Page 2 - The Fifth Amendment Privilege Against Self-Incrimination and Tax Returns: Oil and Water or Peanut Butter and Jelly?

The lesson from these cases is that the Fifth Amendment must be considered by any taxpayer who fears criminal prosecution before he or she les a tax return.
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PENALTIES
e Supreme Court rejected the defendant’s argument because it expanded the protection of the Fifth Amend- ment too far. e Supreme Court held that the defendant was required to le a return, and if any question on the return called for an answer that he was privileged from making, he could have asserted the Fifth Amendment to that speci c question on the return. However, he could not avoid making any return whatsoever. In so holding, the Supreme Court stated that:
Court expressly stated that “a valid claim of privilege cannot be the basis for a 72013 conviction ... .”5 It is not clear to what extent this dictum in Garner was intended to change the holding in Sullivan that the Fifth Amendment does not protect a taxpayer from ling an income tax return altogether.
e Supreme Court went on to cite its prior decision in Sullivan for the proposition that Mr. Garner could have asserted his Fifth Amendment privilege with respect to speci c questions on the tax return. e Court ulti- mately held that, to properly assert his Fifth Amendment rights, Mr. Garner had to claim the privilege at the time he prepared and led his return and his failure to do so was fatal to his claim that he was coerced into making incriminating statements. Once he voluntarily prepared and led his tax return, he could not object when it was introduced against him at trial because the information on the return was not coerced.
A few years later, in a case very similar to Garner, the Second Circuit ruled that a defendant’s tax return could be admitted into evidence against him at trial to help prove a conspiracy to distribute illegal narcotics. In Barnes,6 the Second Circuit reviewed the Sullivan and Garner decisions and held that disclosures on returns were not compelled incriminations and that the defendant could have asserted the Fifth Amendment privilege with respect to speci c questions on the return. In dictum, the Second Circuit speci cally stated that “the right to make a valid claim of privilege is available even as to the amount of a taxpayer’s income, as well as any other item on the return which could legitimately cause self-incrimination.”7 is comment by the Second Circuit may, at rst blush, appear to be contrary to the Supreme Court’s statement in Sul- livan that the refusal to state the amount of income would be an extravagant application of the Fifth Amendment. However, there is no inconsistency if one understands the Supreme Court’s statement to mean that, while as- serting the Fifth Amendment regarding the amount of income would be an expansive assertion of the privilege, it is possible that the privilege could protect the amount of income in rare cases when it is clear that the amount of income could be incriminatory.
Against this backdrop, there have been several tax pro- testor cases in which protestors have asserted the Fifth Amendment expansively throughout the return with respect to several items including the amount of income.8 In these cases, courts often hold that the protestor has not led a tax return because they have not reported the amount of income and, therefore, what they have led does not constitute a tax return. However, in these cases, the protestors appear to be using blanket assertions of the
We are not called upon to decide what, if anything, he may have withheld. Most of the items warranted no complaint. It would be an extreme if not an extrava- gant application of the Fifth Amendment to say that it authorize a man to refuse to state the amount of his income because it may have been made in a crime. But if the defendant desired to test that or any other point hould have tested in the return so that it
could circle
assed upon. He could not draw a conjurors nd the whole matter ...2
Several decades later, the Supreme Court rea rmed and clari ed its position on the Fifth Amendment as it relates to tax returns in R.D. Garner.3 Defendant, Roy Garner, was indicted for conspiracy to x horse races. At trial, over Mr. Garner’s objections, the government introduced Mr. Garner’s tax returns showing that he earned substantial income and that he listed his occupation as “professional gambler.” On Appeal, Mr. Garner argued that he was compelled to le tax returns and, therefore, any admis- sions on the returns were compelled admissions that are protected by the Fifth Amendment privilege and therefore could not be used against him.
e Supreme Court reasoned that the relevant question was whether the government had compelled Mr. Garner to incriminate himself by making disclosures on his tax return. e Court analyzed whether the law compelled Mr. Garner to le a tax return and noted that “it cannot fairly be said that taxpayers are ‘volunteers’ when they le their tax returns”4 and left open the possibility that a valid claim of privilege could be asserted as defense to a prosecution for failure to le an income tax return. In fact, the Supreme
22 JOURNAL OF TAX PRACTICE & PROCEDURE
FEBRUARY–MARCH 2016