Mission. The mission of the Office of Fraud Enforcement (OFE) is to promote compliance by strengthening the IRS’ response to fraud and by mitigating emerging threats. This includes:

OFE builds strong internal and external partnerships and serves as the primary civil liaison to IRS-Criminal Investigation. By supporting cases throughout the life cycle and through full consideration of available treatments, OFE facilitates optimal disposition of cases with civil or criminal fraud potential.

Purpose. The purpose of this section is to address grand jury investigations.

Audience. IRS servicewide employees and CI.

Policy Owner. Director, Office of Fraud Enforcement (OFE) of the Small Business Self Employed (SB/SE) Division.

Program Owner. OFE, Policy, SB/SE.

Primary Stakeholders. The primary stakeholders are IRS compliance and CI.

The IRS may request the use of a grand jury either before, during, or after conducting an administrative investigation. A grand jury may normally be requested whenever:

Criminal Investigation (CI) may request a grand jury investigation by referring the matter to the Department of Justice (DOJ), Tax Division or an investigation may be initiated by the U.S. Attorney's Office, which requests the assistance of the IRS.

By Federal Rules of Criminal Procedure, Rule 6(e), information transpired during a grand jury investigation proceeding is secret and cannot be disclosed or used in any civil proceeding.

When CI initiates a grand jury investigation which has not been referred by a civil compliance function or when the grand jury was initiated by the DOJ, the special agent (SA) must determine if any civil action is being taken or planned. The SA will complete and submit Form 14584, IRS - Criminal Investigation - Check for and Suspend Civil Activity Notification, to the civil business operating divisions for deconfliction. Upon receipt of notification, taxpayer contact must immediately cease on tax years currently under examination/collection activity unless a parallel investigation is authorized.

When an existing administrative criminal investigation, either with or without an assigned cooperating compliance employee, becomes an approved grand jury investigation, CI will send a Notice of Department of Justice Referral memorandum to TS, Advisory, and the civil business operating divisions to initiate suspense action. Upon receipt of such notification:

The examiner will prepare an unagreed income tax examination changes report, identifying only known and supportable adjustments and applicable penalties. See IRM 4.8.11.3.4, Review of Cases Submitted to Fraud or Grand Jury Suspense. Workpapers should reflect the results of the examination, as far as it has progressed, and support all known applicable adjustments and penalties. All workpapers and documentation in the case file must reflect the dates of receipt or preparation which must precede the acceptance date by the grand jury. If additional documents are gathered by Examination or Collection between the date of the grand jury's commencement and the date when Examination or Collection was notified about the grand jury proceedings, those documents should be included in the file, but separately marked. In addition, the transmittal memorandum must include a statement about the existence of additional documents and the date(s) they were collected. Additional information on grand jury suspense can be found in IRM 4.8.11.3.3, Initial Receipt of Fraud and Grand Jury Cases for Suspense in Technical Services.

The examiner should be aware that Criminal Investigation may require the agent to provide original documentation to the SA prior to closing the civil case to grand jury. Original documentation may include any summonsed documentation, third-party correspondence, interviews and agent workpapers. If the SA requires original documentation, the case agent should scan or make a copy of the information prior to giving it to the SA.

The agent should not write on, or alter, original documentation. Summonsed items or original documents should be date stamped on the envelope or other area that is not on the original documentation. Items that should be kept in a confidential envelope with a TD F 15-05.11, Sensitive But Unclassified (SBU) Cover Sheet, attached to the confidential envelope and be kept separate from Form 4665. Sensitive documents could include, but are not limited to: TECS reports, Passport requests, Form 10509, FinCEN Query and Form 10509-A, FinCEN Query SAR Request.

The examiner will also prepare Form 4665, as explained in IRM 25.1.4.4.10(6), Preparation of the Pre-Prosecution Report, except the transmittal should not be labeled "Pre-Prosecution Report."

After receiving notification of the grand jury investigation, the examiner should not establish Audit Information Management Systems (AIMS) controls for prior or subsequent periods, including any related entities. The related entities should be addressed in the workpapers and/or T Letter.

