7 August 2001

See contents of full IRS Handbook of Criminal Investigation: http://cryptome.org/irs-ci/irs-ci.htm

Handbook 9.5
The Investigative Process Handbook


Chapter 12
Formal Conferences and Processing Completed Criminal Investigation Reports

Contents

[9.5] 12.1  (04-30-1999)
Overview

  1. This chapter provides guidelines and procedures for Criminal Investigation (CI) to follow in processing prosecution recommendations, certain arrests, and discontinued investigations. The following are sections found in this chapter:
    • Formal conference with principal upon completion of investigation.
    • General review process of prosecution recommendations.
    • Exceptions to the general review process of prosecution recommendation reports.
    • Documents which are forwarded when an investigation has resulted in a prosecution report.
    • Distribution of documents in prosecution recommendations
    • Discontinued investigation reports-review process and distribution.

[9.5] 12.2  (04-30-1999)
Formal Conference with Principal Upon Completion of Investigation

  1. A district conference will not be conducted as a matter of course. However, a taxpayer who is the subject of a criminal prosecution recommendation will be afforded a district Criminal Investigation conference when he or she requests one or where the Chief, CI, determines that such a conference will be in the best interest of the Government.
  2. A district conference will not be held if the taxpayer is the subject of a grand jury investigation in which CI special agents are assisting the Attorney for the Government.
  3. If a formal district conference is held, it should be done before the Special Agent's Report (SAR) is finalized.
  4. See Exhibit 9.5.12-1, which is a flow chart concerning the formal conference process.

[9.5] 12.2.1  (04-30-1999)
Formal Conference Location and Participants

  1. The Chief, CI, or his or her designee will offer the conference at the District headquarters office or at some other location convenient for both the principal and the Government.
  2. The conference will be held by the Chief, CI, or his or her designee. The Chief, CI may make standing designations or make designations on a investigation-by-investigation basis. Where feasible, the Chief's designee should be the Branch Chief; however, the designee may be a group manager or an experienced special agent.
  3. Under no circumstances shall the designee be the special agent who conducted the investigation, although the special agent and any cooperating IRS employee may attend the conference unless their presence is not deemed advisable by the Chief, CI.
  4. The Chief, CI, shall not hold the conference if he or she has participated in the investigation to such an extent that he or she might appear to be a prejudiced party. Should this occur and there is no designee available, the Chief, CI will inform the Director of Investigations (DI) of Criminal Investigation of the circumstances and request the DI designate to someone to hold the conference.

[9.5] 12.2.2  (04-30-1999)
Information To Be Given To Principal or His Or Her Representative At Formal Conference

  1. At the conference the IRS representative will give a general oral statement of the alleged fraudulent features of the investigation, to the extent consistent with protecting the Government's interests. The statement should at the same time make sufficient facts and figures available to the taxpayer to acquaint him or her with the basis, nature, and other essential elements of the proposed criminal charges against him or her (See 26 CFR 601.107(b(2)). Extreme care must be exercised to ensure that no information is disclosed to the principal which might:
    1. Reveal or indicate the identity of confidential informants.
    2. Endanger prospective witnesses.
    3. Be detrimental to subsequent prosecution of the investigation.
  2. The taxpayer may be accompanied at the conference by an attorney, certified public accountant, enrolled agent or any individual who has knowledge of the facts or who can give information which will assist in establishing the facts in the investigation. However, the Chief, CI or District Director may deny a conference if the taxpayer insists upon the attendance of any person, other than those listed above, whose presence the Chief, CI or District Director believes would serve no useful purpose. (See 26 CFR 601.107(b)(2)).
  3. When a taxpayer's representative, who has furnished a power of attorney or tax information authorization, attends a district CI conference without the taxpayer, the representative is entitled to receive (to the extent authorized by the taxpayer) the same information that would be furnished if the taxpayer were present.

[9.5] 12.2.3  (04-30-1999)
After the Formal Conference

  1. A summary will be prepared of the conference proceeding in the form of a memorandum. The conference may be recorded verbatim by an IRS stenographer or other individuals, if deemed advisable because of the importance of the investigation or for other serious reasons, such as prior refusal of the principal to provide the investigating officer with information relating to the investigation.
  2. At the conclusion of any formal conference attended by a District Counsel attorney, the special agent and the attorney should, as a matter of course, orally discuss the defenses raised by the taxpayer or the taxpayer's representative and determine if those defenses warrant further inquiries.

[9.5] 12.3  (04-30-1999)
General Review Process of Prosecution Recommendations

  1. Four distinct functions review a prosecution recommendation submitted by Criminal Investigation. Two functions are within Treasury Department-Internal Revenue Service (IRS) and two are within the Department of Justice.
  2. The progression of the overall review is as follows:
    1. IRS-Criminal Investigation.
    2. IRS-District Counsel or Regional Counsel.
    3. Department of Justice, Tax Division (DOJ, Tax Division).
    4. Department of Justice, United States Attorney's Office (USAO).


    See Exhibit 9.5.12-2, General Pathway of an Approved Prosecution Report.

  3. The USAO is responsible for obtaining the Information or Indictment.
  4. The process is the same for all prosecution recommendations unless specifically excepted due to the:
    1. Type of investigation ("pure" money laundering, Organized Crime and Drug Enforcement Task Force (OCDETF)); or
    2. Type of action (specific arrest situations, simultaneous plea situations); or
    3. Type of charges. (Trust Fund, Forcible Rescue, Forcible Interference, Perjury, Subordination of Perjury, False Statements before a Grand Jury or Court).
  5. The procedure is the same to forward a prosecution recommendation for a grand jury investigation as an administrative investigation, except that the SAR in a grand jury investigation:
    1. Is addressed to the attorney for the government.
    2. Has exhibit folders prepared for documents governed by grand jury secrecy --Rule 6(e).
    3. Has separately identified folders for documents not governed by Rule 6 (e).
    4. Is not to be given to any person not specifically on the Grand Jury Access List.

[9.5] 12.3.1  (04-30-1999)
IRS Internal Reviews of Prosecution Recommendations

  1. At the conclusion of every Subject Criminal Investigation (SCI) in which the special agent recommend prosecution, the agent will prepare a report called a Special Agent's Report or SAR.
  2. The SAR is reviewed extensively within the Internal Revenue Service with each progressing level of review as follows:
    1. Group Manager
    2. Centralized Case Reviewer
    3. Branch Chief
    4. Chief, Criminal Investigation (CI)
    5. District Counsel
  3. District Counsel's approval is required for all SARs (whether or not the investigation is conducted through the administrative or grand jury process) except in very specific circumstances. Even in those exceptional circumstances, CI may request the advice of District Counsel.
  4. The exceptional circumstances in which District Counsel approval is not needed to forward a prosecution recommendation are;
    1. Certain arrest situations relating to wagering activities.
    2. Title 31 investigations with only Title 18 related charges that do not relate to tax.
    3. Title 18 section 1956 and 1957 investigations where no tax related offenses are involved.
    4. Organized Crime and Drug Enforcement Task Force (OCDETF) investigations.

    See section 12.4.1 of this chapter concerning these exceptions.

  5. Each level of review can provide feedback to the Special Agent as to the;
    1. Completeness of the report.
    2. Sufficiency of the evidence.
    3. Appropriateness of the charge.
  6. The report recommending prosecution is approved, signed and forwarded to District Counsel by the Chief, CI, or the person acting for the Chief, CI.
  7. Criminal Investigation has various formats for the SAR. For more information concerning the contents and structure of an SAR see CI Handbook 9.5 Chapter 8.
  8. For information concerning the SAR in expedited plea situations see Handbook 9.6 Chapter 2.

