Accessibility Skip to Top Navigation Skip to Main Content Home  |  Change Text Size  |  Contact IRS  |  About IRS  |  Site Map  |  Español  |  Help  

9.6.4  Trial

9.6.4.1  (09-28-2005)
Overview

  1. The Federal Rules of Criminal Procedure govern criminal proceedings in the courts of the United States. The following subsections cover Federal court procedures and related matters:

    • Venue for Trial

    • Provisions of the Constitution

    • Provisions of the Federal Rules (Rule 23)

    • Trial Jurors (Rule 24)

    • Disability of Judge (Rule 25)

    • Evidence (Rule 26) Taking of Testimony

    • Opening Statements

    • Presentation of Investigation

    • Stipulations

    • Motion for Judgment of Acquittal (Rule 29)

    • Rebuttal

    • Instructions to Jury (Rule 30)

    • Verdict (Rule 31)

    • Judgment (Rules 32 Through 35)

    • Right of Appeal

    • Compromise of Criminal Tax Investigations

    • Responsibility and Conduct of Special Agent at Trial

    • Separation of Witnesses

    • Post-Trial Cost of Prosecution Memorandum

    • Communication of Information Relevant for Sentencing Purposes to the Probation Officer and the attorney for the government

    • United States Tax Court

9.6.4.2  (09-28-2005)
Venue For Trial

  1. Venue for trial lies in the judicial district in which the crime was committed. Venue could lie in more than one judicial district. For example, an income tax return is prepared, signed, and mailed in one judicial district but is actually filed in another judicial district. Under such circumstances, venue may lie in either judicial district, or where the taxpayer resides. Failure to comply with a regulation as to the performance of a particular act under the Internal Revenue Code (IRC) constitutes a crime at the place where the compliance must occur.

  2. In a willful failure to file investigation where the crime is an act of omission as opposed to commission, venue lies in the judicial district where the return should have been filed with the IRS or where the taxpayer resides.

  3. IRS regulations permit a taxpayer to personally deliver returns to any IRS office, as well as to the person assigned the administrative supervision of any IRS permanent post of duty. This provision establishes venue in the judicial district where the office or a permanent post of duty is located, as well as in the judicial district where the IRS campus is located. For example, if a defendant resides in a revenue district located in one judicial district, has his/her place of business in a revenue district in another judicial district, and is required to file his/her return at an IRS Campus located in yet another judicial district, venue may lie in any of the three judicial districts.

  4. Title 18 USC §3237(b) provides that where an offense is described in 26 USC §7203, or where venue for prosecution of an offense described in 26 USC §7201 or §7206(1), (2), or (5) is based solely on a mailing to the IRS, and prosecution is begun in a judicial district other than the judicial district where the defendant resides, he may upon motion filed in the judicial district in which the prosecution is begun, elect to be tried in the judicial district in which he was residing at the time the alleged offense was committed; provided, that the motion is filed within twenty days after arraignment of the defendant upon indictment or information.

  5. In determining venue, the following factors should be considered:

    1. residence address of the taxpayer at the time the alleged offense was committed

    2. principal business address of the taxpayer at the time the alleged offense was committed

    3. place where the records were maintained, where the return was prepared, and where the return was signed

    4. location of the post office if the return was mailed

    5. location of the IRS office where the return was delivered if the return was not mailed

    6. any other pertinent evidence that may establish or assist in determining venue

  6. When a choice of venue for trial exists, it is preferable that it be in the judicial district of the taxpayer's place of residence or business to avoid undue travel hardships on taxpayers and witnesses.

9.6.4.3  (09-28-2005)
Provisions Of The Constitution (Rule 23)

  1. The Constitution of the United States provides in part: "The trial of all Crimes, except in Cases of Impeachment, shall be by jury . . . and in all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury. . ."

9.6.4.4  (09-28-2005)
Provisions Of Federal Rules

  1. A defendant is entitled to a trial by jury but may waive that right. The waiver must be done in writing, approved by the court, and consented to by the government. If a jury trial is waived, the court decides the case on the competency and relevancy of the evidence after determining the facts and applying the law.

  2. Juries consist of 12 persons. The prosecution and defense may stipulate in writing at any time prior to the verdict, with the approval of the court, that the jury consist of any number less than 12 or that a valid verdict may be returned by a jury of less than 12 should the court find it necessary to excuse one or more of the jurors for any just cause after trial commences. Even absent such stipulation, if the court finds it necessary to excuse a juror for just cause after the jury has retired to consider its verdict, a valid verdict, in the discretion of the court, may be returned by the remaining 11 jurors.

9.6.4.4.1  (09-28-2005)
Trial by United States Magistrate Judge

  1. Title 18 USC §3401 provides that a US Magistrate Judge may have jurisdiction to try persons accused of misdemeanors in a given judicial district, and to sentence persons convicted of misdemeanors committed in that district if specially designated by the district court. A defendant must consent to such in writing or orally on the record.

9.6.4.5  (09-28-2005)
Trial Jurors (Rule 24)

  1. Statutory law determines how trial jurors are selected. The court decides the manner of questioning prospective jurors. Usually the court conducts the examination and then permits the defendant or the defendant's attorney, along with the attorney for the government, to supplement the examination by further inquiry.

9.6.4.5.1  (09-28-2005)
Voir Dire Examination

  1. The purpose of the voir dire examination is to safeguard the criminally accused's right to a fair trial by a panel of impartial, indifferent jurors. The requirement of impartiality demands that voir dire examination serve as a filter capable of screening out prospective jurors who are unable to lay aside any opinion as to guilt or innocence and to render a verdict based solely upon the evidence presented to the court.