Prior to forwarding the case for grand jury suspense, the examiner must ensure all open statutes of limitation are protected and a minimum of one year remains on the statute for each open return. If there is less than 1 year remaining on the statute for any open year, Form 10498-B, Intent to Commence Civil Action - Statute Protection, must be secured.

If the target of a grand jury investigation is not currently under examination/collection activity, AIMS controls should not be established and statute protection is not the responsibility of examination or collection.

After closing the civil case to suspense, the cooperating agent’s role will change to a grand jury agent. See IRM 25.1.5.4 Cooperating Grand Jury Examiner/Revenue Officer Procedures.

Civil information may be used when the case is returned to the field for civil resolution. The information must either be a matter of public record, or be obtained prior to convening the grand jury. One of the most important responsibilities of the cooperating grand jury examiner/revenue officer is to ensure this information is provided to the field.

If a taxpayer files a delinquent or amended return during a grand jury investigation, the assigned cooperating examiner/revenue officer must discuss such filing with the assigned SA. The assigned SA must provide written guidance to the cooperating examiner/revenue officer whether or not any tax shown on such return should be immediately assessed. If the SA determines that such an assessment may jeopardize the criminal case, then the SA should advise the cooperating examiner/revenue officer to not make the assessment at that time. At a minimum, however, the cooperating examiner/revenue officer must update the statute for assessment on AIMS to reflect receipt of the delinquent return and insure transaction codes are reflected on master file to reflect the receipt of an amended or delinquent tax return.

The quarterly conference requirement:

See IRM 25.1.4.4.1, Conduct of the Cooperating Compliance Employee, for guidance on the proper conduct of a cooperating compliance employee during a criminal tax case.

There are generally four critical stages of the cooperating grand jury examiner's/revenue officer's involvement in the grand jury investigation and subsequent criminal proceedings. During these stages pertinent civil assessment information (specific tax information, including the sources of income for each year under investigation) or collection information, with respect to the taxpayer's ability to pay a tax that is due and owing, may be developed and preserved. During these four stages, the cooperating grand jury examiner/revenue officer should identify and secure pre-grand jury information and grand jury information that is a matter of public record. The cooperating grand jury examiner/revenue officer must take action to preserve all non-grand jury information for the subsequent civil resolution of the case.

The cooperating grand jury examiner/revenue officer is responsible for assembling and forwarding documents and evidence, necessary for a civil tax closing of a grand jury investigation, to the SA and for association with Form 13308, Criminal Investigation Closing Report (Tax and Tax related Only). The cooperating grand jury examiner/revenue officer, in preparing to close the case after the grand jury investigation, should complete the following actions:

The completed information item package must be associated with Form 13308 and forwarded through the Supervisory Special Agent (SSA) to TS/Advisory and any appropriate civil business operating divisions for civil disposition. TS/Advisory and any appropriate civil business operating divisions will forward the Form 13308 information package and a memorandum notifying the initiating group (if any) that the civil case cannot be assigned to any employee "tainted" by grand jury information. In other words, the case must be assigned to an examiner/revenue officer whose name was not on the 6(e) list or who was not privy to grand jury information; and to another group, if the name of the group manager was on the 6(e) list or if the group manager was privy to grand jury information.

IRS relinquishes control of a grand jury case to the AUSA. The cooperating grand jury examiner/revenue officer assists the AUSA with the consideration, resolution and review of technical issues related to the criminal charges being investigated. This assistance includes (but is not limited to) being familiar with tax law, schemes, civil investigative techniques, interviews, as well as plea and proffer meetings with various parties.

Evidence obtained during a grand jury investigation is protected under the secrecy provisions of Rule 6(e) of the Federal Rules of Criminal Procedure. Therefore, in a civil case, the cooperating grand jury examiner/revenue officer cannot disclose any information obtained by the grand jury, unless that grand jury information has been made a matter of public record.

The cooperating grand jury examiner/revenue officer assigned to a grand jury investigation is "tainted" and therefore prohibited from any subsequent civil examination/collection action. This also applies to a group manager that has access to grand jury information.