[9.5] 12.3.1.1  (04-30-1999)
Group Manager

  1. The group manager is to keep current with the investigation as it progresses. Multi-functional Handbook 114.1, Compliance and Customer Service Manager's Handbook, Chapter 6, entitled Criminal Investigation provides an in-depth SAR checklist for use by the group manager when reviewing an SAR. While the checklist goes into great detail, the manager can use as much or little of the guideline as required to check for general quality.
  2. The Group Manager will forward all Title 26 prosecution reports (administrative or grand jury) to Centralized Review and may submit any complex investigations for review, regardless of recommended violations. The group manager may provide additional input to Centralized Review on the CID Report Control Log, Form 9838.
  3. The Chief, CI may in unusual situations forego sending a report to Centralized Review.

[9.5] 12.3.1.2  (04-30-1999)
Centralized Case Review (CCR)

  1. See CI Handbook 9.5 Chapter 10, Centralized Review (Investigative Reports), for more information.
  2. If CCR suggests changes to the report which are agreed upon by the group manager and special agent, once those changes are made, the SAR is again submitted to the Group Manager for approval.

[9.5] 12.3.1.3  (04-30-1999)
Branch Chief

  1. The Group Manager will send the approved SAR to the Branch Chief for concurrence. If he or she does not concur, it will be returned through channels to the agent with feedback. If the Branch Chief concurs it will be forwarded to the Chief, CI for approval.

[9.5] 12.3.1.4  (04-30-1999)
Chief, CI

  1. The Chief, CI (and Branch Chief) will indicate approval of a special agent's prosecution recommendation on an SAR by notation on the original and all copies of the report. No other notations, checkmarks, alterations, or marginal memoranda should be made on the report or on the exhibits.
  2. The approval of the SAR by the Chief will result in the SAR being transmitted to District Counsel for approval (except as provided in section 12.4.1 of this chapter).
  3. Recommendations for criminal prosecution should be forwarded to District Counsel not less than 310 days prior to the expiration of the period of limitations as to the first alleged offense included in the recommendation for prosecution. In exigent situations, the Chief may request a joint on-site review by District Counsel and the Department of Justice as described in 12.3.2.1(4) of this chapter.
  4. If exceptional circumstances exist that would act to waive the 310 day rule, they shall be detailed in the memorandum transmitting the report to District Counsel. See 12.5.2.1 of this chapter for details concerning the contents of the transmittal memorandum to District Counsel. Such factors as the importance of the investigation and late discovery of strong evidence of flagrancy should be weighed with the desirability of an even work flow and sufficient review time for District Counsel and Department of Justice, Tax Division (DOJ, Tax Division). The determination as to whether such circumstances are of an exceptional nature must be a matter of judgment on a case-by-case basis. Consideration should be given to dropping the tax period or count that will soon be beyond the limitation period, unless it is vital to successful prosecution. The fact that the statutory period about to terminate involves a tax year considered vital to the prosecution recommendation shall be interpreted as an exceptional circumstance to waive the rule.
  5. If the Chief, CI or Branch Chief do not concur in the recommendation of the special agent, the Chief, CI will prepare a separate memorandum setting forth the reasons for the nonconcurrence.
  6. The Chief, CI will request a written opinion and recommendations from the DI on each investigation in which the Chief does not concur in the recommendation of the special agent.
  7. After receipt of the opinion and recommendation from the DI, the Chief, CI will make the final decision as to the disposition of the investigation.

[9.5] 12.3.1.5  (04-30-1999)
District Counsel

  1. District Counsel may;
    1. Agree with the prosecution recommendation.
    2. Request that additional information be acquired to support the recommendation (Supplemental Investigation).
    3. Decline to forward the prosecution recommendation (Declination).

    Cases are sometimes processed by Chief Counsel when a particular District Counsel has a heavy case load or for any other administrative reason. When this procedure is followed, the distribution to the Criminal Investigation function will be the same.

  2. District Counsel's approval is required to forward any SAR to the Department of Justice, Tax Division. This is true whether or not the investigation is conducted through the administrative or grand jury process unless excepted as stated in 12.4.1 of this chapter. Even when an SAR meets one of the exceptional circumstances, CI may request the advice of District Counsel.

[9.5] 12.3.1.5.1  (04-30-1999)
District Counsel Concurrence With The Prosecution Recommendation

  1. When District Counsel concurs with the prosecution recommendation, they will ordinarily forward prosecution cases to the DOJ, Tax Division; except, District Counsel may refer the following types of investigations directly to the U.S. Attorney;
    1. *Certain violations relating to Form 8300-Report of Cash Payment Over $10,000 Received in a Trade or Business (26 USC 7203 and 7206). This type of case is commonly referred to as a 6050I violation. (See 12.4.2 and 12.4.2.1 below).
    2. Trust fund penalty (26 USC 7215) (See 12.4.2 and 12.4.2.2 below).
    3. Corrupt or forcible interference (26 USC 7212(a)) (See 12.4.2 and 12.4.2.3 below).
    4. Forcible rescue (26 USC 7212(b)) (See 12.4.2 and 12.4.2.3 below).
    5. All excise tax violations other than gasoline and diesel fuel excise taxes. (See 12.4.2 and 12.4.2.4 below).
    6. Violations of 18 USC 1621, 1622, or 1623 which were committed in contravention of the internal revenue laws, during the judicial process (before the grand jury or trial jury), and involve a prosecution recommendation solely under those sections (See 12.4.2 and 2.4.2.5 below).
    NOTE:
    *An SAR involving a 6050I violation must be forwarded to DOJ, Tax Division by District Counsel, if the subject is an accountant, physician, attorney acting in his or her professional representative capacity, or any of the attorney's employees.
    The DI may, at his or her discretion, require that a copy of District Counsel's request for supplemental information or data be forwarded to the DI's office by the Chief, CI

    .

  2. When District Counsel concurs with a recommendation of prosecution, he or she will prepare a Criminal Reference Letter (CRL). District Counsel will forward the SAR and Exhibits to DOJ, Tax Division. District Counsel will also send the Chief, CI two copies of the CRL. The Chief, CI shall retain one copy for his or her files and provide one to the Special Agent (through channels) for the investigative file. The DI may, at his or her discretion, require that a copy be forwarded to the DI's office by the Chief, CI.
  3. See Exhibit 9.5.12-3 at the end of this chapter.

[9.5] 12.3.1.5.2  (04-30-1999)
District Counsel Request for Supplemental Investigation

  1. When the District Counsel Attorney wants clarification, additional information, or additional evidence, he or she will hold an informal discussion with the special agent. If he or she still sees a need for more information, the District Counsel Attorney will prepare a formal request for supplemental information.
  2. At the conclusion of the supplemental investigation a Supplemental Report should be prepared to clarify information contained in the final report previously submitted. The Supplemental Report should be processed through the Group Manager, Branch Chief, and Chief, CI.
  3. The DI or the DI's delegate (at the DI's discretion) may, review supplemental requests for information. or Declination Memorandums from District Counsel. When a decision is made to review these items, a regional analyst will maintain liaison with District Counsel and with the Chief, CI in order to expedite responses to supplemental requests.
  4. District Counsel may have discussed the defenses raised by the taxpayer with the special agent prior to requesting a supplemental investigation. The DI may, at his or her discretion, require that a copy of District Counsel's request for supplemental information or data be forwarded to the DI's office by the Chief, CI.
  5. Supplemental reports will be processed in the same manner as original reports.
  6. District Counsel will retain the investigation's administrative file for ninety days following transmittal of a Request for Supplemental Investigation by Criminal Investigation personnel. During this time frame, District Counsel is responsible for control of civil matters. In the event the request cannot be accomplished within this time, the administrative file may be returned to the appropriate District Director for control of civil matters as deemed necessary by that official.
  7. See Exhibit 9.5.12-3.