9.6.4.5.2  (09-28-2005)
Challenges for Cause and Peremptory Challenges

  1. Any juror will be excused for cause if he/she admittedly is unable to render a verdict based upon the evidence and/or the law as the court charges. In addition to challenges for cause, the defendant is given 10 peremptory (without cause) challenges and the government six in felony trials. Each side has three peremptory challenges in misdemeanor trials. If there is more than one defendant, the court may allow the defendants additional peremptory challenges to be exercised separately or jointly.

9.6.4.5.3  (09-28-2005)
Alternate Jurors

  1. In addition to the 12 jurors, the court may direct that not more than six jurors be called as alternate jurors. The alternate jurors will sit with the regular jurors and replace, in the order in which they are selected, any juror who becomes unable to perform their duties prior to the time the jury retires to consider its verdict. If the regular jury remains intact, the alternates are dismissed following the court's instructions in the investigation.

  2. Each side is entitled to one additional peremptory challenge if one or two alternate jurors are to be impaneled, two additional peremptory challenges if three or four alternate jurors are to be impaneled, and three peremptory challenges if five or six alternate jurors are to be impaneled.

9.6.4.6  (09-28-2005)
Disability Of Judge (Rule 25)

  1. Rule 25 provides for the replacement of the presiding judge if the judge is unable to perform his/her duties during trial, or after a verdict or finding of guilt, because of absence from the judicial district, death, sickness, or other disability.

9.6.4.7  (09-28-2005)
Evidence Taking Of Testimony (Rule 26)

  1. In all trials, the testimony of witnesses is taken orally in open court, unless otherwise provided by law or these rules. The admissibility of evidence is governed by Rule 26, Federal Rules of Evidence. This is a comprehensive code of evidence intended to govern the admissibility of proof in all trials before the Federal courts.

9.6.4.7.1  (09-28-2005)
Definition of Evidence

  1. Evidence is defined as all the means by which any alleged matter or fact is established or disproved. Investigators obtain evidentiary facts which directly or by inference tend to prove or disprove the ultimate, main, or principal fact. The latter is a matter for determination by a court or jury.

9.6.4.7.2  (09-28-2005)
Classifications of Evidence

  1. Direct evidence proves the existence of the principal or ultimate fact without any inference or presumption. It is direct when the very facts in dispute are sworn to by those who have actual knowledge of them by means of their senses. It may take the form of admissions or confessions made in or out of court.

  2. Circumstantial evidence tends to prove the existence of the principal fact by inference. The use of circumstantial evidence is recognized by the courts as a legitimate means of proof and involves proving several material facts which, when considered in their relationship to each other, tend to establish the existence of the principal or ultimate fact. In the absence of a confession of a witness to whom the violator has expressed his intent, violations involving willful intent are proved by circumstantial evidence. It is the only type of evidence generally available to show those elements of a crime which exist only in the mind of the perpetrator, i.e., malice, intent, motive, etc.

  3. The proof of most Internal Revenue violations, therefore, is based on circumstantial evidence. Circumstantial evidence includes direct testimony as to secondary facts which are relied upon to establish the main fact in issue. For example, in a tax evasion investigation, a taxpayer's customer testifies that he/she paid $10,000 for merchandise and a government agent testifies that the payment does not appear on the taxpayer's books and tax returns. Those facts constitute direct evidence of the omission of $10,000 in income but not of the main issue, which is, "Did the defendant willfully attempt to evade income tax?"

  4. In addition to proving intent, circumstantial evidence is also frequently used to prove unreported income as shown by increases in net worth, expenditures, or bank deposits.

  5. Circumstantial evidence may be as cogent and convincing as direct evidence and the jury may properly find that it outweighs conflicting direct evidence. However, the inference must be based on convincing facts and must be a more probable and natural one than any other explanation offered.

9.6.4.7.3  (09-28-2005)
Oral and Documentary Evidence

  1. Evidence may be presented orally through witnesses, and/or by the introduction of records or other physical objects. Oral testimony consists of statements made by living witnesses while under oath or affirmation. Documentary evidence consists of writings such as judicial and official records, contracts, deeds, and less formal writings such as letters, memoranda, books, and records belonging to private persons and organizations. Maps, diagrams, and photographs are classed as documentary evidence.

9.6.4.7.3.1  (09-28-2005)
Best Evidence Rule

  1. The best evidence rule applies only to documentary evidence. It states the best proof of the contents of a document is the document itself.

  2. The best evidence rule is confined to those instances where a party seeks to prove the actual contents of the document. Facts about a document other than its contents are provable without its production. Production consists of either making the writing available to the judge and counsel for the adversary, or having it read aloud in open court. For example, the fact that a sales contract was made is a fact separate from the actual terms of the contract and may be proved by testimony alone.

  3. Certain documents, such as leases, contracts, even some letters, are executed in more than one copy and are all considered originals. Thus, any one of the copies may be produced as an original.

9.6.4.7.3.2  (09-28-2005)
Application of Best Evidence Rule

  1. When an original document is not produced, secondary evidence, which could consist of testimony of witnesses or a copy of the writing, will be received to prove its contents if the absence of the original is satisfactorily explained. Unavailability of the original document is a question to be decided by the trial judge.

  2. The best evidence rule will not be invoked to exclude oral testimony of one witness merely because another witness could give more conclusive testimony.

9.6.4.7.3.3  (09-28-2005)
Secondary Evidence

  1. All evidence falling short of the standard for best evidence is classified as secondary evidence. When it is shown from the face of the evidence itself, or by other proof, that better evidence was or is available, the evidence is classified as secondary evidence.

  2. Secondary evidence may be either the testimony of witnesses or a copy of the document. There is no settled Federal rule stating which of these is a higher degree of secondary evidence.

