41.00 OBTAINING FOREIGN EVIDENCE AND OTHER
TYPES OF ASSISTANCE FOR CRIMINAL TAX CASES

Updated June 2001

41.01 INTRODUCTION

41.02 OBTAINING FOREIGN EVIDENCE OR OTHER TYPES OF 
      ASSISTANCE UNDER MUTUAL LEGAL ASSISTANCE TREATIES
41.02[1] Background
41.02[2] MLATs Currently in Effect
41.02[3] The Extent of Tax Coverage in MLATs
41.02[4] Designation of a Central Authority to Administer the MLAT for Each Treaty Partner
41.02[5] Public Law Enforcement Purpose of MLATs
41.02[6] Matters for Which Assistance Is Available under MLATs
41.02[7] Types of Assistance Available under MLATs
41.02[8] Procedures for Making Requests for Assistance
41.02[9] Contents of a Request
41.02[10] Limitations on Use of Evidence or Information Obtained
41.02[11] Obligation to Return the Items Provided

41.03 MUTUAL LEGAL ASSISTANCE UNDER FOREIGN STATUTES WHERE NO FORMAL TREATY RELATIONSHIP EXISTS

41.04 OBTAINING FOREIGN EVIDENCE UNDER TAX INFORMATION EXCHANGE AGREEMENTS AND TAX TREATIES
41.04[1] Background
41.04[2] Tax Information Exchange Agreements (TIEAs)
41.04[3] TIEAs Currently in Effect
41.04[4] Information Exchange under Tax Treaties
41.04[5] Tax Treaties Currently in Effect
41.04[6] Scope of TIEAs and Income Tax Treaties
41.04[7] Designation of a Competent Authority to Administer TIEAs and Tax Treaties for Each Treaty Partner
41.04[8] Procedures for Making Requests For Information
41.04[9] Contents of a Request
41.04[10] Confidentiality of Information Obtained
41.04[11] Possible Problems with Exchanging Information under TIEAs and Income Tax Treaties

41.05 USING LETTERS ROGATORY AND OTHER JUDICIAL PROCEDURES TO OBTAIN EVIDENCE IN CRIMINAL TAX CASES
41.05[1] Background
41.05[2] Deposition by Stipulation, Notice, or Commission
41.05[3] Depositions by Letters Rogatory
41.05[4] Procedures for Obtaining Assistance by Letters Rogatory
41.05[5] Problems with the Letters Rogatory Process Generally
41.05[6] Specific Problems with the Letters Rogatory Process When Used in Criminal Tax Cases

41.06 USING COMPULSORY MEASURES TO OBTAIN FOREIGN EVIDENCE
41.06[1] Background
41.06[2] The Use of Subpoenas or Summonses to Obtain Foreign Evidence Directly
41.06[3] The Use of Subpoenas to Obtain Testimony of a Nonresident Temporarily in the United States
41.06[4] The Use of Compelled Directives to Obtain Disclosure of Financial Matters Covered by Foreign Secrecy Laws
41.06[5] The Use of Subpoenas Issued to United States Citizens or Residents Abroad
41.06[6] Jurisdictional Conflicts Arising from the Use of Certain Unilateral Measures

41.07 CONCLUSION

                       
                       41.01  INTRODUCTION

      This section provides a detailed analysis of the various means 
available to federal prosecutors for obtaining foreign evidence and other 
types of international assistance in criminal tax cases.  The means analyzed 
here include mutual legal assistance treaties (MLATs) and similar processes, 
tax information exchange agreements (TIEAs) and tax treaties, 
court-sponsored procedures for taking foreign depositions, including letters 
rogatory, and the use of unilateral compulsory measures, such as subpoenas, 
for obtaining foreign evidence.

      Obtaining foreign evidence and other types of international assistance 
under the various processes described here usually requires considerable 
amounts of time and can cause significant delays in an investigation or 
trial proceeding. Thus, a prosecutor should initiate seeking such evidence 
or assistance through the appropriate process as soon as possible.

