The Fifth Amendment Privilege Against Self-Incrimination and Tax Returns: Oil and Water or Peanut Butter and Jelly?
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BRYAN C. SKARLATOS is an Attorney at the law  rm of Kostelanetz & Fink, LLP in New York, New York.
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The Fifth Amendment Privilege Against Self-Incrimination and Tax Returns: Oil and Water or Peanut Butter and Jelly?
By Bryan C. Skarlatos
Tax returns require a wealth of speci c  nancial information that sometimes can be used against a taxpayer in a criminal investigation or prosecution. If a taxpayer is engaged in an illegal business, such as gambling or drugs, the disclosure that the taxpayer earns a lot of money, or has substantial assets, can be an important element of proof against the taxpayer. In less obvious cases, the fact that taxpayer will suddenly report substantial income that was not disclosed on prior returns, or will have a change of inventory valuation that will not match prior returns, or has a foreign bank account that had not been previously reported, could be used as a link in the chain of evidence leading to a tax prosecution re- lating to those prior tax returns. In such cases, taxpayers must carefully consider whether they have a Fifth Amendment privilege not to provide such incriminating information and, if so, how that privilege can be asserted.
Many cases address the assertion of the Fifth Amendment on tax returns. Some cases support the use of the privilege and others hold that no privilege applies. In extreme situations, courts have held that a taxpayer who attempted to assert the Fifth Amendment has failed to  le a proper return and may be prosecuted criminally for such failure. To understand these cases and the rules regarding the Fifth Amendment and tax returns, it is important to trace the development of the privilege through the case law.
In M.S. Sullivan,1 the Supreme Court held that the Fifth Amendment does not shield a defendant from having to  le a tax return, even if the  ling could incriminate him.  e defendant in Sullivan was engaged in the business of illegal liquor tra cking and he earned substantial income from that business, but he failed to  le a tax return.  e government prosecuted him for failure to  le.  e Supreme Court  rst held that the defendant’s income was subject to tax even though it was earned in an illegal activity.  e defendant then argued that the Fifth Amendment protected him from having to  le a tax return because the return could be used against him in a criminal prosecution for liquor tra cking to prove that he had income that he must have earned from his illegal activity.
FEBRUARY–MARCH 2016
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