On September 21, 2012, the U.S. Court of Appeals for the Fifth Circuit joined the Seventh and Ninth Circuits in holding that holders of offshore bank accounts have no recourse to the Fifth Amendment privilege against self-incrimination when the government demands that they turn over their offshore bank account records.  The full citation is In re: Grand Jury Subpoena, No. 11-20750 (5^th Cir. September 21, 2012).  The Fifth Circuit “decline[d] [the target’s] invitation to create a circuit split” with the Seventh and Ninth Circuits and reversed the District Court’s order quashing the government’s grand jury subpoena.

“The Government is now 3-0 in the circuit courts in its use of the Required Records Doctrine to pierce the Fifth Amendment’s protective veil in offshore cases,” said Jim Mastracchio, Co-Chair of BakerHostetler’s Tax Controversy Practice.  Jay Nanavati, a former Tax Division Assistant Chief added that at least according to the Southern District of California, “Not only must holders of offshore accounts produce their records, but they must go to the bank and request the records if necessary to comply with the grand jury’s subpoena for bank records.”

For more information on the government’s offshore enforcement efforts, FBAR penalties, and the IRS’s Offshore Voluntary Disclosure Program (OVDP), please contact Jim Mastracchio at (202) 861-1650 (Jmastracchio@bakerlaw.com) or Jay Nanavati, (202) 861-1747 (jnanavati@bakerlaw.com), Baker Hostetler LLP, 1050 Connecticut Ave., Washington, DC 20036 (www.bakerlaw.com).