part9-2
- 9.1.2.1
Overview - 9.1.2.2
General Authority to Enforce Internal Revenue Laws and Related Statutes
- 9.1.2.3
Authority for Certain Investigative Techniques - 9.1.2.4
Authority to Arrest - 9.1.2.5
Authority to Compromise a Tax Investigation - 9.1.2.6
Authority to Settle Criminal Cases - 9.1.2.7
Authority to Seize Property for Forfeiture - 9.1.2.8
Criminal Referral Authority - 9.1.2.9
Conflict of Laws
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The authority to enforce Federal laws is derived
from a variety of statutes. These statutes may assign the enforcement of any
given law to a particular department such as the Treasury Department, an agency
of a department such as the Internal Revenue Service (IRS), or simply that
the enforcement falls to the legal arm of the government, the Department of
Justice (DOJ). -
The various departments of the government then
further delegate the authority to enforce the laws through Orders and Directives
issued to agencies. The agencies then issue Delegation Orders (or Rules) to
specific functions and sometimes even specific positions of employment within
the agency itself. -
This section discusses the more common delegated
authorities.
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Title 26 United States Code (USC) §7608(b)
provides the initial authority for investigating crimes arising under the
Internal Revenue laws. -
Pursuant to 26 USC §7602, 26 USC §7622,
and Treasury Order 150–10, the Commissioner and his/her designated officers
and employees are authorized to examine any books, papers, records, or memoranda
bearing upon the matters required to be included in the returns, to summon
persons liable for tax and take his/her testimony, and to administer oaths. -
The IRS also has explicit enforcement responsibilities
with regard to 18 USC §1956 and 18 USC §1957, dealing with money
laundering, and 31 USC §5311 et seq., dealing with the Bank Secrecy Act
(BSA). Pursuant to Treasury Directive 15-42 (January 21, 2002), the Commissioner,
IRS has been delegated:-
Investigatory authority over violations of 18 USC
§1956 and 18 USC §1957 where the underlying conduct is subject to
investigation under Title 26 or under the BSA as amended (i.e., 31 USC §5311,
et seq. (other than violations of 31 USC §5316)); -
Seizure and forfeiture authority over violations
of 18 USC §981 and 31 USC §5317, relating to violations of 31 USC
§5313 and 31 USC §5324, and 18 USC §1956 and 18 USC §1957
which are within the investigatory jurisdiction of IRS (as set forth in the
previous paragraph); and -
Seizure authority relating to any other violation
of 18 USC §1956 or 18 USC §1957 if the bureau with investigatory
authority is not present to make the seizure.Note:
Property seized under
18 USC §981 where investigatory jurisdiction is solely with another bureau
whose representatives are not present at the time of the seizure, shall be
turned over to that bureau.
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By commissions given each officer of Criminal
Investigation (CI), the Commissioner designates such individuals as having
the authority to perform all duties conferred upon such officers, under all
laws and regulations administered by the IRS, including the authority to investigate,
require, and receive information related to the aforementioned laws and regulations.
Servicewide Delegation Order 9-2 (formerly DO 158) authorizes the Special
Agent in Charge (SAC) to investigate violations of 18 USC §1956 and 18
USC §1957 where the underlying conduct is subject to investigation under
Title 26 or the BSA (i.e., 31 USC §5311 et seq. (other than violations
of 31 USC §5316)). See DO 9-2 in IRM 1.2.48, Servicewide Policies and
Authorities – Delegation of Authority for Criminal Investigation Activities. -
In Servicewide Delegation Order No. 143, the Commissioner
delegated the authority to initiate criminal investigations of financial institutions
that are not currently examined by Federal bank supervisory agencies, except
for brokers or dealers in securities, to the Deputy Director, Operations Policy
and Support (CI:OPS) and SACs. The Commissioner also delegated the authority
to initiate Title 31 criminal investigations of banks and brokers or dealers
in securities to the Chief, CI. The Commissioners authority for Delegation
Order No. 143 is derived from Treasury Directive 15–41 (December 1,
1991). See DO 143 in IRM 1.2.25, Servicewide Policies and Authorities – Delegations
of Authority for Special Topics Activities. -
Under the Commissioner, CIs responsibilities
include the investigation of all alleged criminal violations arising under
the Internal Revenue laws and related criminal statutes. See IRM 9.1.3, Criminal
Statutory Provisions and Common Law, for a discussion of the statutes under
CI jurisdiction.
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The following authority is granted to special
agents in performance of their duties.
