U.S. Officials Accuse IRS of Digital Espionage and Fourth Amendment Violations in Criminal Tax Investigations

[Originally Published in the California Journal of Tax Litigation (May 2013)]

By Joseph P. Wilson

Concerns about the IRS’ practice of accessing taxpayers’ emails without a warrant have led several lawmakers to make inquiries to IRS officials about the legality of the practice. The IRS had earlier indicated that it can search and seize Americans’ emails, Facebook posts, tweets and other digital communications without a warrant.

During the week of April 8, 2013, Senator Mark Udall, D-N.M., criticized the IRS, saying the recently reported comments by the IRS run counter to the Fourth Amendment and the reasonable expectation Americans have that the government will not peruse such personal information absent a warrant. In the same time period, the Chairman of the House Ways and Means Subcommittee on Oversight, Charles W. Boustany, R-La., wrote the IRS asking for the Service to release all internal communications about its email search policy. Boustany said he views the recent reports of IRS accessing taxpayers’ electronic communications as “disturbing.”

The latest query came from Senate Finance Committee member Charles E. Grassley, R- Iowa, on April 16, 2013 when acting IRS Commissioner   Steven   T.   Miller   appeared before the panel to  discuss  tax  fraud  and identity theft. Grassley pressed the IRS to account for recent media reports stating that agency internal documents say agents have the ability to access taxpayer emails without warrants, despite a court opinion to the contrary. According to the media reports the IRS takes the position that it can access taxpayer emails without a warrant under the Electronic Communication Privacy Act.

Grassley told the IRS that it has a very high burden to treat taxpayers within legal bounds and without abusive intrusion of privacy. The agency’s written materials suggest agents have the ability to access taxpayer emails without warrants. Grassley requested that the IRS explain its aggressive stance in internal documents about accessing electronic communications and whether it in fact accessed electronic  communications without search warrants and if so, when and why.

Grassley stated the Department of Justice applies a warrant-for-content requirement, which comes from the U.S. v. Warshak case from the Sixth Circuit. While the Act does allow federal agencies to obtain electronic communications from a remote computing service without a search warrant, provided they are older than 180 days, Grassley pointed out that the IRS’ position is contrary to the Sixth Circuit’s decision, where the court held that a search warrant is necessary to obtain any content of an email, regardless of age. See U.S. v. Warshak, 631 F.3d 266 (6th Cir. 2010).

In apparent response to questions from members of Congress on IRS practices regarding accessing taxpayers’ emails, the Service issued a statement on its website. The statement reads:

“Where the IRS already has an active criminal investigation and seeks to obtain the content of   emails   from   an   Internet Service Provider, we obtain a court ordered search warrant. It is not the IRS policy to seek the content of emails from ISPs in civil cases.  Respecting taxpayer rights and taxpayer privacy are cornerstone principles for the IRS. Our job is to administer the nation’s tax laws, and we do so in a way that follows the law and treats taxpayers with respect. However, to resolve any remaining confusion surrounding this issue, the IRS is reviewing its policy and guidance and will make appropriate updates.”

See http://www.irs.gov/uac/Newsroom/IRS-Statement-on-Obtaining-eMails

It will be interesting to review any policy and guidance the IRS promulgates on this issue. I have seen the IRS request emails from the taxpayer and third parties in civil cases, such as the return preparer, but not directly from ISP’s. However, if the IRS believes this information is relevant to a civil audit or collection case and the IRS does not obtain this information directly from the taxpayer, I assume the IRS can issue a summons to obtain this information from the ISP, and that the U.S. Department of Justice could enforce it in U.S. District Court, as long as the “Powell Requirements,” as determined by the Supreme Court decision in United States vs. Powell, 379 US 48 (1964), have been satisfied. I have also submitted search warrants in criminal tax criminal investigations while at the U.S. Attorney’s Office and have never seen a situation where the IRS or DOJ attempted to obtain the content of emails from an ISP without a court ordered search warrant.