  3. Before secondary evidence of any nature may be admitted, there must be satisfactory evidence of the present or prior existence of an original document, properly executed and genuine. It must also be established that the original has been destroyed, lost, stolen, or is otherwise unavailable. In all instances, except destruction provable by an eyewitness, the party proving the document must have used all reasonable means to obtain the original, i.e., he/she must have made as diligent a search as was reasonable under the facts. Some investigations have specifically set the rule that a search must be made in the place where the document was last known to be located, or that an inquiry must be made of the person who last had custody of it. In every instance, the sufficiency of the search is a matter to be determined by the court. If a document is offered as secondary evidence it must be shown to be a correct copy of the original.

  4. When the original document has been destroyed by the party attempting to prove its contents, secondary evidence of the contents will be admitted only if the destruction was in the ordinary course of business, by mistake, or, if intentional, provided it was not done for any fraudulent purpose. In the Granquist investigation, the defendant's income tax returns had been destroyed pursuant to Executive Order and statutory authority. At the trial, secondary evidence in the form of oral testimony and state returns were admitted to establish the contents of the missing income tax returns.

  5. In a civil investigation, secondary evidence of the contents of a document may be introduced if the original is in the possession of the opponent in the matter, provided the party attempting to introduce the copy has first served a notice upon his/her opponent to produce the original and the opponent has failed to do so. In a criminal investigation not involving corporate records, the Government may introduce secondary evidence of the defendant's records without showing prior notice to produce.

  6. The Lisansky investigation presents a full statement of this rule and illustrates its application. The defendants in the investigation, who were on trial for income tax evasion, argued that the court, in allowing government agents to testify about the contents of the defendants' books and records, and permitting photostatic pages of the books to be introduced in evidence, violated the best evidence rule. The Court of Appeals held:

    "So far as the best evidence rule is concerned, the government complied with this rule, in that it produced the best proof which could be produced under the circumstances of the investigation. The books were shown to be in possession of the defendants; and, because of the provisions of the Fourth and Fifth Amendments, the court was without power to require their production at the trial. *** But evidence as to the contents of books and papers is not lost to the government because the defendant has them in his possession and their production cannot be ordered or the usual basis laid for the introduction of secondary evidence. In such investigations, the rule is that when they are traced to his/her possession, the government, without more ado, may offer secondary evidence of their contents."

9.6.4.7.3.4  (09-28-2005)
Admissibility of Specific Forms of Documentary Evidence

  1. Admissibility in the Federal courts of various forms of documentary evidence is covered in 28 USC §1731–§1745.

9.6.4.7.3.4.1  (09-28-2005)
Business Records Federal Shop Book Rule

  1. Records made in the regular course of business may be admissible under 28 USC §1732 which states:
    " If any business, institution, member of a profession or calling, or any department or agency of government, in the regular course of business or activity has kept or recorded any memorandum, writing, entry, print, representation or combination thereof, of any act, transaction, occurrence, or event, and in the regular course of business has caused any or all of the same to be recorded, copied, or reproduced by any photographic, photostatic, microfilm, microcard, miniature photographic, or other process which accurately reproduces or forms a durable medium for so reproducing the original, the original may be destroyed in the regular course of business unless its preservation is required by law. Such reproduction, when satisfactorily identified, is as admissible in evidence as the original itself in any judicial or administrative proceeding whether the original is in existence or not and an enlargement or facsimile of such reproduction is likewise admissible in evidence if the original reproduction is in existence and available for inspection under direction of court. The introduction of a reproduced record, enlargement, or facsimile does not preclude admission of the original. This subsection (section) shall not be construed to exclude from evidence any document or copy thereof which is otherwise admissible under the rules of evidence."

  2. The above statute permits showing that an entry was made in a book or maintained in the regular course of business without producing the particular person who made the entry and having him/her identify the entry. For example, in proving a sale, an employee of the customer may appear with the original purchase journal and cash disbursements book of the customer in order to testify that these were books of original entry showing purchases by the customer and payments by him/her to a taxpayer for these purchases, even though the witness is not the person who made the entries.

  3. The essence of the "regular course of business" rule is the presumed reliability of records made under circumstances where there was no reason or motive to misrepresent the facts. As stated, the rule contemplates that certain events are regularly recorded as routine reflections of the day-to-day operations of a business so that the character of the records and their earmarks of reliability impact trustworthiness. For example, the rule is applied to bank records under the theory that the accuracy of such records is essential to the very life of the bank's business.

  4. The mere fact that a record has been kept in the regular course of business is not of itself enough to make it admissible. The rules of competency and relevancy must still be applied, the same as for any other evidence. If a ledger is offered into evidence to prove entries posted from a journal which is available, the journal itself, as the book of original entry, should be produced.

  5. When in the regular course of business it is the practice to photograph, photostat, or microfilm the business records mentioned above, such reproductions, when satisfactorily identified, are as admissible as the originals pursuant to 28 USC §1732. Similarly, enlargements of the original reproductions are admissible if the original reproduction is in existence and available for inspection under the direction of the court. This rule is particularly applicable to bank records because of the common practice of microfilming ledger sheets, deposit tickets, and checks.

9.6.4.7.3.4.2  (09-28-2005)
Photographs, Photostats, and Microfilmed Copies

  1. Photographs, photostats, and microfilmed copies of writings not made in the regular course of business are considered secondary evidence of the contents. They are inadmissible if the original can be produced and no valid reason has been given for failing to produce it. The same rule is usually applied where the original is already in evidence and no reason has been given for offering the copy. The practice has sometimes been followed, in income tax investigations, of placing the original return in evidence and then substituting a photostat with permission of the court where there has been no defense objection. Title 26 USC §7513 as amended provides for reproduction of returns and other documents, and refers to the use of the reproductions as follows: "In General—The Secretary is authorized to have any Federal agency or person process films or other photo-impressions of any return, document, or other matter, and make reproductions from films or photo-impressions of any return document, or other matter."

