Tax Investigations: What Can be Used?

The original IRS 1040 forms and all other income tax returns are highly protected by law and by the IRS. In fact, law enforcement agencies such as the FBI, Homeland Security and the Drug Enforcement Administration, just to name a few, do not have open access to tax return information.

These agencies must proceed through specific legal channels to gain access to tax return information and then they, too, must adhere to the very strict disclosure laws covering tax information.

Now, the better news. My comments above relate to the original tax returns and tax information provided directly to the IRS. Fortunately, there are many other opportunities to secure tax return information outside the protections of the IRS.

  • Any person can officially request a tax return that they signed. So a spouse or former spouse can complete the necessary paperwork to secure a copy of the original joint tax return filed with the IRS. This is commonly done in divorce proceedings where one spouse is seeking the tax returns for use in the settlement process. Business partners can also secure previously filed tax returns in the same manner provided they were a party to the corporate tax returns filed.
  • Tax return preparers normally retain copies of tax returns they prepared. Tax return preparers whether they are CPAs, Public Accountants, or commercial tax return services, can be subpoened for retained copies of tax returns and related documents.
  • Tax returns are commonly provided for loans, especially home mortgage loans (particularly in today’s market). Copies of these tax returns can be obtained through a subpoena to the bank or mortgage company or even the closing agents on the real estate sale. Mortgage brokers also retain copies of tax returns that were submitted.
  • Tax returns are many times submitted during the course of civil legal actions. Explore historical legal actions to see what documents were requested and provided.
  • Tax returns are sometimes required for insurance policies. Determine the insurance carriers and secure the documentation provided for those policies.
  • Tax returns can also be subpoened directly from the subject, although plan on a fight.
  • Anywhere business records are maintained, copies of tax returns can often times be found.
  • Safe deposit boxes have been found to contain copies of tax returns and can be accessed by any signatory on the box or even by subpoena.
  • Many tax returns are prepared by software such as TurboTax. Copies of these returns are stored on the computer used to prepare the returns. Gaining access to that computer can provide access to the tax returns.
In addition to the Federal Income Tax Returns, never overlook other tax returns such as:
  • State sales tax returns
  • State income tax returns
  • Corporate and Partnership tax returns
  • Property Tax records
  • Estate tax returns (leads to assets)
  • Intangable Tax returns and documents (state and local)
  • Research the state the individual or business is in to determine
    the taxing requirements for individuals and states

Michael McDonald is a retired IRS Criminal Investigation Division special agent, former coordinator of the South Florida Organized Crime Drug Enforcement Task Force (OCDETF) and supervisor of the South Florida High Intensity Drug Trafficking Area (HIDTA) task force.