[9.5] 12.3.1.5.3  (04-30-1999)
District Counsel Declines to Forward the Prosecution Recommendation

  1. District Counsel may decline to forward a prosecution report if the Special Agent's Report is incomplete to the extent that additional investigative activity would not result in evidence sufficient to support prosecution.
  2. Prior to the issuance of a District Counsel Declination memorandum (commonly referred to as a Criminal Action Memorandum or CAM), District Counsel will confer with the Chief, CI, in an effort to resolve the differences of opinion. If after the conference District Counsel still does not concur with the prosecution recommendation, District Counsel will prepare a CAM and transmit it along with the report and exhibits to the Chief, CI. The DI or the DI's delegate (at the DI's discretion) may, review CAMs from District Counsel.
  3. Criminal Investigation has ten workdays to decide whether or not additional investigative activity could perfect the SAR. If a decision is made to complete necessary work and resubmit the SAR to District Counsel, the matter will be treated like any other supplemental. If it is determined that the additional work will not be performed, the matter will be treated like other District Counsel declinations.
  4. The DI may analyze declinations by District Counsel in an attempt to identify trends and patterns of investigative deficiencies. The DI may also devise a system for providing feedback regarding these analyses, to each CI Chief.
  5. See Exhibit 9.5.12-4.

[9.5] 12.3.1.5.3.1  (04-30-1999)
District's Protest Reply to a CAM

  1. When the Chief, CI decides that the investigation should be forwarded as it stands, he or she will submit a protest report within 10 days from the date of the CAM to the DI. In it the Chief, CI should set forth the District's disagreement with the declination. The report is to be signed by the District Director or his/her designee, but no lower than the Chief, CI. A memorandum notifying the DI that the District will protest the CAM may be sent before the protest report, but the report should follow promptly.
  2. The protest report will include any comments concerning overall evaluation of the evidence, interpretation of law, or other disagreements with opinions expressed in the CAM. Any new or additional facts or evidence developed after receipt of the CAM will be included in a separate report signed by the special agent, and submitted with the District's protest report. Such reports by the special agent should be limited to a presentation of the facts and should not contain opinions relating to action proposed by District Counsel.
  3. A copy of the District's protest report (and notification, if applicable) will be forwarded to District Counsel. When the District's protest report includes a separate report signed by the special agent reflecting new or additional facts or evidence developed after receipt of the Declination Memorandum, a copy of the special agent's report will also be forwarded to District Counsel.
  4. If District Counsel does not receive the District's protest report or notification within the time limit prescribed above, District Counsel may assume that the declination will not be protested and consider the matter closed.
  5. See Exhibit 9.5.12-4

[9.5] 12.3.1.5.3.2  (04-30-1999)
Director of Investigations' Response to Declination Memorandum (CAM)

  1. Within thirty calendar days from the date of the CAM, the DI will inform the Assistant Regional Counsel (Criminal Tax), in writing, of the DI's disagreement with the Declination Memorandum; or of the DI's intention to protest the Declination Memorandum, to be followed promptly by the DI's memorandum of nonconcurrence. See Exhibit 9.5.12-5.
  2. The DI's memorandum of nonconcurrence will set forth the reasons for nonconcurrence. The DI should give consideration to the reasons advanced against the prosecution, and to the supplemental information and comment submitted by the district. A copy of the District's report should be forwarded with the DI's memorandum of nonconcurrence. A copy of the DI's reply to the Declination Memorandum will be forwarded to the Chief, CI.
  3. If the Assistant Regional Counsel (Criminal Tax) does not receive the DI's memorandum of nonconcurrence or notification within the time limit prescribed above, the Assistant Regional Counsel may assume that the Declination Memorandum will not be protested and consider the matter closed.
  4. The DI may assign a regional analyst to maintain liaison with District Counsel and with the Chief, CI in order to expedite responses to supplemental requests and to assist in decisions on any further action with respect to Declination Memorandums.

[9.5] 12.3.1.5.3.3  (04-30-1999)
Disagreement Between Director of Investigations and Regional Counsel

  1. In the event of disagreement between the DI and the Assistant Regional Counsel (Criminal Tax), concerning the DI's memorandum of nonconcurrence, the DI will refer the matter to the Regional Commissioner. If the Regional Commissioner agrees with the recommendation for prosecution, the DI will request the Office of Chief Counsel to consider prosecution of the investigation by submitting the matter, by memorandum, to the Assistant Chief Counsel (Criminal Tax). A copy of the special agent's report and exhibits will be transmitted with the DI's memorandum to the Assistant Chief Counsel (Criminal Tax). The Criminal Investigation function at the National Office will coordinate the matter with Assistant Chief Counsel (Criminal Tax), but will not make a decision on the investigation. One copy of the DI's memorandum will be forwarded to the Regional Counsel; one copy will be forwarded to the Assistant Commissioner (CI), Attn: OP:CI:O; and one copy will be forwarded to the Chief, CI.
  2. See Exhibit 9.5.12-5.

[9.5] 12.3.1.5.3.4  (04-30-1999)
Reports Referred to Chief Counsel

  1. the Regional Commissioner may refer a recommendation for prosecution to the Office of Chief Counsel for concurrence when there is a report in which the Regional Commissioner and Regional Counsel have not agreed as to the recommendation for prosecution. In such instances, final action on behalf of the Service (whether to make a referral to the Department of Justice for prosecutive action or concluding against prosecutive action) will be taken by the Associate Chief Counsel (Enforcement Litigation).
  2. If the Associate Chief Counsel concludes that prosecutive action is warranted and refers the matter to the Department of Justice, the Associate Chief Counsel will send copies of the Criminal Reference Letter (CRL) to all of the following:
    1. Assistant Regional Counsel (Criminal Tax).
    2. District Counsel.
    3. Assistant Commissioner (CI), Attn: OP:CI:O.
    4. Regional Commissioner.
    5. District Director.
  3. If the Associate Chief Counsel concludes against prosecutive action, he or she will advise the Regional Commissioner, by memorandum and furnish a copy of the memorandum to:
    1. Assistant Regional Counsel (Criminal Tax)
    2. District Counsel
    3. Assistant Commissioner (CI), Attn: OP:CI:O.

    In addition the Associate Chief Counsel will transmit a copy of the memorandum and the CI investigation file to the District Director for closing of the Subject Criminal Investigation.

  4. See Exhibit 9.5.12-5.

[9.5] 12.3.2  (04-30-1999)
External Reviews of Prosecution Reports (Department of Justice)

  1. DOJ, Tax Division and the United States Attorney's Office also review the prosecution recommendation submitted by IRS--CI.

[9.5] 12.3.2.1  (04-30-1999)
Department of Justice (DOJ), Tax Division

  1. Typically a prosecution recommendation is sent to DOJ, Tax Division from IRS District Counsel after District Counsel has reviewed and concurred with CI's prosecution recommendation.
  2. DOJ, Tax Division may;
    1. Agree with the prosecution recommendation.
    2. Decline to forward the prosecution recommendation (Declination).
  3. In the event that the DOJ, Tax Division representative determines that the evidence as presented does not meet the prosecution standards, the investigation will be handled as provided in 12.3.2.1.2 below.
  4. In exigent situations, the Chief, CI may request a simultaneous review or a joint on-site review by District Counsel and the DOJ, Tax Division. If District Counsel concurs that the circumstances warrant a joint on-site review, District Counsel will contact the Assistant Chief Counsel (Criminal Tax), either orally or by memorandum with a request that the DOJ, Tax Division be asked to participate in an on-site review. If Justice approval is obtained, District Counsel will be notified and will inform the Chief, CI regarding the particulars of the meeting. A completed SAR, with exhibits, must be available at the time of the on-site review.
  5. Following a simultaneous review or a joint on-site review by District Counsel and the DOJ, Tax Division, where the evidence is deemed to meet the prosecution standards, the exhibits and original of the SAR should normally be left with the DOJ, Tax Division representative.