  2. A photographic or photostatic reproduction of a document may be admitted after evidence has been produced that the original cannot be obtained and that the reproduction is an exact and accurate copy. This principle has been followed where the original was in the hands of the defendant and its production could not be compelled by the government. It has further been held that a photograph of a promissory note taken because the writing had faded and became illegible was admissible in place of the illegible original.

  3. When photostats of documents are obtained during an investigation, they shall be initialed on the back, after comparison with the original, by the individual who made the photostat or the special agent who obtained the document which was photostated. The date of the comparison shall also be noted after the initials. Lastly, the source of the original document shall be set out on the reverse of the photostat or on an initialed attachment or memorandum relating to each photostat or group of photostats covered by the one memorandum. This procedure will ensure proper authentication at a trial. A Multi-Stamp Stencil Duplicator or other similar device may be used for placing such identifying data with the exception of the special agent's initials. The special agent will personally affix his/her initials on such reproductions.

9.6.4.7.3.4.3  (09-28-2005)
Admissibility of Transcripts as Evidence

  1. Transcripts are copies of writings and are admissible under the same principles governing the admission of photographs or photostatic reproductions. A special agent shall take certain precautions in the preparation of transcripts to ensure proper authentication for their admission at a trial when the original documents are unavailable. The special agent shall carefully compare the transcript with the original and certify that it is a correct transcript. The certification shall show the date that the transcript was made, by whom and where it was made, and the source from which it was taken. Each page shall be identified by the special agent to show that it forms part of the whole. A good practice is to show the total number of pages involved, as page 1 of 5 pages. When a partial transcript is made, it should be so indicated, for example, "excerpt from page 5 of the cash receipts book. " In the Zacher investigation a government agent was allowed to identify a transcript of the taxpayer's bank records which had been prepared by fellow agents under that agent's direction, control, and supervision.

9.6.4.7.3.4.4  (09-28-2005)
Admissibility of Charts, Summaries and Schedules as Evidence

  1. Charts and summaries prepared by examining agents may be placed into evidence at the discretion of the court if they are summaries of evidence previously admitted in an investigation. This is permitted as a matter of convenience to the court and jury. At times such charts and summaries have been permitted in the jury room to aid in the jury's deliberations. Charts are particularly effective in net worth investigations to summarize the details of the various items and computations upon which the additional income is based. Summaries are frequently used to simplify the presentation of a great number of transactions upon which a specific item investigation is based. For example, with respect to the purchase and resale of used automobiles, a schedule of those items showing the details of the transactions can be admitted into evidence after the introduction of the pertinent records and testimony. However, care should be exercised in the preparation of charts and summaries to avoid prejudicial headings or titles. For example, a chart listing a series of unreported sales should not be entitled "Fraudulently Omitted Sales" .

  2. A schedule prepared by the investigating agent from the taxpayer's books and records is admissible as secondary evidence of the contents thereof. It should be properly certified and authenticated in a similar manner to that used for transcripts.

9.6.4.7.3.4.5  (09-28-2005)
Admissibility of Notes, Diaries, Workpapers, and Memorandums as Evidence

  1. Notes, diaries, workpapers, and memorandums made by examining agents during an investigation ordinarily are not considered evidence. However, they may be used on the witness stand or prior to testifying as an aid to recollection or may be introduced into evidence by the adverse party if used for impeachment purposes. Any documents used by a witness while on the stand are subject to inspection by the defense. Since such documents may be used in court, they must be carefully prepared to ensure that they are entirely accurate.

9.6.4.7.3.4.6  (09-28-2005)
Evidence to Prove Specific Transactions

  1. In proving specific transactions such as purchases and sales of real and personal property, loans, encumbrances, and other commercial events, it is not enough for the special agent to obtain the written record of those transactions. Documents and recorded entries, no matter how honestly made, are not in themselves facts. They are written descriptions of events but are not in themselves proof of the events. Consequently, witnesses should be produced who will testify about the transactions and authenticate the documents. During the investigation, parties to the transactions should be questioned to determine whether the documents or entries truthfully relate all the facts and/or if there are any additional facts or circumstances that should have been recorded. The following examples illustrate this principle:

    1. In the instance of alleged unreported sales, the witness should be interviewed to determine whether checks and invoices represent all the transactions with the taxpayer, whether the documents truthfully record the events, whether additional sums might have been paid or refunded, whether there were any other methods of payment or other parties to the transaction, and whether there is other relevant information.

    2. A contract of sale, settlement sheet, closing statement or recorded deed does not necessarily reflect all the facts involved in a real estate transaction. Currency payments over and above those shown in the instrument and nominees may be revealed by questioning the parties to the transaction. Mortgages and other encumbrances may not actually exist even though recorded documents seem to evidence such facts. Proof of real estate transactions should, therefore, include the testimony of the parties involved.

  2. No question of admissibility is involved when different items of documentary evidence may be used to prove a fact. The only thing involved in such instance is the weight of the evidence, which is determined by the jury in the same way as the weight of any other evidence placed before it. Where the government is trying to prove that a third party made purchases from the taxpayer, a canceled check of the third party made to the order of the taxpayer will not be excluded from evidence merely because purchase invoices, purchase journals, or cash disbursements books of the party, although available, have not been produced. The fact that the check itself may not be the best proof of payment for a purchase is a factual question for the jury. However, complete documentation of every transaction should be obtained whenever possible.

