutes, to establish the requirements of those to file, and to enforce and collect taxes through standard procedures.
If an inspector discovers evidence of a criminal violation he is supposed to make a referral to the criminal enforcement branch of the IRS (for the special agents to handle).
If you answer the door with guns, drugs, diamonds, gold, and stacks of money all over your coffee table and invite IRS agents in to your home then you may very well deserve to be nailed to the criminal cross. Remember RULE ONE (see above) and seek competent legal advice.
If the inspector is not reasonable or professional, keep in mind that your being an American citizen does not require you to talk to them, or to provide them access to your copy machine, rest room, etc.
If you are dealing with an idiot, remember RULE ONE (see above) -- and let him bring his own copy machine.
Also remember that he has no right to use your electricity to power-up their copy machine either!
The inspector may be legally entitled to inspect all your required records, your business premises, and your inventory. They are legally entitled to inspect nothing else.
You should not permit inspection of non-required records unless there is a satisfactory explanation of why it is desired (such as inspecting a purchase or sale invoice for the correct 'serial number' where the bound book may show different serial numbers for the same inventory item).
You should 'not permit' inspection of 'non-business portions of the premises when your home is the licensed premises'. When your business is conducted from your home, you should carefully 'delineate that portion dedicated to the business and 'confine the business inspection' strictly to 'that portion only' of the premises.
You 'should' be accommodating to the inspector by making copies of any records desired (within reason).
Never permit original records (or other property) to be removed from the premises without a summons, subpoena or court order, and without seeking legal counsel.
The inspector has no power of seizure and may attempt to bluff his way into removing original records or may try to obtain your consent.
Do not be bluffed and 'do not consent'.
Inspections should be conducted on your premises. If you store inventory 'off premises', the inspector is also entitled to inspect such storage facilities.
The simple truth is that you never want an IRS employee in your home if it can be avoided.
In summary, the taxation regulatory process does not assume you are a criminal, but rather seeks to ensure that citizens generally are complying with the requirements of the law.
If bona fide, the process does not require invocation of your various rights to notice, counsel, warning, non-self-incrimination, etc., which all come into play when you are the target of a criminal investigation.
Unfortunately, the IRS sometimes attempts to avoid these constitutional "inconveniences" by illegally using the access of civil inspectors to further a criminal investigation without alerting the targeted citizen. You should never proceed, without competent legal counsel, in such a subterfuge.
You are required to maintain the same records any other taxpayer/return filer is required to maintain: whatever records are necessary to support the figures on your return.
The IRS Raid On Your Business or Castle . . .
If only a search warrant is involved, you must then recover your wits sufficiently to do the following:
(A) Try to note and record the identities of as many participants as possible, by name, agency, badge number, and physical description;
(B) Ask for a copy of the warrant;
(C) Disable your telephones and fax machines, do not unplug, but DISABLE IT;
You should disable your telephones and fax machines before leaving in order to prevent the agents from illegally seizing evidence (calls and faxes), which might come in while they are on the premises.
Such items 'did not exist when the warrant was signed' and cannot possibly be covered by the warrant.
Their seizure will probably therefore be illegal; but it is better to prevent such seizures from even happening.
If you are physically prevented from disabling your own property, go somewhere else and place incoming calls to all your lines and keep the circuits open.;
(D) Gather your family, children and pets and leave the premises; and,
(E) Call your lawyer.
Sometimes, illiterate agents may prevent you from doing some or all of the above legal things, which will simply lay the foundation for 'your own winning day' in court.
You will need as much information about identities, badge numbers and descriptions as you can manage in the minutes before you leave. These will be useful later when you assert or defend your rights. But, they are not a reason to delay leaving the premises promptly.
You are legally entitled to a copy of the warrant, but do not remain on the premises if you are refused.
A federal search warrant authorizes only the search of a specified premises and only the seizure of specifically described items.
Corollary to the execution of a warrant, the law permits the agents to make a forcible entry if that becomes necessary after knocking and announcing their identity and purpose, to control the premises, and to take reasonable precautions for their own safety, such as a pat down for weapons of those persons present and assigning an agent to watch over and accompany anyone moving about on the premises.
The law authorizes the agents to prevent the destruction of evidence or contraband and it protects them against being assaulted or interfered with.
It is a serious federal crime to assault a federal officer or to obstruct execution of the warrant. Don't turn a possible later indictment into a sure one.
Never assist the raiding party in locating the items described in the warrant.
They have the right to search, but not the right to find.
Do not open locked compartments, safes or rooms for them or provide them with keys or combinations.
Do not talk to the raiding officers other than to request identification and a copy of the warrant.
Resist the compulsion to show what a good guy you are; these are not your friends and they are not there to help you.
A "search warrant" does not authorize agents to arrest you or anyone else on the premises (although assaulting any agents or forcibly interfering with the execution of the warrant will justify an arrest) and it does not authorize them to handcuff you, restrict you to a particular place or, "prevent you from leaving"!
You have a perfect right to leave the premises and should do so immediately.
If you are physically prevented from leaving, you have just been falsely arrested in violation of the Fourth Amendment and will have your recovery later in court as well as taking some of the other retaliatory measures promised above.
You must get yourself and your family out of the house for several reasons:
(A) To avoid the personal insult, humiliation, provocation and indignities which many agents seem to enjoy;
(B) To avoid a potential life-threatening situation; and,
(C) To avoid creating evidence against yourself (RULE ONE).
There is no useful purpose your remaining on the premises can serve; if the agents are going to plant evidence or destroy property, they will do it whether or not you are present.
Now, go call your lawyer!
Staff Writer, Paul Collin, Offshore Informant, at:
Copyright 2002-2003 OI Information Group, Inc. All rights reserved.