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Title 26 USC §7602 authorizes the Secretary
of the Treasury or his delegate to examine books and records, and to take
testimony under oath. This authority was delegated to the Commissioner under
Treasury Order 150-10 and 26 CFR 7602-1 through 26 CFR 7605-1. The Commissioner
has delegated that authority to other IRS employees via Servicewide Delegation
Order No. 4 (Rev. 23), Summonses, Oaths, Certifications, and Related Functions. -
Delegation Order No. 4 authorizes special agents
to issue and serve summonses, examine books and records, question witnesses,
and take testimony under oath.
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The authority granted to the Secretary or his/her
delegate by 26 USC §7602 to issue a summons, examine records, and take
testimony is granted to the Commissioner of Internal Revenue by Treasury Order
150–10 and 26 CFR §7602–1 through 26 CFR §7605–1.
The Commissioner has delegated that authority to other IRS employees in Delegation
Order No. 4. Detailed information about the summons and instructions for its
preparation is found in IRM 25.5, Summons Handbook. -
Field offices will designate CI as the issuing compliance function on
Form 2039, Summons “Internal Revenue Service (Division)”
line. -
The provisions of the law relating to the use
and enforcement of a summons are contained in the following sections of Title
26:-
26 USC §7602 – Examination of Books and Witnesses
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26 USC §7603 – Service of Summons
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26 USC §7604 – Enforcement of Summons
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26 USC §7605 – Time and Place of Examination
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26 USC §7609 – Special Procedures for Third-Party
Summonses -
26 USC §7610 – Fees and Costs for Witnesses
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26 USC §7622 – Authority to Administer Oaths
and Certify -
26 USC §7402 – Jurisdiction of District Courts
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26 USC §7210 – Failure to Obey Summons
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26 USC §6420(e)(2), 26 USC §6421(f)(2),
26 USC §6424(d)(2), and 26 USC §6427(g)(2) (gasoline, lubricating
oil, and fuel credits)
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Pursuant to 26 USC §7610, payments may be
made to third parties who request reimbursement for costs incurred in complying
with a summons. Under 26 USC §7801 payments may be made to third parties
without the issuance of a summons for records needed in an investigation when
the records are available to the general public. -
Delegation Order No. 178 delegates the authority
to use appropriated funds to pay search costs, reproduction costs, and transportation
costs, incurred while complying with a third-party summons, to the Chief,
CI. In CI Delegation Order No. 4, the Chief has redelegated this authority
to the Supervisory Special Agent (SSA) – $2,500; SAC – $10,000; and Director,
Field Operations – over $10,000.
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Whenever an agent becomes aware that the authenticity
or origin of a document may be in question, he/she should attempt to obtain
handwriting exemplars of the parties involved. An agents authority to summons
a taxpayer or other witness for the purpose of taking handwriting exemplars
is provided by 26 USC §7602. This authority does not violate any Constitutional
rights or policies enunciated by Congress. Compulsion of handwriting exemplars
is neither a search nor seizure subject to Fourth Amendment protections nor
testimonial evidence protected by the Fifth Amendment privilege against self-incrimination.
A handwriting exemplar is an identifying physical characteristic.
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The basic authority for conducting searches and
making seizures is found in the Fourth Amendment to the Constitution of the
United States which states: “the right of the people to be secure
in their persons, houses, papers, and effects against unreasonable searches
and seizures shall not be violated, and no warrants shall issue, but upon
probable cause, supported by oath or affirmation, and particularly describing
the place to be searched and the persons or things to be seized.”
The
Fourth Amendment protects individuals against unreasonable searches and seizures
by the government. The scope of this protection extends to any area in which
an individual has a reasonable expectation of privacy. Further, the Fourth
Amendment provides that all warrants shall be based upon probable cause and
supported by oath or affirmation. -
Title 26 USC §7302 provides that it shall
be unlawful to have or to possess any property used, or intended for use,
in violating the provisions of the Internal Revenue laws, or regulations prescribed
under such laws, and that no property rights shall exist in any such property. -
Title 26 USC §7608, authorizes special agents
to serve search warrants and seize personal property subject to forfeiture. -
A search warrant may be issued pursuant to 18
USC Chapter 205, and the Federal Rules of Criminal Procedure (Fed. R. Crim.
P.), for the search of the personal property used, or intended for use, in
violation of the Internal Revenue laws or regulations. -
Title 18 USC §3105; 18 USC §3109; Fed.
R. Crim. P. R 41; 26 USC §7302; 26 USC §7321; and 26 USC §7608
provide the statutory authority for searches and seizures conducted by special
agents. Pertinent parts of Rule 41 provide for warrants to be issued by a
Federal judge or magistrate upon the affidavit of a law enforcement officer.