9.6.4.7.3.4.7  (09-28-2005)
Official Government Records

  1. The admissibility of official government records and copies or transcripts in Federal proceedings is covered by provisions of the United States Code and by rules of criminal and civil procedure.

9.6.4.7.3.4.7.1  (09-28-2005)
Authentication of Official Records

  1. The admissibility of official records and copies or transcripts is governed by 28 USC §1733, which states as follows:

    1. Books or records of account, or minutes of proceedings of any department or agency of the United States, shall be admissible to prove the act, transaction, or occurrence of which the same were made or kept.

    2. Properly authenticated copies or transcripts of any books, records, papers, or documents of any department or agency of the United States shall be admitted into evidence in the same manner as would the originals.

  2. The method of authenticating Federal records is set forth in Federal Rule of Civil Procedure 44 which is made applicable to criminal investigations by Fed Rule of Crim Proc 27. Authenticating government records under these rules requires certification by the officer having custody of the records and verification of the official status of the certifying officer by a Federal district judge over the seal of the court. Verification of the official status of Disclosure Officers is not required on authenticated copies of IRS documents certified to by Disclosure Officers over their seal of office (Delegation Order No. 198 (Rev.5)).

  3. Tax returns which have been filed, or certified copies of them, are admissible under 28 USC §1733, as official records of the IRS (26 USC §6103). Procedures and types of forms for the certification of tax returns or other official records by Disclosure Officers are set forth in IRM 11.3, Disclosure of Official Information. Although tax returns or other official records are usually offered into evidence through an IRS representative, authenticated copies are generally admissible without a representative.

  4. A Certificate of Assessments and Payments, Form 4340 (for non-ADP returns), or a Transcript of Account, Form 4303 2PT (C) or Form 4303 3PT (C) (for ADP returns), is customarily offered into evidence through a representative of the IRS as a transcript of the records to which it relates. These forms, properly authenticated in accordance with Fed Rule of Civil Proc 44, are admissible without the presence of an IRS representative.

9.6.4.7.3.4.8  (09-28-2005)
Proof of Lack of Official Record

  1. It is sometimes desirable or necessary to prove that a search of official files has resulted in a finding that there is no record of a certain document. For example, in a prosecution for failure to file an income tax return, the government, in addition to such oral testimony as it may introduce, may desire some documentary certification that a search had disclosed no record of such return. Rule 44(b) of the Federal Rules of Civil Procedure makes the following provision for lack of record:

    "A written statement that after diligent search no record or entry of a specified tenor is found to exist in the records of his office, designated by the statement, authenticated as provided in subdivision (a)(1) of this rule in the investigation of a domestic record, or complying with the requirements of subdivision (a)(2) of this rule for a summary in the investigation of a foreign record, is admissible as evidence that the records contain no such record or entry. This rule does not prevent the proof of official records or of entry or lack of entry therein by any other method authorized by law. "

  2. Procedures and a standard form for the certification of a lack of records by the Disclosure Officer are set forth in IRM 11.3, Disclosure of Official Information.

9.6.4.7.3.5  (09-28-2005)
State and Territorial Statutes and Procedures

  1. The admissibility of copies of legislative acts of any state, territory, or possession of the United States, as well as court records and judicial proceedings, is governed by 28 USC §1738 which states:

    "Such acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its territories and possessions as they have by law or usage in the courts of such State, territory or possession from which they are taken."

  2. The procedures for authentication of the above records are detailed in 28 USC §1738.

  3. Non-judicial records or books kept in any public office of any state, territory, or possession of the United States, or copies thereof, are admissible under 28 USC §1732 and given full faith and credit upon proper authentication.

9.6.4.7.3.6  (09-28-2005)
Chain of Custody

  1. See IRM 9.4.9, Search Warrants, Evidence, and Chain of Custodyfor procedures on chain of custody.

9.6.4.7.3.6.1  (09-28-2005)
Identification of Seized Documentary Evidence

  1. See IRM 9.4.9, Search Warrants, Evidence, and Chain of Custody for procedures on identification of seized documentary evidence.

9.6.4.7.3.6.2  (09-28-2005)
Identification of Evidence and Preserving the Chain of Custody

  1. See IRM 9.4.9, Search Warrants, Evidence, and Chain of Custody for procedures on preserving the chain of custody, identification of evidence, and transfer of evidence.

9.6.4.7.4  (09-28-2005)
Relevancy and Competency of Evidence

  1. To be admissible, evidence must be relevant and competent. If a fact offered into evidence relates in some logical way to the principal fact it is relevant. The word "relevant" implies a traceable and significant connection. A fact need not bear directly on the principal fact so long as it constitutes one link in a chain of evidence or relates to other facts that would constitute circumstantial evidence that a fact in issue did or did not exist. One fact is logically relevant to another if, taken by itself or in connection with other facts, it proves or tends to prove the existence of the other fact. If the fact is logically relevant, it is also legally relevant unless it is barred by some rule of evidence. The principal question to be resolved in determining relevancy is: " Would the evidence be helpful to the finder of the fact in resolving the issue? " (Fed Rule Evid 401).

  2. The terms "relevant" and "competent" are not synonymous. Evidence must not only be logically relevant and sufficiently persuasive but also legally admissible, in other words, competent.

  3. As applied to evidence such as documents, evidence is competent if it was obtained in a manner, in a form, and from a source proper under the law. Examples of evidence which is not competent are a confession involuntarily obtained or an unsigned carbon copy of a document which is offered without any explanation for the failure to produce the original.

