5th Amendment and IRS Summonses
ORDER
30]. The Court heard oral argument on the motion on June 10, 2002, and received supplemental briefs thereafter. The Court has considered the following briefs in connection with the United States' motion: the United States' brief in support of the motion to compel (#30), Mr. Nipper's response in opposition to the United States' Rule 56(f) motion (#94), the United States' reply (#97), and Mr. Nipper's sur-reply (#99). For the reasons discussed below, the United States' motion to compel is DENIED.
These requests sought information about Mr. Nipper's tax returns, sources of income, bank accounts and statements, and payments and gifts made to others.
(1) failure to pay the tax, (2) an affirmative act of evasion, and (3) willfulness.[fn2]
Thus, one can be guilty of evading taxes due more than six years prior as long as one or more affirmative acts of evasion is committed within the past six years. "?it is the date of the latest act of evasion, not the due date of the taxes, that triggers the statute of limitations." United States v. Ferris, 807 F.2d 269, 271 (1st Cir. 1986).[fn3] Mr. Nipper argues that he has a substantial and real fear that he could still be prosecuted for evading to pay his taxes for tax years 1981-1988 given that the government need only demonstrate that at some point in the last six years he took some affirmative act of evasion in connection with his
1981-1988 income or tax liability.
Doc. No. 97, p. 4. In other words, the United Sates argues that Mr.
Nipper must disclose that he actually committed the crime for which he fears prosecution before he can validly assert his rights under the Fifth Amendment. The United States cites no authority which stands directly for such a proposition, and it does not, as the United States argues, follow from the cases cited by Mr. Nipper.
Nipper has shown more than just a fanciful possibility of prosecution in this case, especially given the fact that the United States has already alleged in its complaint against Mr. Nipper that Mr. Nipper engages in fraudulent conveyances of property to conceal his income and assets. The government could certainly attempt to argue in an evasion prosecution that any such similar conveyance in the last six years constituted a continuing act of evasion.
Garrett, No. 99-56226, 2001 WL 206000 (9th Cir. Feb. 28, 2001); and United States Aeilts, 855 F. Supp. 1114, 1119 (C.D. Cal. 1994). In these cases, however, the courts only discussed whether the defendants had a reasonable fear of prosecution for wilful failure to file a tax return more than six years after the return was due. The courts held that the defendants did not. The courts did not discuss whether the defendants could have had a reasonable fear of prosecution for wilful evasion (an offense different than wilful failure to file). The statute of limitations is much more definite for a wilful failure to file than it is for wilful evasion, The failure to file occurs on the April 15th following the tax year in question, A wilful evasion offense can, as discussed above, be a continuing offense which subjects a defendant to liability well after the statue of limitations runs for the underlying tax liability.
As the United States points out in its brief, the relevance of information about those helping Mr. Nipper with this case is that the information could lead it to those other than Mr. Nipper who have first hand knowledge about his income and taxes, and to those to whom Mr.
Nipper may have made admissions concerning his income and taxes. Thus, the requested information could easily provide a link in the chain of evidence needed to prosecute Mr. Nipper for wilful evasion, or even for wilful failure to file in the last six years. The information could, therefore, be incriminating and Mr. Nipper cannot be compelled by the government to disclose it.
Nipper has validly asserted his Fifth Amendment right in connection with the discovery served on him by the United States. Absent immunity, the United States will have to obtain evidence to establish its claims against Mr. Nipper from sources other than Mr. Nipper himself.
406 U.S. 472, 478 (1972); and United States v. Schmidt, 816 F.2d 1477,
1481 (10th Cir. 1987).
[fn2] Sansone v. United States, 380 U.S. 343, 351 (1965); Spies v.
United States, 317 U.S. 492 (1943).
[fn3] See also United States v. Shorter, 808 F. Supp. 871, 874-75 (D.D.C. 1985); United States v. Mousley, 194 F. Supp. 119, 119-120 (E.D.
Pa. 1961); United States v. DiPetto, 938 F.2d 96, 98 (2nd Cir. 1991); and United States v. Hunerlach, 197 F.3d 1059, 1064-65 (11th Cir. 1999).