[9.5] 12.3.2.1.1  (04-30-1999)
Department of Justice Concurrence With The Prosecution Recommendation

  1. When DOJ, Tax Division concurs with a prosecution recommendation, they will forward the prosecution case to the United States Attorney Office that has venue.

[9.5] 12.3.2.1.2  (04-30-1999)
Department of Justice Declination to Forward the Prosecution Recommendation

  1. When the DOJ, Tax Division or a U.S. Attorney declines to prosecute an investigation it will be returned to the referring District Counsel for review and evaluation for any further prosecution potential.
  2. District Counsel will send the Chief, CI copies of the DOJ, Tax Division letters declining prosecution along with a memorandum by the District Counsel setting forth its decision to:
    1. Concur in the declination.
    2. Request a supplemental investigation.
    3. Request that the case be reconsidered (in which event the case will be submitted to Chief Counsel for review and final approval).
  3. The Chief, CI will forward to the DI, upon receipt, copies of the documents received from District Counsel, and will take action appropriate with District Counsel's memorandum. The Chief, CI will also send the DI copies of any resultant correspondence that he or she generates.

[9.5] 12.3.2.2  (04-30-1999)
Department of Justice, United States Attorney's Office (USAO)

  1. The United States Attorney's Office will;
    1. File an Information for the charges asserted in the recommendation; or
    2. Present the evidence to a grand jury which can either indict or present a No True Bill; or
    3. Decline to prosecute.
    NOTE:
    If an investigation has been approved by DOJ, Tax Division, the USAO must have permission of DOJ, Tax Division to refuse to obtain an Information or to present the evidence to a grand jury.

[9.5] 12.4  (04-30-1999)
Exceptions to the General Review Process of Prosecution Recommendation Reports

  1. The review process within the IRS is the same for all types of SARs with the exceptions listed in 12.4.1 below. The external approval route for an SAR approved by the Chief, CI has only two exceptions to the pathway described in 12.3.2 and its associated sub-sections. They are;
    1. Processing the Prosecution Recommendations Directly From The Chief, CI To The U. S. Attorney's Office
    2. Processing the Prosecution Recommendations Directly From District Counsel To The U. S. Attorney's Office

[9.5] 12.4.1  (04-30-1999)
Processing Prosecution Recommendations From The Chief, CI Directly To The U. S. Attorney's Office

  1. The Chief, CI can make a direct referral to the U.S. Attorney:
    1. In certain arrest situations. (See 12.4.1.1 below).
    2. When a prosecution report recommends Title 31 and related Title 18 charges without any tax charges. (See 12.4.1.2 below).
    3. When a prosecution report recommends Title 18 Section 1956 and/or 1957 and specific circumstances are present. (See 12.4.1.3 below).
    4. When a prosecution report recommends prosecution in an OCDETF investigation. (See 12.4.1.4 below).
  2. The progression of the overall review when Chief, CI forwards an approved prosecution recommendation to the USAO is as follows:
    1. IRS--Criminal Investigation.
    2. Department of Justice, United States Attorney's Office (USAO).
    3. Department of Justice, Tax Division (DOJ, Tax Division) in OCDETF and money laundering investigations where there is a related tax charge.
    4. Department of Justice, United States Attorney's Office (USAO).


    See Exhibit 9.5.12-6, External Review of SARs From the Chief, CI to the USAO.

[9.5] 12.4.1.1  (04-30-1999)
Direct Referral of Arrests to the U.S. Attorney by the Chief, CI

  1. The Chief, CI will refer prosecution recommendations involving arrests by special agents directly to the United States Attorney in two situations:
    1. Race track "ten percenter" investigations in which prosecution is recommended under I.R.C. § 7206(2) or 18 U.S.C. § 371.
    2. Wagering occupational tax investigations in which no other tax violations are recommended.
  2. However if prosecution is recommended in:
    1. Race track "ten percenter" investigations under a provision other than I.R.C. § 7206(2) or 18 U.S.C. § 371, or
    2. Wagering occupational tax investigations in which prosecution is recommended for other tax violations

    the investigative file should be referred through established channels as displayed in this chapter at section 12.3 for evaluation and review, even when an arrest has been made.

  3. See Exhibit 9.5.12-6.
    NOTE:
    The special agent will still be required to prepare a final report (SAR) for prosecution recommendations which are directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.4.1.2  (04-30-1999)
Direct Referral of Title 31 and Related Title 18 Investigations to the U.S. Attorney by the Chief, CI

  1. Reports recommending prosecution for violation of Title 31 and related Title 18 offenses are to be referred directly from the Chief, CI to the United States Attorney or Strike Force Attorney. However, when prosecution is also being recommended on tax charges , then ordinary review channels are to be used. (See section 12.3 of this chapter above).
  2. Also, if violations of Title 26 are used to elevate a Title 31 violation to a felony under 31 USC 5322(b), then ordinary review channels prescribed in section 12.3 above must be used.
  3. See Exhibit 9.5.12-6.
    NOTE:
    The special agent will still be required to prepare a final report (SAR) for prosecution recommendations which are directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.4.1.3  (04-30-1999)
Direct Referral of Title 18 U.S. C. 1956 and 1957 Investigations to the U.S. Attorney by the Chief, CI

  1. Title 18 U.S.C. 1956 and 1957 investigations are intended to facilitate and enhance the prosecution of money launderers. They are not intended to provide a substitute for traditional Title 18 and Title 26 charges related to tax evasion, filing of false returns, including the aiding and abetting thereof, or tax fraud conspiracy. Consequently, appropriate tax-related Title 18 and Title 26 charges are to be utilized when the evidence warrants their use.
  2. Reports recommending prosecution for violation of 18 U.S.C. 1956 or 1957 offenses are to be referred directly from the Chief, CI to the United States Attorney, Except if :
    1. The indictment also contains charges for which DOJ, Tax Division authorization is required (i.e. a substantive tax violation or a tax fraud conspiracy); or
    2. When the intent to engage in conduct constituting a violation of 26 U.S.C. 7201 or 7206 is the sole or principal purpose of the financial transaction which is the subject of the money laundering count.
    NOTE:
    District Counsel review and DOJ, Tax Division authorization is mandatory in cases involving violations of 18 USC 1956 (a)(1)(A)(ii).
  3. If either (2)(a) or (2)(b) is present, then ordinary review channels are to be used. (See section 12.3 above).
  4. It is assumed that when a direct referral is made all the following are true:
    1. The principal purpose of the financial transaction was to accomplish some other covered purpose, such as carrying on some specified unlawful activity like drug trafficking.
    2. The circumstances do not warrant the filing of substantive tax or tax fraud conspiracy charges; and
    3. The existence of a secondary tax evasion or false return motivation for the transaction is one that is readily apparent from the nature of the money laundering transaction itself.
  5. When direct referral is appropriate, consultation with Counsel prior to such referral is encouraged.
  6. See Exhibit 9.5.12-6.
    NOTE:
    The special agent will still be required to prepare a final report (SAR) for prosecution recommendations which are directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.4.1.4  (04-30-1999)
Direct Referral of OCDETF Investigations to the U.S. Attorney by the Chief, CI

  1. At the end of an OCDETF investigation, the special agent will prepare a final report similar to the final report in an administrative investigation and address it to the U.S. Attorney.
  2. After the Chief, CI approves the prosecution recommendation he or she will make a direct referral to the U.S. Attorney.
    NOTE:
    The U.S. Attorney must then seek DOJ, Tax Division approval for indictment of tax violations.
  3. See Exhibit 9.5.12-6.