  4. Evidence may have limited admissibility. The fact that certain evidence is not admissible for one purpose does not preclude its use for another. An evidentiary fact may not be admissible as independent proof of the principal fact but may be admitted to corroborate or impeach. To illustrate, tax returns for years prior to those in an indictment may be used to corroborate the starting point for a net worth computation although they would be inadmissible as proof of the charge of attempted evasion.

  5. A special agent should obtain and report all facts which logically relate to the subject of the investigation. The special agent should not omit any significant facts because of doubt regarding their relevance. There are no absolute and concrete standards for relevancy because the facts vary in each instance. Judges therefore have broad discretion in determining what evidence is relevant.

9.6.4.7.5  (09-28-2005)
Judicial Notice

  1. To save time and expense, a trial judge may accept certain facts without requiring proof so long as the facts are commonly and generally known, or can be easily discovered. Judicial notice of such facts takes the place of proof and is of equal force. This does not prevent a party from introducing evidence to dispute the matter.

  2. A matter of judicial notice has three material requisites:

    1. It must be a matter of common and general knowledge.

    2. It must be well-settled and not uncertain.

    3. It must be known to be within the limits of the jurisdiction of the court.

  3. A Federal court must take judicial notice of such matters as the Constitution; US statutes (including legislative history); treaties; contents of the Federal Register, in which the Internal Revenue and other administrative regulations are published; and the laws of each state. Laws of foreign jurisdictions are not judicially noticed.

  4. A Federal court will judicially notice its record in the same investigation and may also take judicial notice of proceedings in other courts, both within and outside the Federal judicial system, if the proceedings have a direct relation to matters at issue. It is not required to notice prior litigation in the same court, but may do so under certain circumstances where the prior proceedings are closely related, as in a contempt proceeding.

  5. Federal courts may also judicially notice such matters as scientific and statistical facts, well-established commercial usages and customs, and historical and geographical facts.

9.6.4.7.6  (09-28-2005)
Presumptions

  1. A presumption is a rule of law that permits the drawing of a particular inference as to the existence of one fact not certainly known from the existence of other particular facts. Although it is not evidence, such a presumption may be considered a substitute for evidence. An inference is a permissible deduction from the evidence and may be accepted or rejected. It differs from a presumption in that the latter is a rule of law affecting the duty of proceeding with the evidence.

  2. Presumptions may be conclusive or rebuttable. A conclusive presumption is binding upon the court and jury, and evidence in rebuttal is not permitted. For example, it is generally recognized that an child under the age of 7 is conclusively presumed to be incapable of committing a felony.

  3. A rebuttable presumption is one that prevails until it is overcome by evidence to the contrary. Some rebuttable presumptions are:

    1. In criminal investigations, a defendant is presumed to be innocent until proven guilty beyond a reasonable doubt.

    2. A presumption as to the authenticity of signatures on Internal Revenue documents is governed by 26 USC §6064 which states: "The fact that an individual's name is signed to a return, statement, or other document shall be prima facie evidence for all purposes that the return, statement, or other document was actually signed by him." Presumptions as to the authorization for signing corporation and partnership returns are governed by 26 USC §6062 and 26 USC §6063.

    3. It is presumed that public officers perform their duties according to law and do not exceed their authority.

    4. Every person is presumed to know the law, and ignorance of the law is no excuse for its violation. This presumption does not relieve the government from proving willfulness in criminal actions for violations of the Internal Revenue laws. A defendant may show his/her misconception of the Internal Revenue law as evidence of lack of willfulness. Willfulness requires the government to prove the law imposes a duty on the defendant, and that the defendant has voluntarily and intentionally violated that duty. In order for the government to prove actual knowledge of the pertinent legal duty, it must also disprove a defendant's claim of ignorance of the law or claim that because of a misunderstanding of the law, he/she had a good-faith belief they were not violating the law. Evidence of actions such as hiding assets or using nominee names can disprove a defendant's claim of a misunderstanding of the law.

    5. A person signing an instrument is presumed to have knowledge of its contents.

    6. A person of ordinary intelligence is presumed to intend the natural and probable consequences of his voluntary acts. Although this presumption in itself will not relieve the burden of proving willfulness, it does permit inferences to be drawn from the acts of the defendant which may constitute the circumstantial proof of willfulness.

    7. The deductions and exclusions appearing on an income tax return are presumed to be all that exist.

    8. Every person is presumed to be sane.

    9. Proof that a letter, properly stamped and addressed, was mailed and not returned to the return address creates a presumption that it was received.

    10. The flight of a person accused of a crime or an attempt to evade arrest may create a presumption of guilt.

    11. The destruction, mutilation, or concealment of books and records or other evidence creates a presumption that the production of the records or evidence would be unfavorable to the person destroying them. A fabricator of evidence also creates a presumption of guilt against himself/herself. It is proper for a court to charge the jury that it may consider the taxpayer's refusal to produce his/her books and records for Internal Revenue inspection in determining the question of willfulness.

9.6.4.7.7  (09-28-2005)
Burden of Proof

  1. Burden of proof is the obligation of the party alleging the affirmative of an issue to prove it. This burden remains on the government throughout a criminal trial although the burden of going forward with evidence may periodically shift from one side to the other. The doctrine of judicial notice and the operation of presumptions are aids in carrying the burden of proof and in proceeding with evidence. When the party having the burden of proof has produced sufficient evidence for the jury to return a favorable verdict, a prima facie case has been made. This does not mean that the jury will render such a verdict, only that they could do so from the standpoint of the sufficiency of evidence. At this point, the defendant has two choices:
    1. to offer no evidence and simply rely on the court and jury to decide that the government has not overcome the presumption of innocence;
    2. or to offer evidence in his defense. If the defendant wishes to introduce new matters by way of denial, explanation, or contradiction, the burden of going forward with evidence is the defendant's. The prosecution still has the burden of proof with respect to the entire investigation.

