Taking the Fifth

Almost everyone knows the text of the Fifth Amendment to the US Constitution:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb, nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation.
[emphasis added]

Thus, in a court case (including Tax Court), you cannot be forced to testify and/or incriminate yourself.

Today, the Tax Court released a number of opinions where plaintiff’s asserted fifth amendment rights. But this doesn’t mean that you can stand mute in Tax Court and win your case. The petitioners lost all the cases.

In a criminal case, the prosecution must prove its’ case beyond a reasonable doubt. Tax Court is different. Tax Court has been set up to resolve tax disputes, not criminal matters. And, generally, the petitioner has the burden of proof, not the respondent (the IRS). “Petitioner contends that respondent generally bears the burden of proof. We disagree.” There are exceptions to this standard, notably: “If a taxpayer asserts a reasonable dispute with respect to any item of income reported on a third-party information return and the taxpayer has fully cooperated with the Secretary, the Secretary has the burden of producing reasonable and probative information concerning that deficiency in addition to such information return.” “Once there is evidence of actual receipt of funds by the taxpayer, the taxpayer has the burden of proving that all or part of those funds is not taxable.” But if you don’t assert anything, the petitioner (taxpayer) has the burden of proof.

Finally, as the Court notes, “Before trial, petitioner asserted Fifth Amendment rights against self-incrimination. However, even if petitioner’s claim were bona fide (which we need not decide), it would have no effect on petitioner’s burden of proof. See United States v. Rylander, 460 U.S. 752, 758 (1983); Petzoldt v. Commissioner, 92 T.C. 661, 684-685 (1989); Traficant v. Commissioner, 89 T.C. 501, 504 (1987), affd. 884 F.2d 258 (6th Cir. 1989).”

See:
Richardson v. Commissioner (TC Memo 2005-143);
Krohn v. Commissioner (TC Memo 2005-145);
and Howard v. Commissioner (TC Memo 2005-144)

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