[9.5] 12.4.2  (04-30-1999)
Processing Prosecution Recommendations Directly From District Counsel To The U. S. Attorney's Office

  1. District Counsel can make a direct referral to the U.S. Attorney without going to DOJ-Tax first:
    1. In certain violations relating to Form 8300-Report of Cash Payment Over $10,000 Received in a Trade or Business (26 USC 7203 and 7206). This type of case is commonly referred to as a 6050I violation. (See 12.4.2.1 below).
    2. When a Trust fund penalty is the sole criminal charge. (26 USC 7215); (See 12.4.2.2 below.)
    3. When Corrupt or forcible interference is the sole criminal charge. (26 USC 7212(a)); (See 12.4.2.3 below).
    4. When Forcible rescue is the sole criminal charge. (26 USC 7212(b)); (See 12.4.2.3 below).
    5. In all excise tax violations other than gasoline and diesel fuel excise taxes when excise tax is the sole criminal charge. (See 12.4.2.4 below).
    6. When a prosecution report recommends criminal charges related solely to Title 18 Sections 1621 (Perjury), 1622 (Subornation of Perjury) or 1623 (False Declarations Before the Grand Jury or Court) which were committed in contravention of the Internal Revenue laws, were committed during the judicial process (before the grand jury or trial), and involve a prosecution recommendation solely under those sections (See 12.4.2.5 below.)
  2. The progression of the overall review when District Counsel forwards an approved prosecution recommendation to the USAO is as follows:
    1. IRS--Criminal Investigation.
    2. IRS--District Counsel.
    3. Department of Justice, United States Attorney's Office (USAO).
    NOTE:
    District Counsel provides a courtesy copy of the SAR to DOJ, Tax Division.
  3. See Exhibits 9.5.12-7 and 9.5.12-8, External Review Of SARs From District Counsel To The USAO.

[9.5] 12.4.2.1  (04-30-1999)
Direct Referral Of Form 8300 (Report Of Cash Payment Over $10,000 Received In A Trade Or Business) Charges To The U.S. Attorney By District Counsel

  1. District Counsel may refer violations directly to the United States Attorney's Office relating to Form 8300 (Report of Cash Payment Over $10,000 Received in a Trade or Business) which meet all of the following :
    1. The Form 8300 violation was committed in contravention of the Internal Revenue laws (26 USC 7203 and 7206).
    2. The Form 8300 violation was committed during the judicial process (before the grand jury or trial jury), and
    3. The prosecution recommendation was solely for a "Form 8300 violation" .
  2. See Exhibit 9.5.12-8.
    NOTE:
    The special agent will still be required to prepare a final report in a prosecution recommendation which is directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.4.2.2  (04-30-1999)
Direct Referral Of Trust Fund Penalty Prosecution Recommendations To The U.S. Attorney By District Counsel

  1. District Counsel may refer criminal violations directly to the United States Attorney's Office relating to trust fund penalty which meet all of the following:
    1. The violation was committed in contravention of the Internal Revenue laws (26 USC 7215).
    2. The violation was committed during the judicial process (before the grand jury or trial jury), and
    3. The prosecution recommendation was solely for a trust fund penalty criminal violation.
  2. See Exhibit 9.5.12-7.
    NOTE:
    The special agent will still be required to prepare a final report in a prosecution recommendation which is directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.4.2.3  (04-30-1999)
Direct Referral Of Forcible Interference Or Forcible Rescue Prosecution Recommendations To The U.S. Attorney By District Counsel

  1. District Counsel may refer forcible interference (26 USC 7212(a)) or forcible rescue (26 USC 7212(b)) violations directly to the United States Attorney's Office which meet all of the following:
    1. The violation was committed in contravention of the Internal Revenue laws.
    2. The violation was committed during the judicial process (before the grand jury or trial jury), and
    3. The prosecution recommendation was solely for a forcible interference or forcible rescue violation.
  2. See Exhibit 9.5.12-7.
    NOTE:
    The special agent will still be required to prepare a final report in a prosecution recommendation which is directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.4.2.4  (04-30-1999)
Direct Referral Of An Excise Tax Prosecution Recommendations To The U.S. Attorney By District Counsel

  1. District Counsel may refer violations relating to excise tax directly to the United States Attorney's Office which meet all of the following:
    1. The violation was committed in contravention of the Internal Revenue laws.
    2. The violation was committed during the judicial process (before the grand jury or trial jury), and
    3. The prosecution recommendation was solely for an excise tax violation.
  2. See Exhibit 9.5.12-7.
    NOTE:
    The special agent will still be required to prepare a final report in a prosecution recommendation which is directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.4.2.5  (04-30-1999)
Direct Referral Of Violations Of 18 USC 1621 (Perjury), 1622 (Subornation Of Perjury), Or 1623 (False Declarations Before Grand Jury or Court) Prosecution Recommendations To The U.S. Attorney By District Counsel

  1. District Counsel may refer violations relating to 18 USC 1621 (Perjury), 1622 (Subornation of Perjury), or 1623 (False Declarations Before Grand Jury or Court) directly to the United States Attorney's Office which meet all of the following:
    1. The violation was committed in contravention of the Internal Revenue laws,
    2. The violation was committed during the judicial process (before the grand jury or trial jury), and
    3. The prosecution recommendation was solely for an 18 USC 1621 (Perjury), 1622 (Subornation of Perjury), or 1623 (False Declarations Before Grand Jury or Court) violation.
  2. See Exhibit 9.5.12-7.
    NOTE:
    The special agent will still be required to prepare a final report in a prosecution recommendation which is directly referred. The report should be addressed to the attorney for the government.

[9.5] 12.5  (04-30-1999)
Documents Which are Forwarded When an Investigation Has Concluded in a Prosecution Recommendation

  1. When preparing the recommendation package for forwarding to District Counsel or the U.S. Attorney's Office some if not all of the following documents need to be prepared and forwarded as well.
    1. Special Agent Report--needed in all recommendations. (See IRM Handbook 9.5 Chapter 8.)
    2. Transmittal memorandum-to District Counsel or U.S. Attorney's Office. (See Exhibits 9.5.12-9, 9.5.12-10 and 9.5.12-11.)
    3. Transmittal memorandum to the Chief, Examination or Chief, Collection-needed for all administrative prosecution (and discontinued investigation) reports wherein information from the investigation can be used civilly. (See Exhibit 9.5.12-12.)
    4. Memorandum to the DI (only in Money Laundering Investigations when the subject is a bank).
    5. Notification Letter to the Principal in the Prosecution Recommendation--Only in investigations worked entirely by the administrative process. (See Exhibit 9.5.12-13.)
    6. Form 3714, Subject Investigation Analysis Guide, Exhibit 114.1.6-1 (This Exhibit is located in Compliance and Customer Service Managers Handbook, 114.1, Chapter 6, Criminal Investigation.)
    7. Form 4930, CID G/P/S Investigation Report. Please see IRM Handbook 9.9, Criminal Investigation Management Information System.
    8. Form 10102, Public Affairs Office Fact Sheet. Please see CI Handbook 9.3, Disclosure and Publicity, Chapter 2, Publicity and Internal Communications.

[9.5] 12.5.1  (04-30-1999)
Structure of the Special Agent's Report

  1. The structure and content of the SAR is discussed in detail in CI Handbook 9.5, Chapter 8, entitled Investigative Reports.
  2. Additional information on "how to analyze" the content of an SAR is found in the Multi-functional Management Handbook 114.1, Chapter 6.
  3. If the investigation was not conducted with the cooperation of District Examination or Collection functions, no copy of the report need be forwarded to those divisions unless it relates to matters within their normal jurisdiction.

