Recent years have witnessed a gradual erosion of the practical distinctions between the civil and criminal investigations performed by federal administrative agencies. This trend arose naturally from a growing number of federal statutes and regulations that carry both civil and criminal penalties for their violation. Administrative agencies today wield investigative summons power almost as expansive as the grand jury subpoena power and can use that power to investigate without first deciding whether criminal or civil liability ultimately will be sought. The Internal Revenue Service (IRS) has participated to some extent in this intermingling of civil and criminal inquiry - with a corresponding increase in investigative efficiency - despite the fact that before 1982 the IRS issued summonses pursuant to a provision in the Internal Revenue Code, section 7602, that on its face gave the IRS only civil investigative authority. In the 1971 case Donaldson v. United States, however, the Supreme Court interpreted section 7602 to allow the IRS to issue summonses for criminal investigation, at least as long as there existed some valid civil purpose. The Court's decision was not surprising: investigations into tax law violations frequently contain the potential for both civil and criminal liability. It would have greatly hampered tax law enforcement had the Court forced the IRS either to ignore potentially criminal conduct or to give up its civil investigation altogether once it discovered such conduct. Donaldson, however, placed a singular limitation on the IRS's criminal investigative authority, what this Note calls the "Justice Department referral" doctrine: the IRS must cease issuing summonses for a particular case once it refers that case to the Department of Justice for criminal prosecution. No other federal agency is subject to such a restriction, as the restriction found its roots in the Court's interpretation of the unique language of section 7602.
Darius J. Mehraban,
The "Solely Criminal Purpose" Defense to the Enforcement of IRS Summonses,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol95/iss7/5