Handbook 5
THE INVESTIGATIVE PROCESS
Chapter 15
CLOSING THE SUBJECT CRIMINAL INVESTIGATION
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Contents
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A criminal referral (requesting grand jury investigation or a criminal
prosecution) is in effect until it is terminated (see I.R.C. §
7602(c)(2)(B)). Generally, the termination of a criminal referral is accomplished
by a letter from the Department of Justice. The Department of Justice has
delegated preparation of the letter terminating the referral to the Service.
Thus, the responsibility for closing criminal investigation rests with the
referring authority.
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This chapter provides guidelines and procedures for the Chief, Criminal
Investigation (CI) to follow in closing administrative referrals, grand jury
investigations and direct referrals (i.e., investigations involving Race
Track "Ten Percenters" , arrests by special agents, and violations of Title
31 and related Title 18 offenses). This chapter also discusses the closing
of discontinued investigations - either administrative or grand jury. The
following are sections found in this chapter;
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Procedures for closing administrative investigations that have resulted in
a criminal prosecution, a plea of guilty, or nolo contendre.
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Procedures for closing grand jury investigations that have resulted in a
criminal prosecution, a plea of guilty or nolo contendere.
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Procedures for closing directly referred investigations that have resulted
in a criminal prosecution, a plea of guilty or nolo contendere.
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Procedures for closing discontinued administrative or grand jury investigations.
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Procedures for closing administrative, grand jury, and direct referral
investigations on Criminal Investigation Management System (CIMIS).
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[5] 15.2 (12-14-1998)
PROCEDURES FOR CLOSING ADMINISTRATIVE INVESTIGATIONS THAT HAVE RESULTED
IN A CRIMINAL PROSECUTION, A PLEA OF GUILTY OR NOLO CONTENDERE
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The investigative files can be made available to the IRS civil functions
for tax assessment or collection after an administrative case has been prosecuted
or after a plea of guilty or nolo contendere. The procedures to accomplish
this are outlined in paragraph (2) through (8) of this section below.
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Within 5 workdays of when the criminal phase of a case referred by Counsel
has been concluded, the Chief will ensure that a closing letter is prepared
and presented to the United States Attorney, or his or her representative,
for signature. See Exhibit 15-1.
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The closing letter must accurately summarize:
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The date and nature of the indictment or information.
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The date and result of the adjudication.
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The date and nature of the sentence imposed.
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Whether there has been appellate action, and if so, the result.
In addition, the closing letter must contain the following language:
"Pursuant to IRC 7602(c)(2)(B), this action constitutes a termination of
the referral and, as such, you are now free to seek appropriate civil action."
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The Chief will ensure the closing letter and one copy are distributed as
follows:
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The original will be mailed (hand delivered where possible) to the Counsel
office responsible for the preparation of the criminal referral letter (i.e.,
District Counsel, Regional Counsel, or Assistant Chief Counsel (Criminal
Tax)) who will be responsible for notifying CI and Examination (Collection,
where appropriate) of the U.S. Attorney's action.
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A copy will be mailed to the office of the Assistant Chief Counsel (Criminal
Tax) in all cases except where they are the recipient of the original letter.
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The United States Attorney's office will then provide the letter to IRS District
Counsel office. At that time, the civil functions are free to make assessments
and collections as appropriate and CI can provide Examination or Collection
with their investigative files.
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When the Chief, CI is formally notified by Counsel as specified above in
paragraph 3 a. of this section, the Chief shall so inform the Chief of both
district Examination and Collection functions and furnish the party who forwarded
the administrative file a copy of the Special Agent's Report (SAR).
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A summary of the outcome of the criminal investigation should be included
in the transmittal memorandum unless such information has already been furnished
by the District Counsel at the time they issued the closing letter.
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If the investigation was not conducted with the cooperation of district
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.
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[5] 15.3 (12-14-1998)
PROCEDURES FOR CLOSING GRAND JURY INVESTIGATIONS THAT HAVE RESULTED IN
A CRIMINAL PROSECUTION OR A PLEA OF GUILTY OR NOLO CONTENDERE
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When the investigative aspects of a grand jury investigation have concluded,
the special agent will prepare a final report similar to the final report
in an administrative investigation and address it to the attorney for the
government.
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If prosecution is recommended, the Chief will forward the report to Counsel
for review (except in Organized Crime and Drug Enforcement Task Force (OCDETF)
and "pure" money-laundering investigations). The special agent should prepare
separate exhibit folders for information developed during the course of the
administrative aspects of the investigation (if there were any) and for documents
governed by Rule 6(e). Grand jury information should be clearly labeled as
such and the Chief should not give copies of the report containing grand
jury information to any person not specifically on the Grand Jury Access
List.