Examiner’s time should be charged to the applicable activity code:

During a grand jury investigation, the cooperating grand jury examiner/revenue officer should be identified as an assistant to the AUSA and not an IRS employee. IRS credentials may only be used for identification purposes. The grand jury examiner/revenue officer may be involved in interviews, plea agreements and court proceedings.

Grand jury materials should be kept in a secured workspace, inaccessible to others who do not have grand jury authorization from the AUSA.

The cooperating grand jury examiner's/revenue officer's workpapers will be part of the Cl grand jury files. The files will not be available for the civil examination/collection activity without a release of grand jury materials pursuant to a Rule 6(e) court order. Workpapers, however, that have been admitted through a court proceeding are available for use in any subsequent civil examination/collection action. The grand jury examiner/revenue officer should be aware that all emails, correspondence, activity records and other items can be provided to the defense or presented in court. Personal opinions, comments and items that are non-factual should be excluded from any documents.

Upon completion of the grand jury investigation, cases open in an Examination group when the grand jury was initiated will be released by TS from grand jury suspense and returned to the field for civil case resolution with a memorandum explaining the required procedures. Collection cases will be released from Advisory with a memorandum explaining the civil settlement procedures for collection action. Other civil business operating divisions will release cases in suspense to the field for civil case resolution. Examiners/revenue officers who had access to grand jury information are "tainted" for civil case resolution and cannot be assigned to the case. Likewise, if the group manager had direct or indirect access to grand jury information, the case must be assigned to another manager for civil resolution. Rule 6(e) precludes the use of "matters occurring before the grand jury" in any subsequent civil action.

The civil examiner/revenue officer may use information in public record, including the search warrant, affidavit, indictment, plea agreement and other information in the court file for civil settlement purposes. As noted above, the cooperating grand jury examiner/revenue officer will gather this information during the grand jury investigation. At the conclusion of the grand jury investigation, that information will be given to the SA to attach to Form 13308 and will be forwarded to TS/Advisory and any appropriate civil business operating divisions for the civil examination case file.

The civil examiner/revenue officer may go to the courts and obtain court documentation using their credentials to identify themselves as civil compliance employees requesting information in connection with an official duty. Contact your FEA for further guidance.

Since the taxpayer may not be convicted for all years in the indictment, information available may not be complete. A Rule 6(e) order may be requested through the AUSA to disclose grand jury information when the information is needed "preliminarily to or in connection with a judicial proceeding. " There must be a "particularized need," in that, the information cannot be obtained from some other source. An IRS civil examination does not meet this requirement. There must be specific litigation, such as a tax court or district court proceeding. Once a tax case is in litigation, the civil government attorneys may obtain a Rule 6(e) order to get more information to support their case.

The touchstone of Rule 6(e)’s applicability is whether the disclosed material would "elucidate the inner workings of the grand jury. " The "inner workings" test would preclude disclosure of evidence, which tended to reveal the identity and/or testimony of witnesses, the direction of the investigation, and the deliberation of the grand jurors.

The civil examiner/revenue officer should ask Cl if they have possession of specific documents known to be non-grand jury evidence. Documents that may be requested are described in IRM 25.1.5.4(6)(d). Any non-grand jury items completed by the SA, such as Memorandum of Interviews and workpapers may also be requested by the civil examiner/revenue officer. A memorandum from the field territory manager, or its equivalent in other business units, to the Special Agent in Charge (SAC) should be prepared, providing a brief explanation of the situation and the specific documents requested.

Grand jury evidence cannot be released even when the taxpayer volunteers to execute a waiver authorizing disclosure. However, the taxpayer can furnish records in their possession even though the grand jury subpoenaed the same records.

If a court determines the IRS has improperly used grand jury material, the court may refuse to admit the evidence, reverse the burden of proof and/or require the IRS to proceed with evidence not derived from the grand jury. Further, the court may decide to dismiss the case, without prejudice, due to government misconduct. If the court determines that the IRS intentionally used grand jury material, attorney and legal fees can be awarded to the taxpayer. The examiner/officer should contact their local FEA for advice on how to obtain documentation and other non-grand jury items.