The Wall Street Journal has an article today here with further discussion of the new HSBC initiative which I discussed earlier here. I just want to focus on one picky point in the article. The article quotes the DOJ Tax Division letter (signed by himself, Kevin Downing) as concluding with the following: "You are further advised, that you are the subject of a criminal investigation being conducted by the Tax Division."
As I discussed in a prior blog here, I question the authority of the Tax Division to conduct a criminal tax investigation. A grand jury can certainly conduct a criminal tax investigation, but I presume that, if Mr. Downing were acting as a designated attorney for the grand jury, he would have had to identify himself as doing so and stated that the investigation was a grand jury investigation. That is not what he says. So I guess he is acting, as he says, under some authority that he assumes the Tax Division has to conduct criminal tax investigations. If he is right, then I am wrong.
One other thing I do note with respect to these supposed DOJ Tax criminal tax investigations -- there seems to be a glitch in the secrecy safeguards around tax matters. Criminal tax investigations conducted by the IRS are covered by Section 6103; criminal tax investigations conducted by the grand jury are covered by Rule 6(e); criminal tax investigations conducted by the Tax Division are not covered, meaning, I suppose, that information and documents gathered in such investigations may be disseminated as DOJ Tax and its attorneys see fit. I don't think that is the right result if one considers the spirit of Section 6103 and Rule 6(e) in the context of criminal tax investigations. Which may be a good reason to question DOJ Tax's claim of authority to conduct such investigations.
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