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After criminal prosecution or plea of guilty or nolo conterdere in a grand
jury investigation, the Chief will, within 5 workdays, ensure that a closing
letter is prepared and presented to the United States Attorney, or his or
her representative, for signature (see Exhibit 15-2).
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The Chief will ensure the closing letter and one copy are distributed as
follows:
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The original will be mailed (hand delivered where possible) to the Counsel
office responsible for the preparation of the grand jury evaluation letter
(i.e., District Counsel, Regional Counsel or Assistant Chief Counsel (Criminal
Tax)), who will then be responsible for notifying CI and Examination (Collection,
where appropriate) of the U.S. Attorney's action;
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A copy will be mailed to the office of the Assistant Chief Counsel (Criminal
Tax) in all cases except where they are the recipient of the original letter.
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The closing letter must accurately summarize:
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The date and nature of the indictment or information.
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The date and result of the adjudication.
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The date and nature of the sentence imposed.
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Whether there has been appellate action, and if so, the result.
In addition, the closing letter must contain the following language: "Pursuant
to IRC 7602(c)(2)(B), this action constitutes a termination of the referral
and, as such, you are now free to seek appropriate civil action."
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The letter will be prepared in accordance with the secrecy requirements of
the Federal Rules of Criminal Procedure Rule 6(e) in that grand jury information
will not be disclosed in the letter.
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The Chief will provide a copy of the special agent's report to the Chief,
Examination Division (Collection Division, as appropriate), unless prohibited
by the Federal Rules of Criminal Procedure Rule 6(e).
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[5] 15.4 (12-14-1998)
PROCEDURES FOR CLOSING DIRECTLY REFERRED INVESTIGATIONS THAT HAVE RESULTED
IN A CRIMINAL PROSECUTION, PLEA OF GUILTY OR NOLO CONTENDRE
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A direct referral is an "Organized Crime and Drug Enforcement Task Force
(OCDETF)" or a non-Title 26 "pure" money-laundering investigation which was
directly referred to the United States Attorney's office without going through
IRS District Counsel.
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When the criminal phases of a case directly referred by CI have been concluded
through prosecution, a plea of guilty or nolo contendere, the Chief will,
within 5 workdays, ensure that a closing letter is prepared and presented
to the United States Attorney for his or her representative, for signature
(see Exhibit 15-3).
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The Chief will ensure the closing letter and one copy are distributed as
follows:
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The original will be mailed (hand delivered where possible) to the District
Director, Attn.: Chief, Examination Division (Collection Division, where
appropriate) along with a copy of the special agent's report unless prohibited
by the Federal Rules of Criminal Procedure Rule 6(e)
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A copy will be mailed to Assistant Chief Counsel (Criminal Tax).
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The closing letter must accurately summarize:
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The date and nature of the indictment or information.
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The date and result of the adjudication.
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The date and nature of the sentence imposed.
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Whether there has been appellate action and, if so, the result.
Also, the closing letter must contain the following language:
"Pursuant to IRC 7602(c)(2)(B), this action constitutes a termination of
the referral and, as such, you are now free to seek appropriate civil action."
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As discussed above in paragraph (1) of this section, a direct referral is
recognized as an "Organized Crime and Drug Enforcement Task Force (OCDETF)"
or non--Title 26 "pure" money laundering investigation which was directly
referred to the United States Attorney's office without going through IRS
District Counsel. These investigations have proceeded through the grand jury
setting; therefore, the procedures outlined above in section 14.3 of this
chapter are also applicable.
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NOTE:
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The unique characteristic of a directly-referred investigation is that the
Chief, CI, forwards the SAR directly to the United States Attorney's office.
It is then the responsibility of the United States Attorney or the Assistant
United States Attorney to get approval to prosecute the referred case from
DOJ Tax Division. (In other types of administrative and grand jury
investigations, this responsibility rests with IRS.)
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[5] 15.5 (12-14-1998)
PROCEDURES FOR CLOSING DISCONTINUED INVESTIGATIONS
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When an investigation is discontinued, the formal closing and associated
civil aspects of the case are handled differently for an administrative
investigation than for a grand jury investigation.
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Information developed during the course of an administrative tax investigation
is not subject to Federal Rules of Criminal Procedures Rule 6(e) and, therefore,
can be used by IRS civil functions in the assessment and collection of a
tax liability.
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When the Chief approves a final report discontinuing an investigation, he
or she will promptly inform the Chief of the cooperating function, in writing,
of the determination. For joint investigations initiated by referral from
a function other than the cooperating function, the Chief will notify the
referring function, by memorandum, of the disposition of the investigation.
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In a report of a discontinued investigation which is being referred to
Examination for further action, the special agent will:
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Include a section on evidence developed during the investigation that would
support or negate a recommendation of the civil fraud penalty.
