Tax Fraud – Cases of Interest
In United States v. Hubbell, 147 L.Ed. 809, 120 S.Ct. 973 (U.S. 2000), the court held that the Government is not entitled to conduct a wholesale fishing expedition into the production of records by the taxpayer. The IRS is required to specifically demonstrate some knowledge of the records’ existence prior to requiring the taxpayer to respond to a summons for those records. Otherwise, the taxpayer is entitled to act of production of immunity. Arguably, the taxpayer’s disclosure to the IRS bespeaks good faith when it would otherwise not be aware of the records.
In United States v. Srivastva, 444 F.Supp.2d 385 (D. Md. 2006), a motion to suppress certain financial records was filed and upheld by the District Court. The warrant allowed agents to seize only documents relating to its healthcare fraud investigation and during the search certain financial documents were also seized which later gave rise to an indictment for tax fraud. The Court held that financial records should be suppressed although the case is being appealed. In particular, Srivastva demonstrates the importance of filing suppression motions in financial crime cases.