Opinion ID: 2818141
Heading Depth: 3
Heading Rank: 3

Heading: Compliance with the Summonses Will Result

Text: in Criminal Liability The Chabots contend that compliance with the IRS’s summonses for their account records will provide a “significant link in the chain of evidence” that the government needs to prosecute them for willful failure to report overseas account(s) to the IRS. Appellant’s Br. 12. Unfortunately for the Chabots, this argument echoes the familiar yet unsuccessful arguments of other holders of foreign bank accounts who have invoked the Fifth Amendment privilege to prevent compliance with summonses for required records. See, e.g., Doe, 741 F.3d at 342–43, 353 (rejecting same argument). Courts use prong one of the required records exception to evaluate whether compliance with a recordkeeping scheme is likely to lead to criminal charges as a general matter. Doe, 741 F.3d at 349; M.H., 648 F.3d at 1074–75. If the scheme’s main purpose is to force individuals to turn over potentially incriminating evidence to be used in criminal prosecutions, the scheme is not essentially regulatory. See M.H., 648 F.3d at 1075 (concluding that § 1010.420 is essentially regulatory, in part, because the records that it requires accountholders to keep are not inherently incriminating and therefore not significant links in the chain of evidence necessary to bring criminal charges against accountholders). As discussed in further detail infra, production of the records that the IRS seeks is unlikely to lead to criminal proceedings as a general matter, because owning a bank account overseas is not an inherently criminal activity. Id. at 1074. To the extent that the Chabots argue that production of the requested account records will establish a significant link in the chain of evidence in their particular case, we are not persuaded that this precludes application of the required 10 records exception. The Fifth Amendment applies only if the compelled production is potentially self-incriminating. If producing the documents were not potentially incriminating, the Chabots would have no Fifth Amendment concerns. It is the potentially incriminating nature of production that allows the Chabots to invoke an otherwise valid Fifth Amendment privilege. It is this same potentially incriminating nature that makes the required records exception relevant to the Chabots’ account records. See Doe, 741 F.3d at 344. The Chabots’ argument appears to boil down to this: the exception to the Fifth Amendment is inapplicable if the Fifth Amendment otherwise would apply. Such an argument is nothing more than a request that the exception be abolished altogether—a request we must reject.