  2. Proof beyond a reasonable doubt of every element of the crime charged is necessary for a conviction. In charging a jury as to the meaning of reasonable doubt, it has been stated:

    " A reasonable doubt, is a doubt founded upon a consideration of all the evidence and must be based on reason. Beyond a reasonable doubt does not mean to a moral certainty or beyond a mere possible doubt or an imaginary doubt. It is such a doubt as would deter a reasonably prudent man or woman from acting or deciding in the more important matters involved in his/her own affairs. Doubts which are not based upon a reasonable and careful consideration of all the evidence, but are purely imaginary, or born of sympathy alone, should not be considered and should not influence your verdict. It is only necessary that you should have that certainty with which you transact the more important concerns in life. If you have that certainty, then you are convinced beyond a reasonable doubt. A defendant may not be convicted upon mere suspicion or conjecture. A defendant should be acquitted if the evidence is equally consistent with innocence as with guilt." The IRC provides that the burden of proof is on the Commissioner where fraud is alleged. Title 26 USC §7454 states: "In any proceeding involving the issue whether the petitioner has been guilty of fraud with intent to evade tax, the burden of proof in respect of such issue shall be upon the Secretary." As a matter of general law, it has always been held that one who alleges fraud must prove it.

  3. In some circumstances, the Restructuring and Reform Act of 1998 (RRA of 1998) shifted the burden of proof from the taxpayer to the IRS in civil tax investigation. If, in any court proceeding, a taxpayer introduces credible evidence with respect to any factual issue relevant to determining his/her liability, the burden of proof is shifted to the IRS. This shift to the IRS occurs if the taxpayer presents credible evidence to that issue and satisfies all of the following conditions (further detail on this topic refer to 26 USC §7491 and RRA of 1998, §133):

    1. Compliance with substantiation and recordkeeping requirements.—A taxpayer must comply with the substantiation and recordkeeping requirements of the IRC.

    2. Cooperation with the IRS.—The taxpayer must cooperate with reasonable requests by the IRS for witnesses, information, documents, meetings, and interviews.

    3. Net worth limitation for taxpayers other than individuals.—Taxpayers other than individuals must meet the net worth limitations that apply for awarding attorney fees. Corporations, trusts, and partnerships whose net worth exceeds $7,000,000 cannot benefit from this provision.

  4. The degree of proof required in civil investigations is a "preponderance of evidence," except where fraud is alleged. In the latter instance, "clear and convincing evidence " is necessary in order to prevail on the fraud issue.

    1. Preponderance of evidence is evidence that will incline an impartial mind to one side rather than the other so as to remove the cause from the realm of speculation. It does not relate merely to the quantity of evidence. In the Wissler investigation, the court's instruction concerning preponderance of evidence was as follows:

      " The terms preponderance of evidence and greater weight of evidence as used in these instructions are terms of practically the same meaning, and when it is said that the burden rests upon either party to establish any particular fact or proposition by a preponderance or greater weight of evidence, it is meant that the evidence offered and introduced in support thereof to entitle said party to a verdict, should when fully and fairly considered produce the stronger impression upon the mind and be more convincing when weighed against the evidence introduced in opposition thereto. Such preponderance is not always to be determined by the number of witnesses on the respective sides, although it may be thus determined all other things being equal."

    2. Clear and convincing evidence is that which need not be beyond a reasonable doubt, as in a criminal investigation, but must be stronger than a mere preponderance of evidence. In the Gladden investigation, the court instructed the jury on this point as follows:

      " A mere preponderance of the evidence, meaning merely the greater weight of the evidence, is not sufficient to prove fraud. This does not mean that you must be convinced of fraud beyond a reasonable doubt, because this is not a criminal investigation. However, an allegation of fraud does require a greater degree of proof than is required in most civil investigations, and a mere preponderance of the evidence, while enough to incline the mind of an impartial juror to one side of the issue rather than the other, is not enough to prove fraud. Fraud must be established by evidence which is clear, cogent, and convincing. "

9.6.4.7.8  (09-28-2005)
Hearsay (Federal Rules of Evidence Article VIII)

  1. A statement is an oral or written assertion, or the nonverbal conduct of a person intended as an assertion (Fed Rule Evid 801(a)). Hearsay statements are inadmissible at trial unless an exception is applicable (Fed Rule Evid 802). Lack of opportunity for cross-examination and unreliability are the principal reasons for excluding hearsay testimony.

  2. Hearsay is an individual's narrative account of matters told to him/her by another, and is offered into evidence to prove the truth of the matter asserted (Fed Rule Evid 801(c)). Evidence which does not come from the personal knowledge of the declarant but from the repetition of what the declarant has heard others say is hearsay. For example, testimony of a special agent that third parties made statements to the special agent that checks written by a taxpayer were personal in nature is hearsay and inadmissible. The personal nature of the checks should instead be proved through the taxpayer's admissions, records, testimony, and records of the third parties.

9.6.4.7.8.1  (09-28-2005)
Federal Rule of Evidence 801(d)(1)(A)

  1. Fed Rule Evid 801(d)(1)(A) provides that when a witness testifies at a trial or hearing and is subject to cross-examination concerning a prior statement which is inconsistent with his/her present testimony, the prior statement may be admitted for its truth if it was made under oath in a previous proceeding (excluding grand jury) or deposition. A proceeding is a formal evidentiary hearing where the witness declarant is subject to cross-examination. Testimony taken by a special agent for use in an affidavit or question and answer statement does not qualify.