[9.5] 12.5.2  (04-30-1999)
Transmittal Memorandums

  1. The transmittal memorandum is a structured memorandum forwarding the SAR and its associated exhibits of evidence in which the receiver is informed of facts concerning the investigation.

[9.5] 12.5.2.1  (04-30-1999)
Structure of the Transmittal Memorandum to District Counsel

  1. When the Chief, CI concurs with a prosecution recommendation he or she will prepare a transmittal memorandum, for the signature of the District Director or his/her designee, but no lower than the Chief, CI directed to District Counsel.
  2. The memorandum will include:
    1. A brief summary of the investigation.
    2. A specific recommendation as to further action.
    3. Any unusual legal problems.
    4. A description of civil matters pending.
    5. Whether or not the investigation included the use of search warrants, undercover activities, confidential informants, polygraph, or electronic surveillance.
    6. The name of the individual in the district who may be contacted if additional details are needed.
    7. The identity of any witness who is a confidential informant and has agreed to testify.
    8. If a confidential informant is involved, state whether the informant was paid, and/or is being used as a witness.
  3. See Exhibits 9.5.12-9 and 9.5.12-10. These are samples of what might be contained in a transmittal letter to District or Regional Counsel.

[9.5] 12.5.2.2  (04-30-1999)
Structure of the Transmittal Memorandum to U. S. Attorney's Office

  1. The transmittal should include
    1. A request that the report and exhibits be returned to the Chief, CI upon disposition of the criminal features of the case.
    2. A statement that, in accordance with the policy of DOJ, Tax Division the case should not be brought under the Pretrial Diversion Program. (This statement is not required on direct referrals of pure Title 31 and related Title 18 offenses.)
  2. See Exhibit 9.5.12-11.

[9.5] 12.5.2.3  (04-30-1999)
Structure of the Transmittal Memorandum to the Chief, Examination or Collection

  1. This memorandum's purpose is to notify the Chief, Examination or Chief, Collection that the investigative aspects of the subject criminal investigation have concluded and that prosecution is being recommended. When the SAR is transmitted to District Counsel with a recommendation for prosecution, the Chief, CI, through this transmittal memorandum, shall advise the Chief, Examination or Chief, Collection to forward the administrative file to the District Counsel.
  2. If the investigation was not conducted with the cooperation of the District's Examination or Collection function, no copy of the report need be prepared and forwarded to those divisions unless it relates to matters within their normal jurisdiction.
  3. See Exhibit 9.5.12-12.

[9.5] 12.5.2.4  (04-30-1999)
Structure Of The Transmittal Memorandum To The Civil Functions At the Close Of All Criminal Aspects Of An Investigation

  1. When all phases of the criminal aspects have been concluded, the Chief, CI shall inform the Chief of both the District Examination and Collection functions with provide a copy of the special agent's report with a transmittal memorandum. The information that needs to be included in the "transmittal memorandum to notify Examination or Collection that all criminal aspects of the investigation has concluded" is different than the information to be included in the transmittal memorandum to Examination or Collection when the report is initially forwarded to District Counsel. (See 12.5.2.3 above for information concerning the initial SAR processing memorandum to Examination or Collection.)
  2. This concluding memorandum should include a summary of the outcome of the criminal aspects unless such information has already been furnished the civil functions by the District Counsel. Any question as to whether all phases of the criminal aspects have been concluded and whether negotiations should be commenced looking toward civil settlement, should be resolved by consultation with the District Counsel. If this was directly referred to the United States Attorney, or a grand jury investigation not resulting in a criminal prosecution, follow procedures outlined in CI Handbook 9.5 Chapters 13, 14, and 15.

[9.5] 12.5.3  (04-30-1999)
Notification Letter to the Principal in the Prosecution Recommendation

  1. When the special agent has made a determination, concurred with by the Chief, CI and the District Director, that the facts in the investigation warrant a prosecution recommendation against the taxpayer, a letter shall ordinarily be sent (via certified mail, return receipt requested) to the principal notifying him/her that prosecution is being recommended and that the investigation is being referred to District Counsel (include office address and telephone number).
  2. A similar letter will also be prepared in those situations when a formal District Conference has been held (See 12.2 at the beginning of this chapter), after the Chief, CI makes a determination to forward the investigation to District Counsel. (See 26 CFR 601.107(c).)
  3. A copy of the letter shall be mailed to:
    1. The principal of the prosecution recommendation.
    2. The principal's enrolled representative (agent or attorney) if a power of attorney or tax information authorization has been filed in the investigation.
  4. A notification letter to the principal should not be sent when recommending prosecution in a grand jury investigation.
  5. See Exhibit 9.5.12-13.

[9.5] 12.5.4  (04-30-1999)
Form 3714, Subject Investigation Analysis Guide

  1. Compliance and Customer Service Managers Handbook, 114., Chapter 6, Criminal Investigation discusses this form at length. See Exhibit 114.1.6-1 for a sample of this form.

[9.5] 12.5.5  (04-30-1999)
Form 4930, CID G/P/S Investigation Report

  1. CI Handbook 9.9, Criminal Investigation Management Information System is a 13 chapter Handbook which discusses all aspects of completing this form.

[9.5] 12.6  (04-30-1999)
Document Distribution in Prosecution Recommendations

  1. Each completed prosecution package (the prosecution recommendation plus the associated transmittals and letters) has its unique distribution pattern dependent on which violations are recommended for prosecution and whether it is a referral through District Counsel or directly to the U.S. Attorney's Office.

[9.5] 12.6.1  (04-30-1999)
Distribution of Documents in an Administrative Prosecution Recommendation and Most Grand Jury Investigations

  1. If prosecution is recommended in an administrative prosecution recommendation or a grand jury prosecution report, the Chief, CI will forward the report to Counsel for review, except in OCDETF and "pure" money laundering investigations. In those latter situations the Chief, CI will make a direct referral to the U.S. Attorney's Office, which must then seek DOJ, Tax Division approval for indictment of tax violations.
  2. See Exhibit 9.5.12-14 Completed Prosecution Report Checklist.
  3. An original and six copies of the special agent's report and transmittal will be prepared. In addition an original and 3 copies of the transmittal memorandum for the Chief, Examination or Chief, Collection should be prepared.
  4. Pertinent documents will be distributed to District Counsel as follows:
    1. Original and three copies of transmittal memorandum to District Counsel. See Exhibit 9.5.12-9 or 9.5.12-10.
    2. Original and three copies of the SAR.
    3. One copy of the notification letter to the principal(s). See Exhibit 9.5.12-13.
    4. One copy of the transmittal memorandum to Examination and/or Collection. See Exhibit 9.5.12-12.
  5. Pertinent documents will be distributed to the DI (if required by the DI) as follows:
    1. One copy of transmittal memorandum to District Counsel. See Exhibit 9.5.12-9 or 9.5.12-10.
    2. One copy of the SAR.
  6. Pertinent documents will be retained by the Chief, CI (after being forwarded through the Branch Chief) as follows:
    1. One copy of transmittal memorandum to District Counsel. See Exhibit 9.5.12-9 or 9.5.12-10.
    2. One copy of the SAR.
    3. One copy of the notification letter to the principal. Exhibit 9.5.12-13.
    4. One copy of the transmittal memorandum for the Chief, Examination or Chief, Collection See Exhibit 9.5.12-12.
    5. Form 3714, Subject Investigation Analysis Guide. See Exhibit 114.1.6-1.
    6. Form 4930, CID G/P/S Investigation Report.
    7. Form 10102, Public Affairs Office Fact Sheet.
  7. Pertinent documents will be distributed to the Chief, Examination or Chief, Collection as follows;
    1. Original of the transmittal memorandum for the Chief, Examination or Chief, Collection. See Exhibit 9.5.12-12.

