In their ongoing pursuit of taxpayers who use undisclosed offshore accounts to conceal assets and evade taxation, the Internal Revenue Service and the Department of Justice have relied on regulations adopted pursuant to the Bank Secrecy Act (BSA),1 which require taxpayers to maintain certain records relating to their offshore accounts. Taxpayers in receipt of IRS summonses or grand jury subpoenas seeking such records must choose between either producing the documents and effectively conceding their violation of U.S. tax laws, or refusing to respond to the request and risking a finding of criminal contempt. Not surprisingly, many taxpayers facing this quandary have argued that the Fifth Amendment privilege against self-incrimination precludes the government from compelling them to produce the demanded records.
Over the past five years, all eight of the circuit courts of appeals to consider this issue have held that a taxpayer’s reliance on the Fifth Amendment is barred by the “required records” doctrine.2 The U.S. Supreme Court has twice declined to hear challenges to this conclusion and, in the absence of a circuit split, it seems unlikely that this widely accepted rule of law will be examined, let alone altered, in the near future.
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