A warrant issued under this rule may provide for the search and seizure of
any of the following:-
property that constitutes evidence of the commission
of a criminal offense -
contraband, the fruits of crime, or things otherwise
criminally
possessed -
property designed or intended for use or which is
or has been used as the means of committing a criminal offense -
person for whose arrest there is probable cause,
or who is lawfully restrained
The phrase, Federal law enforcement
officer, as used in this Rule, refers to any government agent, other than
an attorney for the government as defined in Fed. R. Crim. P. R54(c), who
is engaged in the enforcement of the criminal laws and is within any category
of officers authorized by the Attorney General to request the issuance of
a search warrant. -
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For more information concerning search authority
and procedure see IRM 9.4.9, Search Warrants, Evidence, and Chain of Custody.
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Searches can be made without a warrant so long
as the consent of the property owner is obtained first or the search is incident
to a lawful arrest. -
A search without a warrant may be made with the
consent of the person who has the right to give such consent. The consent
must be voluntarily given and not the result of any undue influence or duress.
Any coercion will invalidate the search and seizure. The courts have held
that only persons whose constitutional rights have been violated will be heard
in objection to the search. The rights guaranteed are personal and may be
waived only by the person having the right of immediate possession. One person
may not waive such rights for another unless the person so waiving has authorized
possession of the premises. -
A person lawfully arrested may be searched without
a warrant and the premises under his/her immediate custody and control may
be searched for weapons. -
For more information concerning search authority
and procedure, see IRM 9.4.9, Search Warrants, Evidence and Chain of Custody.
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The authority of special agents to make arrests
is provided by 26 USC §7608. This section provides, in part, that a special
agent is authorized: to execute and serve search warrants and arrest warrants;
to serve subpoenas and summonses issued under authority of the United States;
to make arrests without warrant for any offense against the United States
relating to the Internal Revenue laws that is committed in his/her presence,
or for any felony cognizable under such laws if he/she has reasonable grounds
to believe that the person to be arrested has committed or is committing any
such felony; and to make seizures of property subject to forfeiture under
the Internal Revenue laws. -
The Supreme Court has stated that, in the absence
of a controlling Federal statute, the law of arrest of the state where the
arrest is made is controlling. In the absence of a statute authorizing a federal
officer to make an arrest without a warrant, that officer has the same powers
of arrest as a private citizen. A special agent’s power to make an arrest
without a warrant as a private citizen, when valid under state law, is not
made invalid because the crime is outside the scope of the Internal Revenue
laws. An arrest without a warrant is a serious matter and could subject the
person making the arrest to criminal and civil liability for false imprisonment
or false arrest. Therefore, in order for a special agent to be authorized
to make a warrantless arrest (as a private citizen), it is generally necessary
that a violation constituting a felony be committed in his/her presence or
he/she must reasonably believe that the person whom he/she arrests has committed
a felony. -
Every state has its own requirements in granting
Federal law enforcement officers state peace officer status. Even if peace
officer status is recognized by your state, check with counsel before taking
any position as a recognized peace officer.
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There is no specific statutory authority for special
agents to carry firearms. The General Counsel, Department of the Treasury,
has concluded that no specific authority is necessary because ”
where a Federal officer has authority to make an arrest, he/she has implied
authority to carry firearms”
. Authority for special agents to make arrests
is contained in 26 USC §7608(b). -
The authority to carry firearms is limited to
the conduct of official duties in enforcing any of the criminal provisions
of the Internal Revenue laws or other criminal provisions of laws relating
to the Internal Revenue where the enforcement is the responsibility of the
Secretary or his/her delegate. -
Authority to carry or use privately owned weapons
during off-duty hours, as a private citizen, is subject to local civil and
criminal restrictions. Special agents may not use their position or credentials
to qualify under state or local laws to purchase, license, carry, or use private
weapons. Credentials may be displayed as occupational identification, upon
request, but not to influence any decision a state or local law enforcement
officer may make concerning the special agent’s ability to carry a concealed
weapon.
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The Secretary of the Treasury or the Secretary’s
delegate may compromise any civil or criminal tax case prior to referral to
the DOJ (26 USC §7122(a)). The Secretary has delegated this authority
to the Commissioner of Internal Revenue (203 CFR §601). Strict compliance
with the statutory provisions is required to effect a compromise. Accordingly,
an attempted settlement by subordinate IRS officials will not bar criminal
prosecution. A valid compromise is as complete a discharge from prosecution
as an acquittal by a jury. -
Criminal Investigation pursues offers in compromise
in investigations in which criminal proceedings are pending only if specifically
requested by Counsel. -
After referral of an investigation to the DOJ,
authority to compromise rests with the Attorney General. -
Tender of tax or the actual payment thereof, prior
to a verdict or plea of guilty, is not a bar to criminal prosecution.