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Not make a recommendation concerning civil penalties.
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Not use language that may indicate CI's position on the imposition of the
civil fraud penalty.
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In those instances where an investigation has been terminated or a criminal
referral from Examination or Collections was declined by a memorandum, a
statement should be made in the report to the effect that nothing was discussed
or occurred in the case which precludes the assertion of the civil fraud
penalty.
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In joint investigations, the withdrawal report should contain a statement
that the cooperating officer's Group Manager has been advised of the proposed
withdrawal action and concurs with it.
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The special agent will also transfer all original tax returns to Examination
with the final report.
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When the investigative aspects of a grand jury investigation have concluded,
the special agent will prepare a discontinued final report similar to the
final discontinued report in an administrative investigation and address
it to the attorney for the government.
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The Chief will forward the discontinued report to Counsel for review (except
in OCDETF and "pure" money-laundering investigations). The special agent
should prepare separate exhibit folders for information developed during
the course of the administrative aspects of the investigation (if there were
any) and for documents governed by Rule 6(e). Grand jury information should
be clearly labeled as such and the Chief should not give copies of the report
containing grand jury information to any person not specifically on the Grand
Jury Access List.
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At the conclusion of a grand jury investigation that does not result in a
criminal prosecution, the Chief will, within 5 workdays, ensure that a closing
letter is prepared and presented to the United States Attorney, or his or
her representative, for signature (see Exhibit 15-4).
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The Chief will ensure the closing letter and one copy are distributed as
follows:
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The original will be mailed (hand delivered where possible) to the District
Director, Attn.: Chief, Examination Division (Collection Division, where
appropriate), along with a copy of the SAR unless prohibited by the Federal
Rules of Criminal Procedure Rule 6(e);
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A copy will be mailed (hand delivered where possible) to the Counsel office
responsible for reviewing the grand jury request and or grand jury evaluation.
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The closing letter must contain the following language:
"Pursuant to Internal Revenue Code (IRC) 7602(c)(2)(B), this action constitutes
a termination of the referral, and as such, you are now free to seek appropriate
civil action."
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The letter will be prepared in accordance with the secrecy requirements of
the Federal Rules of Criminal Procedure Rule 6(e) in that matters occurring
before the grand jury will not be disclosed in the letter.
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Information developed during the course of a grand jury investigation typically
cannot be used by IRS in the civil assessment of tax unless a Rule 6(e) Order
has been obtained by the attorney for the government. See section 15.3 above
and Handbook 9.3, Chapter 1, in the section entitled, Grand Jury Information
and Civil Matters, for details concerning what can be disclosed and how it
is to be done.
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NOTE:
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If the SAR does not recommend prosecution against the subject(s) of the grand
jury investigation or anyone who has been submitted as the subject of the
investigation on the Form 9131, Request for Grand Jury Investigation, or
a grand jury expansion request, the special agent must notify the designated
Counsel attorney that the investigation was concluded without a prosecution
recommendation. Failure to do so leaves an open grand jury file in District
Counsel for which CI is responsible.
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[5] 15.6 (12-14-1998)
CLOSING THE ADMINISTRATIVE, DISCONTINUED, GRAND JURY AND DIRECT REFERRAL
INVESTIGATION ON CRIMINAL INVESTIGATION MANAGEMENT INFORMATION SYSTEM (CIMIS)
DATABASE
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In addition to the closing letter, prepare a Form 4930, CI
General/Primary/Subject Investigation Report, completing the item showing
the appropriate closing status code and the item stating the appropriate
reason closed code. Refer to Handbook 9.9 for details on completing the Form
4930.
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The data on Form 4930 should be inputted into CIMIS within 48 hours of closing
the investigation.
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Exhibit [5]
15-1 (12/14/98)
United States Attorney Closing Letter (To be used at the close of a criminal
case referred by Counsel to the U.S. Attorney)
(Use Appropriate
Letterhead)
District Counsel
[District]
Regional Counsel
[Region]
Assistant Chief Counsel (Criminal Tax)
Internal Revenue Service
City, State, Zip Code
RE: United States v. Doe
Criminal No.
DJ No.
Dear [Name]:
On [Date], John Doe was indicted on nine counts of preparing false returns,
in violation of I.R.C. § 7206(1). On [Date], the court sentenced Mr.
Doe to two years imprisonment with one year of supervised probation. A special
condition of probation requires Mr. Doe to give the United States Probation
Office full access to all of his financial information and he is prohibited
from engaging in the tax return preparation business during his period of
incarceration and probation.
Pursuant to I.R.C. § 7602(c)(2)(B) the above action constitutes a
termination of the referral, and as such, you are now free to seek appropriate
civil action. We have returned the exhibits in this case directly to the
special agent and are closing our files in this matter.
