Academic journal article Journal of Accountancy

Sole Owner Can't Use Fifth Amendment to Prevent IRS Request for Documents

Academic journal article Journal of Accountancy

Sole Owner Can't Use Fifth Amendment to Prevent IRS Request for Documents

Article excerpt

Mr. Maxey was the sole owner of Maxey & Co. P.C., a tax preparation business. He had organized the business as a corporation and was the sole shareholder. In 1996, the IRS served a summons on Maxey -- as the company's sole agent and owner -- to appear and produce specific corporate documents on the corporation's behalf. Maxey failed to appear before the IRS, which filed a petition seeking to enforce the summons. The IRS contended the requested documents were necessary to determine the accuracy of Maxey's income tax returns for 1992 to 1994, as well as to ascertain whether he had committed any criminal tax offense. The court granted the IRS motion and ordered Maxey to appear and show why the order should not be enforced.

The corporation contended Maxey, as Maxey & Co.'s sole agent and employee, was entitled to immunity and priviledge against self-incrimination under the Fifth Amendment to the U.S. Constitution. The Corporation also claimed that if a criminal prosecution was commenced against Maxey personally, evidence of his identity as the custodian of the company would prejudice his defense. …

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