    The copy of the SAR prepared for the District Examination or Collection function will be retained by the Chief, CI until final disposition of the criminal aspects. The Chief, Examination or Chief, Collection will be responsible for taking security measures necessary to protect the confidential nature of the retained copy of the report of the Internal Revenue agent or revenue officer in the matter and workpapers and other documents involved until all criminal aspects have been resolved. If the investigation was not conducted with the cooperation of District Examination or Collection function, no copy of the report need be forwarded to those divisions unless it relates to matters within their normal jurisdiction.

  8. The above distribution will also apply where the report covers more than one investigation or more than one taxpayer or is a supplemental report.
  9. When District Counsel concurs with a recommendation of prosecution, in accordance with the procedure of the Chief Counsel's office, District Counsel will forward to the Chief, CI two copies of the criminal reference letter prepared by his/her office. The Chief, CI shall retain one copy for his/her files. Cases are sometimes processed by Chief Counsel when a particular District Counsel has a heavy case load or for other administrative reasons. When this procedure is followed, the distribution to the Criminal Investigation function will be the same.
  10. See Exhibit 9.5.12-14 for a Prosecution Report distribution checklist.

[9.5] 12.6.2  (04-30-1999)
Direct Referral Reports To the U.S. Attorney by District Counsel

  1. An original and six copies of the special agent's report and transmittal to District Counsel will be prepared.
  2. Pertinent documents will be distributed to District Counsel. When the SAR is forwarded to District Counsel for review and referral direct to the U.S. Attorney, the Chief, CI should furnish the original and four copies of the special agent's report to District Counsel, so that District Counsel may send two copies to DOJ, Tax Division.
    1. Original and four copies of the transmittal memorandum to District Counsel. See Exhibit 9.5.12-9 or 9.5.12-10.
    2. Original and four copies of the SAR to District Counsel.
    3. One copy of the notification letter to the principal. See Exhibit 9.5.12-13.
    4. One copy of the transmittal memorandum to Examination or Collection. See Exhibit 9.5.12-12.

    When District Counsel concurs with recommendation of prosecution, in accordance with the procedure of the Chief Counsel's office, District Counsel will forward two copies to DOJ, Tax Division and the original SAR to the United States Attorney's Office.

  3. Pertinent documents will be distributed to the DI (if required by the DI) as follows:
    1. One copy of transmittal memorandum to District Counsel. See Exhibit 9.5.12-9 or 9.5.12-10.
    2. One copy of the SAR.
  4. Pertinent documents will be retained by the Chief, CI (after being forwarded through the Branch Chief) as follows:
    1. One copy of transmittal memorandum District Counsel. See Exhibit 9.5.12-9 or 9.5.12-10.
    2. One copy of the SAR.
    3. Form 3714, Subject Investigation Analysis Guide. See Exhibit 114.1.6-1.
    4. Form 4930, CID G/P/S Investigation Report.
    5. Form 10102, Public Affairs Office Fact Sheet.
  5. If the case being forwarded directly falls under the jurisdiction of the Criminal Division, no copies of the special agent's report or the transmittal memorandum will be forwarded to the Department of Justice.
  6. The Criminal Division has general responsibility over the following offenses investigated by the Criminal Investigation Division: wagering and coin-operated gaming device cases; forcible rescue of seized property (26 USC 7212(b)) and corrupt or forcible interference of an officer or employee acting under the Internal Revenue laws (26 USC 7212(a)); and unauthorized mutilation, removal or reuse of stamps (26 USC 7208). The other Title 26 and Title 18 cases in contravention of the Internal Revenue laws investigated by the Criminal Investigation fall under the jurisdiction of the Criminal Section of the Tax Division.
  7. See Exhibit 9.5.12-14 and 9.5.12-15 for Prosecution Report distribution checklists.

[9.5] 12.6.3  (04-30-1999)
Direct Referral to the U.S. Attorney by the Chief, CI

  1. An original and three copies of the special agent's report and transmittal to the U. S. Attorney's Office will be prepared.
  2. Pertinent documents will be distributed as follows;
    1. Original and four copies of the transmittal memorandum to the United State's Attorney's Office. See Exhibit 9.5.12-10.
    2. Original and four copies of the SAR to the United States Attorney's Office.

    The United States Attorney's Office will forward two copies to DOJ, Tax Division.

  3. Pertinent documents will be distributed to the DI (if required by the DI) as follows:
    1. One copy of transmittal memorandum to the U.S. Attorney's Office. See Exhibit 9.5.12-10.
    2. One copy of the SAR.
  4. Pertinent documents will be retained by the Chief, CI (after being forwarded through the Branch Chief) as follows:
    1. One copy of transmittal memorandum the U.S. Attorney's Office. See Exhibit 9.5.12-10.
    2. One copy of the SAR.
    3. Form 3714, Subject Investigation Analysis Guide. See Exhibit 114.1.6-1.
    4. Form 4930, CID G/P/S Investigation Report.
    5. Form 10102, Public Affairs Office Fact Sheet.
  5. If the case being forwarded directly falls under the jurisdiction of the Criminal Division, no copies of the special agent's report or the transmittal memorandum will be forwarded to the Department of Justice.
  6. The Criminal Division has general responsibility over the following offenses investigated by the Criminal Investigation Division: wagering and coin-operated gaming device cases; forcible rescue of seized property (26 USC 7212(b)) and corrupt or forcible interference of an officer or employee acting under the Internal Revenue laws (26 USC 7212(a)); and unauthorized mutilation, removal or reuse of stamps (26 USC 7208). The other Title 26 and Title 18 cases in contravention of the Internal Revenue laws investigated by the Criminal Investigation fall under the jurisdiction of the Criminal Section of the Tax Division.
  7. See Exhibits 9.5.12-14 or 9.5.12-15 for Prosecution Report distribution checklists.

[9.5] 12.7  (04-30-1999)
Discontinued Investigation Reports--Review Process and Distribution

  1. When it appears there is no prosecution potential in a Subject Criminal Investigation or evidence cannot be obtained to establish a prosecution recommendation, the special agent will recommend that CI withdraw from the investigation.

[9.5] 12.7.1  (04-30-1999)
Responsibility of Group Manager In Discontinued Investigation and Other Reports

  1. The Group manager will make a detailed review of each discontinued investigation report prepared by special agents under his or her supervision. The purpose of the review is to determine whether:
    1. The reasons for discontinuing the investigation are valid and consistent with procedures,
    2. No additional leads are apparent that might nullify the reason for discontinuing the investigation,
    3. The facts presented in the report support the conclusions drawn by the agent, and
    4. The recommended disposition of the investigation is appropriate in the circumstances.

[9.5] 12.7.2  (04-30-1999)
Responsibility of the Chief for Discontinued Investigations

  1. Discontinued investigation reports are reviewed in detail by the group managers. Therefore, the Chief or the Chief's designated representative, may review such reports to the extent necessary to ensure that the action recommended in the report is appropriate in the circumstances and that the facts presented in the report support the recommendation. However, the Chief may require a more thorough or detailed review at this level.