Sincerely,
[Name]
UNITED STATES ATTORNEY
[Name]
ASSISTANT UNITED STATES ATTORNEY
cc: Assistant Chief Counsel (Criminal Tax)
CC:CT
Room 2571,
1111 Constitution Ave., N. W.,
Washington, D.C. 20229
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Exhibit [5]
15-2 (12/14/98)
United States Attorney Closing Letter (To be used at the close of a grand
jury investigation resulting in criminal prosecution)
(Use Appropriate
Letterhead)
District Counsel
[District]
Regional Counsel
[Region]
Assistant Chief Counsel (Criminal Tax)
Internal Revenue Service
City, State, Zip Code
RE: United States v. Doe
Criminal No.
DJ No.
Dear [Name]:
On [Date], John Doe was indicted on nine counts of preparing false returns,
in violation of I.R.C. § 7206(1). On [Date], the court sentenced Mr.
Doe to two years imprisonment with one year of supervised probation. A special
condition of probation requires Mr. Doe to give the United States Probation
Office full access to all of his financial information and he is prohibited
from engaging in the tax return preparation business during his period of
incarceration and probation.
Pursuant to I.R.C. § 7602(c)(2)(B) the above action constitutes a
termination of the referral, and as such, you are now free to seek appropriate
civil action. We have returned the exhibits in this case directly to the
special agent and are closing our files in this matter.
You are reminded that Rule 6(e) of the Federal Rules of Criminal Procedure
greatly restricts the civil use of items constituting matters occurring before
the grand jury. You are invited to submit questions regarding what constitutes
such matters, and the procedures to be employed with the below named Assistant
United States Attorney or with your District Counsel.
Sincerely,
[Name]
UNITED STATES ATTORNEY
[Name]
ASSISTANT UNITED STATES ATTORNEY
cc: Assistant Chief Counsel (Criminal Tax) CC:CT
Room 2571,
1111 Constitution Ave., N. W.,
Washington, D.C. 20229
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Exhibit [5]
15-3 (12/14/98)
United States Attorney Closing Letter (to be used at the close of grand jury
investigation not resulting in criminal prosecution)
(Use Appropriate
Letterhead)
District Director
District
A ttention: Chief, Examination Division
Internal Revenue Service
City, State, Zip Code
RE: John Doe
Appropriate Investigation No.
Dear [Name]:
The above named grand jury matter has been closed by this office. As a result,
pursuant to I.R.C. § 7602(c) (2) (B) the above action constitutes a
termination of the referral, and as such, you are now free to seek appropriate
civil action. We have returned the exhibits in this case directly to the
special agent and are closing our files in this matter.
You are reminded that Rule 6(e) of the Federal Rules of Criminal Procedure
greatly restricts the civil use of items constituting matters occurring before
the grand jury. You are invited to submit questions regarding what constitutes
such matters, and the procedures to be employed with the below named Assistant
United States Attorney or with your District Counsel.
Sincerely,
[Name]
UNITED STATES ATTORNEY
[Name]
ASSISTANT UNITED STATES ATTORNEY
cc: District Counsel [District]
Regional Counsel [Region]
Assistant Chief Counsel (Criminal Tax)
CC:CT
Internal Revenue Service
City, State, Zip Code
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Exhibit [5]
15-4 (12/14/98)
United States Attorney Closing Letter (To be used at the close of a criminal
case referred directly to the U.S. Attorney)
(Use Appropriate
Letterhead)
District Director
District
Attention: Chief, Examination Division
Internal Revenue Service
City, State, Zip Code
RE: United States v. Doe
Criminal No.
DJ No.
Dear [Name]:
On [Date], John Doe was indicted on two counts of aiding and assisting in
preparing false returns, in violation of I.R.C. § 7206(1). On [Date],
the court sentenced Mr. Doe to two years imprisonment with one year of supervised
probation. A special condition of probation requires Mr. Doe to give the
United States Probation Office full access to all of his financial information
and he is prohibited from engaging in the tax return preparation business
during his period of incarceration and probation.
Pursuant to I.R.C. § 7602(c)(2)(B) the above action constitutes a
termination of the referral, and as such, you are now free to seek appropriate
civil action. We have returned the exhibits in this case directly to the
special agent and are closing our files in this matter.
Sincerely,
[Name]
UNITED STATES ATTORNEY
[Name]
ASSISTANT UNITED STATES ATTORNEY
cc: Assistant Chief Counsel (Criminal Tax)
CC:CT
Room 2571,
1111 Constitution Ave., N. W.,
Washington, D.C. 20229
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Internal Revenue Manual
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Hndbk. 5 Chap. 15 CLOSING THE SUBJECT CRIMINAL INVESTIGATION
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(12-14-1998)
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