Rules, Restrictions, Recordation & Registration: What IRS Special Agents Must Do With Informants in IRS Criminal Investigations
An informant is an individual who furnishes information to the Internal Revenue Service (IRS). See IRS Handbook for Special Agents 332.21. Informants are classified as anonymous, confidential sources of information, confidential informants (CI), cooperating witnesses (CW) or cooperating defendants (CD). See Internal Revenue Manual (IRM) Part 9, Chapter 4, Section 2: Sources of information, 9.4.25, 8-‐10-‐2004). The purpose for these classifications is to identify the level of approval necessary to use the informant. For instance, an informant can only be considered anonymous if two facts are met: first, he refuses to identify himself; and secondly, his identity is unknown to the IRS. (See Internal Revenue Manual 9.4.2.5.2.1, 12-‐20-‐2001). An anonymous informant can neither be paid nor work at the direction of the IRS. See Internal Revenue Manual. On the other hand, special agents are directed to follow a strict set of mechanisms for the use of any informant who either identifies himself or is identified by the IRS. See Internal Revenue Manual 9.4.2.5.4 (1), (8-‐10-‐2004).
If an IRS special utilizes an informant as a source in an IRS criminal investigation, it must “perform due diligence concerning the background of the individual who will be providing information or receiving direction from the IRS.” See Internal Revenue Manual 9.4.9.3.1.2 (10) (10-‐05-‐2007). This includes “the background, motivation, history of providing reliable information, and ability to independently corroborate testimony” of the informant. See Internal Revenue Manual 9.4.9.3.1.2 (3) (10-‐05-‐2007). Additionally, the special agent, the Special Agent in Charge, the Criminal Tax Counsel, and the attorney for the government must each separately and independently evaluate each aspect of the source. See Internal Revenue Manual 9.4.9.3.1.2 (3) (10-‐05-‐2007). Additionally, the special agent, the Special Agent in Charge, the Criminal Tax Counsel, and the attorney for the government must each separately and independently evaluate each aspect of the source. See Internal Revenue Manual 9.4.9.3.1.2 (3) (10-‐05-‐2007).
Specifically, when evaluating the potential use of an informant, the Internal Revenue Manual states the approving official should consider, at minimum, the following suitability factors to determine whether or not to authorize the use of the informant and, if so, whether certain precautions must be taken, recorded in Form 9836. See Internal Revenue Manual 9.4.2.5.4 (1), (8-‐10-‐2004). The form must detail the individual’s age, criminal history, tax filing and payment history, particularly any delinquencies, reliability and truthfulness, including any and all of the person’s motivation for conduct. See Internal Revenue Manual 9.4.2.5.4 (1), (8-‐10-‐2004). Breeden’s background made him unfit as an informant from the inception of the case, a fact that became manifestly clear as the facts developed.
When special agents believe that an individual is in a position to obtain relevant information under the direction of the IRS, or have reason to suspect the informant is motivated by financial reward for providing the information, the special agents must obtain authorization for use of the individual. See Internal Revenue Manual 9.4.2.5.4 (1), (8-‐ 10-‐2004).
The approving official must then provide the Director of Special Investigative Techniques with the following information concerning the informant’s identity: full name, any known aliases, date of birth, social security number and their activation date. The approving official will provide the names and phone numbers of the special agents controlling the informant on Form 13316. See Internal Revenue Manual 9.4.2.5.4 (1), (8-‐10-‐2004). After an evaluation of this material and the approving official authorizes the use of the individual, a registration file must separately be established for each informant. See IRM, 9.4.2.5.5.1(1), 8-‐10-‐2004). After the informant has been registered, the Special Agent must review with the informant written instructions regarding their responsibilities and relationship with the IRS. (IRM, 9.4.2.5.5.1(2), 8-‐10-‐2004). This review will be documented with Form 9831 (Approved Informant Advice) and placed in the registration file.
At a minimum the instructions must state that:
1) the informant must not engage in unlawful acts, except as specifically authorized by the special agents, and is subject to prosecution for any unauthorized, unlawful act;
2) the informant must provide truthful information at all times;
3) the informant must abide by the instructions of lawful orders;
4) the informant must not seek to take any independent action on behalf of the United States government;
5) the informant is not an employee of the United States government and may not represent himself as such;
6) the informant must not engage in witness tampering, witness intimidation, or fabrication, alteration or destruction of evidence;
7) the informant is liable for any taxes on any moneys paid to him for information or services;
8) the informant is not guaranteed any rewards, payments, or other compensation by the IRS, nor can the individual’s tax liability be abated or compromised;
9) the terms and conditions of cooperation, including any plea agreements and/or proffers, should be discussed with the cooperating defendant, his defense attorney, and the attorney for the government assigned to the investigation.
This is because few witnesses prove as unreliable as informants, and embarrassing losses and even more embarrassing wrongful prosecutions of the innocent redound with cases of inappropriately used informants, particularly problematic in tax cases.A knowledgeable IRS defense lawyer can assert, help enforce, and guard your rights in the IRS criminal investigation process at many stages of the case before it gets too far. While the past cannot guarantee the future, it is a resume worth knowing when choosing your tax defense lawyer. Barnes Law enjoys a 90% success in preventing the government from imprisoning its clients even when only hired after a fraud audit or IRS criminal investigation has commenced, while protecting your privacy in the process and limiting the amount of fines, fraud penalties, tax and interest the IRS can charge. Barnes Law is often the best investment you will ever make. Choose wisely: your freedom, your future, and your finances often depend upon it.