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When a taxpayer, represented by counsel, expresses
a desire to negotiate an expedited plea agreement prior to the formal completion
of an administrative investigation, the special agent will advise taxpayer’s
counsel (see IRM 9.6.2, Plea Agreements and Sentencing Process for detailed
information on the expedited plea program):-
The IRS does not have the authority to engage in
plea negotiations, because this authority rests exclusively with the DOJ. -
Plea negotiations have to be conducted by either
the United States Attorney’s office or the DOJ, Tax Division.
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The authority to seize assets for forfeiture comes
from the Internal Revenue Code (Title 26 of the USC) and Title 18 and 31 of
the USC. For more information concerning seizure authority and procedure,
see IRM 9.7, Asset Seizure and Forfeiture.
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Title 26 USC §7608, authorizes special agents
to serve search warrants and seize personal property subject to forfeiture. -
Title 26 USC §7302 provides that it shall
be unlawful to have or possess any property which is used, or intended for
use, in violation of the Internal Revenue laws or regulations prescribed under
such laws. Title 26 USC §7301 provides the Secretary or the Secretary’s
delegate is authorized to seize such property per 26 USC §7321. It further
provides that no property rights shall exist in any such property, and that
a search warrant may be issued as provided in 18 USC Chapter 205 and the Fed.
R. Crim. P., for the seizure of such property. -
A search warrant may be issued for the seizure
of property used or intended to be used in violation of the Internal Revenue
laws. (Fed. R. Crim. P. R41(b)). A seizure in violation of the Fourth Amendment
will not sustain a forfeiture, unless the property seized is contraband per
se. -
Servicewide Delegation Order 9-1 (formerly DO
157) authorizes special agents to seize personal property for forfeiture to
the United States when such property was used or intended to be used in violation
of those Internal Revenue laws other than Chapters 51, 52 and 53 of the Internal
Revenue Code.
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Title 18 USC §981(e) vests civil seizure
and forfeiture authority in the Secretary of the Treasury relating to violations
of:-
18 USC §1956 (within the investigatory jurisdiction
of IRS) -
18 USC §1957 (within the investigatory jurisdiction
of IRS) -
18 USC §1960 (within the investigatory jurisdiction of IRS)
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The Secretary of the Treasury, through Treasury
Order 101-05 (May 17, 2002), delegated the authority to the Under Secretary
(Enforcement). Treasury Directive 15-42 (January 21, 2002) redelegated this
authority to the Commissioner of IRS. The Commissioner issued Servicewide
Delegation Order 9-2 (formerly DO 158) specifying various activities in the
civil seizure/forfeiture process delegated to different IRS officials. -
The criminal forfeiture procedures found in Title
18, as they relate to the IRS, are governed by four statutory authorities.
Three of these authorities are incorporated into the money laundering criminal
forfeiture statute by reference, while the fourth is a consequence of the
fact that criminal processes are governed by the Fed. R. Crim. P. These statutory
authorities are as follows:-
18 USC §982(b) which states that the provisions
of 21 USC §853(c) and (e) through (p) shall govern the seizure and disposition
of any property subject to forfeiture under 18 USC §982. -
21 USC §853(e)(1) provides for a temporary
restraining order prior to the conclusion of a criminal investigation to preserve
the availability of the property for forfeiture by restraining transfer of
the property or further encumbrances. -
21 USC §853(f) provides for the use of a seizure
warrant for property subject to forfeiture under 18 USC §982 and §853(f). -
Pursuant to 21 USC §853(j), and by reference
in 21 USC §881(d), civil forfeiture proceeds according to the Supplemental
Rules of Certain Admiralty or Maritime Claims and Asset Forfeiture (Civil
Judicial Forfeiture Procedures, 19 USC §1602 et seq.) (Civil Administrative
Forfeiture Procedures). -
In addition, because criminal forfeiture is an integral
part of the underlying criminal prosecution, the Fed. R. Crim. P. govern the
general process by which property is criminally forfeited.
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Treasury Order 150-35 (July 10, 2000) delegates
criminal referral authority to the Commissioner and to Treasury General Counsel.-
The Commissioner has the authority to refer all
criminal matters within the jurisdiction of the IRS to the Department of Justice
for grand jury investigation, criminal prosecution, or other criminal enforcement
action requiring court order or DOJ approval. -
Treasury General Counsel has exclusive authority
to make referrals in criminal matters for judicial enforcement of summonses
and to determine which court decisions of a criminal tax matter should be
appealed. He/she has concurrent authority with the Commissioner to refer a
criminal matter to DOJ for pre-referral advice. This authority has been redelegated
to Chief Counsel by General Counsel Order No. 4.
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Servicewide Delegation Order 9-6 (formerly DO
263) delegates the Commissioners criminal referral authority to the Chief,
CI. -
Criminal Investigation Delegation Order No. 3
(Rev. 1) redelegates criminal referral authority from the Chief, CI, to Headquarters
and field executives and managers under certain defined circumstances.