[9.5] 12.7.3  (04-30-1999)
Discontinued Reports on Administrative Investigations

  1. If the group manager concurs that CI should withdraw, he or she will discuss the proposed withdrawal action with the cooperating officer's group manager to determine if there is any objection. If there is no objection, the special agent will prepare a withdrawal report, that includes a statement to the effect that the cooperating officer's group manager has been advised of the proposed withdrawal action and has no objection to it. If the cooperating officer's group manager objects to the proposed withdrawal by CI, the matter will be referred to the Chief, CI who, if he or she agrees with the proposed withdrawal action, will discuss it with the Chief of the cooperating function. If the Chiefs do not reach an agreement, the matter will be resolved by the District Director. See Exhibit 9.5.12-16.
  2. Once CI withdraws from an investigation, it will not reenter or resume the investigation unless the case is again referred to CI.

[9.5] 12.7.3.1  (04-30-1999)
The Discontinued Investigation Report

  1. Final typed Discontinued Investigation reports will be reviewed in detail by the group manager and, upon approval, will be forwarded to the Chief, CI, or Branch Chief for review and approval.
  2. The special agent should recommend in the Discontinued Investigation report that a delinquency investigation be made if the investigation was not worked jointly and:
    1. It was determined that the taxpayer is liable for filing tax returns, but has not had a revenue officer assigned to the investigation; or
    2. It was determined that the taxpayer is liable for filing tax returns, and the investigation was not initiated as a result of a fraud referral; or
  3. If it is determined that the information obtained during the course of the investigation is pertinent only in another District, the information will be forwarded to the other District.

[9.5] 12.7.3.1.1  (04-30-1999)
Forwarding the Discontinued Investigation Report to Examination

  1. The original and one copy of the discontinued investigation report, together with tax returns, if applicable, will be forwarded to the Chief, Examination, if:
    1. The taxpayer, his or her representative, or a present employee was contacted.
    2. The taxpayer's records were inspected.
    3. The investigation was initiated as the result of an Examination referral.
    4. The special agent has recommended an examination or further inquiries by the District Examination function, and the Chief, CI concurs in that recommendation. or
    5. The investigation was initiated as a result of a Collection referral, however, the investigation was worked jointly with Examination.
    NOTE:
    In all investigations where a Form 211, Application and Public Voucher for Reward for Original Information has been filed, and which are determined to lack criminal potential, a copy of the closing report will be forwarded to the Chief, Examination, Attention: Informant Claims Examiner, regardless of the allegation.
  2. If the report is forwarded to the Chief, Examination, it will be promptly evaluated and a determination made either to continue the examination or to accept the returns as filed without further action. If the taxpayer, his or her representative, or a present employee was contacted or the taxpayer's records were inspected, a regular report of examination or a no-change notification letter must be sent to the taxpayer in accordance with established Examination procedures.

[9.5] 12.7.3.1.2  (04-30-1999)
Forwarding The Discontinued Investigation Report to Collection

  1. The original and one copy of the closing report (and in a failure to file situation a Form 2275, Record Request Charge and Recharge stating "No Record"), will be forwarded to the Collection function, if:
    1. A revenue officer was assigned to cooperate in the investigation.
    2. The investigation was initiated as the result of a Collection referral. (except in those instances where the investigation was worked jointly with Examination).

[9.5] 12.7.4  (04-30-1999)
Discontinued Reports on Grand Jury Investigations

  1. At the end of the grand jury investigation resulting with a CI withdrawal from the investigation or when it is determined that there are no charges for which CI has jurisdiction, the special agent will prepare a final withdrawal report similar to the withdrawal report in an administrative investigation and address it to the attorney for the government.
  2. The special agent will identify, as part of the final report, those documents governed by the Rule 6(e) secrecy requirements. The special agent will then seek Counsel's assistance in determining whether civil action should be pursued and whether the law will permit usage of the documents in any future civil action.
  3. If Counsel determines that civil action is warranted, the U.S. Attorney will apply for a Rule 6(e) order to allow use of the grand jury information by the appropriate civil function(s). If the court grants the Rule 6(e) order authorizing full disclosure for civil purposes, the Chief, CI will forward a copy of the SAR and supporting documents to the civil function.
  4. If a Rule 6(e) order cannot be obtained and the investigation has civil potential solely on the basis of non-grand jury information, the special agent will consult with the attorney for the government for his or her concurrence that the information is non-grand jury information and can be disclosed. The special agent will then confer with Counsel to determine whether Service policy allows the information to be given to the appropriate civil division(s). If Counsel concurs, the Chief CI will transmit the non-grand jury information to the Chief of the affected civil function by memorandum, but will not refer to the grand jury investigation or refer to or draw conclusions based on grand jury information.
  5. The special agent should notify the designated Counsel attorney that the investigation was concluded without a prosecution recommendation. (District Counsel establishes files on all individuals for which a grand jury request has been processed. Notification of withdrawal is essential in order for District Counsel files to remain current.)
  6. If civil action is not to be pursued, DOJ and/or USAO may try to give CI the records acquired during the grand jury investigation that are not retained pursuant to DOJ's record Control Schedules. If CI has or obtains receipt of these records, CI should document how it disposes of the records. As a general rule, third party records should be returned to their owners. The remaining records are to be retained and stored in accordance with existing IRS Record Control Schedules. Criminal Investigation should obtain approval for the method of disposal from the USAO, and retain the record of disposition in the investigation files. The USAO does not have the authority to tell IRS to destroy the records.
  7. See Exhibit 12-17 , 9.5.12-18, and 9.5.12-19 for Discontinued Investigation checklists.

Exhibit [9.5] 12-1  (04/30/99)
Formal Conference (Chart)

Exhibit [9.5] 12-2  (04/30/99)
General Pathway of an Approved Prosecution Report (Chart)

Exhibit [9.5] 12-3  (04/30/99)
Prosecution Recommendation Pathway Through District Counsel (Chart)

Exhibit [9.5] 12-4  (04/30/99)
District Counsel Disagreement Process Concerning Prosecution Recommendations

Exhibit [9.5] 12-5  (04/30/99)
Succeeding Levels of Review to Protest District Counsel Declination

Exhibit [9.5] 12-6  (04/30/99)
Pathway for Prosecution Reports--Money Laundering, OCDETF, & Certain Arrests

Exhibit [9.5] 12-7  (04/30/99)
Pathway for Prosecution Reports--Trust Fund, Forcible Rescue, Special Excise, & Perjury

Exhibit [9.5] 12-8  (04/30/99)
Pathway for Prosecution Reports--60501 and Simultaneous Pleas

Exhibit [9.5] 12-9  (04/30/99)
Transmittal Memorandum--District Counsel for an Administrative Investigation

Exhibit [9.5] 12-10  (04/30/99)
Transmittal Memorandum--District Counsel for a Grand Jury Investigation

Exhibit [9.5] 12-11  (04/30/99)
Transmittal Investigation--United States Attorney

Exhibit [9.5] 12-12  (04/30/99)
Transmittal Memorandum--Collection or Examination

Exhibit [9.5] 12-13  (04/30/99)
Notification Letter to the Principal

Exhibit [9.5] 12-14  (04/30/99)
Prosecution Report Checklist

Exhibit [9.5] 12-15  (04/30/99)
Grand Jury Prosecution Report Checklist

Exhibit [9.5] 12-16  (04/30/99)
Pathway of a Discontinued Investigation (Chart)

Exhibit [9.5] 12-17  (04/30/99)
Discontinued Subject Investigation Checklist

Exhibit [9.5] 12-18  (04/30/99)
Discontinued Grand Jury Checklist--Title 26 & 18 USC 286, 287, & 371

Exhibit [9.5] 12-19  (04/30/99)
Discontinued Grand Jury Investigaion Checklist--Money Laundering

Internal Revenue Manual  

Hndbk. 9.5 Chap. 12 Formal Conferences and Processing Completed Criminal Investigation Reports

  (04-30-1999)


05/02/2001 14:28:39 EST