9.6.4.7.8.2  (09-28-2005)
Federal Rule of Evidence 801(d)(2)

  1. Admissions of a party-opponent (e.g., taxpayer) which are offered against the party are not hearsay (Fed Rule Evid 801(d)(2)). The admissions include statements:

    1. made by the party

    2. shown to have been adopted or believed by the party (adoptive or implied admission)

    3. made by a person authorized by the party to make a statement concerning the subject of the statement

    4. made by an agent or servant of the party concerning a matter within the scope of the agency or employment, and made during the existence of the relationship

    5. made by a co-conspirator during the course and in furtherance of a conspiracy

9.6.4.7.8.3  (09-28-2005)
Federal Rules of Evidence 803 and 804 Exceptions

  1. Fed Rules Evid 803 and 804 set forth certain exceptions to the hearsay rule. The exceptions are based on the theory that under appropriate circumstances a hearsay statement is of the type that makes its trustworthiness and truthfulness highly probable and the statement is necessary to prove the fact alleged. In these instances the statements can be introduced by means other than the declarant even though he/she is available to testify.

  2. Fed Rule Evid R 803, Hearsay Exceptions; Availability of Declarant Immaterial, lists 23 types of statements which are not to be excluded by the hearsay rule. Some of the more important exceptions are noted in the following sections.

9.6.4.7.8.3.1  (09-28-2005)
Federal Rule of Evidence Rule 803(1) Present Sense Impression

  1. A statement describing or explaining an event or condition made while the declarant was actually perceiving the event or condition, or immediately thereafter.

9.6.4.7.8.3.2  (09-28-2005)
Federal Rule of Evidence Rule 803(2) Excited Utterance

  1. A statement relating to a startling event or condition made while the declarant was under the stress of excitement caused by the event or condition. This exception refers to spontaneous declarations and acts committed during the event. The trustworthiness of such statements lies in their spontaneity, for the occurrence must be startling enough to produce a spontaneous and unreflective utterance without time to contrive or misrepresent. Once the excitement passes, statements made are not within this exception. They may be made by participants or bystanders, and a person who made or heard them may testify to that extent in court. The trial judge has wide discretion in deciding the admissibility of unsworn statements. The circumstances involved in a raid on a bookmaking establishment may be used to illustrate the application of this rule. One of the persons in the establishment, upon seeing the raiding officers enter the room says: "Burn the betting slips!" Even though the speaker is never identified and is not available as a witness, an agent who heard the statement may be permitted to testify that it was made in order to prove that betting slips existed.

9.6.4.7.8.3.3  (09-28-2005)
Federal Rule of Evidence Rule 803(3) Existing Mental, Emotional, or Physical Condition

  1. A statement as to the declarant's then existing state of mind, emotion, sensation, or physical condition (such as intent, plan, motive, design, mental feeling, pain and bodily health), but not including a statement of memory or belief that proves the fact remembered or believed, unless it relates to the execution, revocation of identification, or terms of declarant's will. Example: Assume that the taxpayer is alleging that the return preparer was in a state of depression when the return was prepared and is responsible for errors on the tax return. A witness (e.g., the return preparer's secretary) who spoke with the return preparer at the time the return was being prepared could testify that the return preparer expressed a feeling of mental well-being and confidence. The witness could testify whether or not the return preparer was available.

9.6.4.7.8.3.4  (09-28-2005)
Federal Rule of Evidence Rule 803(4) Statements for Purposes of Medical Diagnosis or Treatment

  1. Statements made for purposes of medical diagnosis or treatment and which describe a patient's medical history, past or present symptoms, pain, or sensation, or the inception or general character of the cause or external source thereof.

9.6.4.7.8.3.5  (09-28-2005)
Federal Rule of Evidence Rule 803(5) Recorded Recollection

  1. A memorandum or record concerning a matter about which a witness once had knowledge but now has insufficient recollection to enable him to testify fully and accurately, shown to have been made or adopted by the witness when the matter was fresh in his memory and to reflect that knowledge correctly. If admitted, the memorandum or record may be read into evidence but may not itself be received as an exhibit unless offered by an adverse party. Example: A special agent has taken a question and answer statement from a witness. At trial, the witness no longer recollects the facts in the statement. Even if the witness has not initialed the pages or signed the statement, the facts of the statement could be read at trial as a record adopted by the witness. In the instance of an unsigned affidavit, if it can be shown that the witness indicated that the recorded facts were true, those facts could be read as a statement adopted by the witness. Similarly, if a witness had at some point adopted a memorandum prepared by a special agent, the memorandum could be read into evidence.

9.6.4.7.8.3.6  (09-28-2005)
Federal Rules of Evidence Rule 803(6) Records of Regularly Conducted Activity

  1. A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes a business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit. This rule permits showing that an entry was made in a business record maintained in the ordinary course of business without producing the person who made the entry. Where there is an indication that the particular record lacks trustworthiness, this rule does not apply. This rule extends the definition of business to include records of institutions and associations like schools, churches, and hospitals. The rule also covers data compilations whether stored in a computer or elsewhere.

9.6.4.7.8.3.7  (09-28-2005)
Federal Rule of Evidence Rule 803(8) Public Records and Reports

  1. Records, reports, statements or data compilations, in any form, of public offices or agencies, regarding:

    1. The activities of the office or agency.

    2. Matters observed pursuant to a duty imposed by law as to which matters there was a duty to report; excluding, however, matters observed by police officers and other law enforcement personnel during the course of criminal investigations.

    3. In civil actions and proceedings, and against the government in criminal investigations, factual findings resulting from an investigation made pursuant to authority granted by law, unless the source of information or other circumstances indicate lack of trustworthiness.


More Internal Revenue Manual