      It is extremely important to remember that no United States 
investigator or prosecutor should contact foreign authorities or witnesses, 
whether by telephone or other means, or undertake foreign travel, without 
obtaining the proper clearances or authorizations.  Prosecutors under the 
jurisdiction of the Department of Justice are required to coordinate and 
clear all such contacts and travel through the Office of International 
Affairs ((202) 514-0000).

       
       41.02  OBTAINING FOREIGN EVIDENCE OR OTHER TYPES OF
       ASSISTANCE UNDER MUTUAL LEGAL ASSISTANCE TREATIES

41.02[1] Background

      Mutual Legal Assistance Treaties (MLATs) create a routine channel for 
obtaining a broad range of legal assistance for criminal matters generally, 
including, inter alia, taking testimony or statements of persons, 
providing documents and other physical evidence in a form that would be 
admissible at trial, and executing searches and seizures.  These treaties 
are concluded by the United States Department of Justice (primarily the 
Criminal Division) in conjunction with the United States Department of 
State.  An MLAT creates a contractual obligation between the treaty partners 
to render to each other assistance in criminal matters in accordance with 
the terms of the treaty. It is designed to facilitate the exchange of 
information and evidence for use in criminal investigations and 
prosecutions.  Unfortunately, while many of the MLATs currently in force 
cover most U.S. tax felonies, several others have only limited coverage, at 
best, for tax offenses. 


41.02[2] MLATs Currently in Effect

      As of  June 1, 2001, the United States has MLATs with the following 
jurisdictions: Anguilla, Antigua & Barbuda, Argentina, Australia, Austria, 
the Bahamas, Barbados, Belgium, Brazil, the British Virgin Islands, Canada, 
the Cayman Islands, the Czech Republic, Dominica, Estonia, Grenada, Hong 
Kong, Hungary, Israel, Italy, Jamaica, Latvia, Lithuania, Luxembourg, 
Mexico, Montserrat, Morocco, the Netherlands (including the Netherlands 
Antilles and Aruba), Panama, the Philippines, Poland, South Korea, Spain, 
St. Christopher and Nevis, St. Lucia, St. Vincent & the Grenadines, 
Switzerland, Thailand, Trinidad & Tobago, Turkey, the Turks and Caicos 
Islands, Ukraine, the United Kingdom, and Uruguay.


41.02[3] The Extent of Tax Coverage in MLATs

      The MLATs with Antigua & Barbuda, Argentina, Australia, Austria, 
Barbados, Belgium, Brazil, Canada, the Czech Republic, Dominica, Estonia, 
Grenada, Hong Kong, Hungary, Israel, Italy, Jamaica, Latvia, Lithuania, 
Luxembourg, Mexico, Morocco, the Netherlands (excluding the Netherlands 
Antilles and Aruba), the Philippines, Poland, South Korea, Spain, St. 
Christopher and Nevis, St. Lucia, St. Vincent & the Grenadines, Thailand, 
Trinidad & Tobago, Turkey, Ukraine, and the United Kingdom cover all 
criminal tax felonies under the Internal Revenue Code.  The remaining MLATs 
contain a variety of restrictions regarding assistance for tax offenses.  
Thus, the Swiss MLAT excludes tax and similar fiscal offenses from its scope 
except in cases involving organized crime.  However, assistance is available 
from the Swiss under one of their domestic mutual assistance statutes 
(referred to as an "IMAC") in any tax matter where a foreign tax authority 
can establish "tax fraud" as the term is used under Swiss law. Historically, 
the Swiss had considered the conduct underlying most U.S. criminal tax 
felonies as civil in nature, and establishing "tax fraud" as the term is 
used under  Swiss law had been a considerably difficult task. FN1]  
However, with the advent of the new Income Tax Treaty with Switzerland, the 
concept of tax fraud has been expanded and this expansion applies to 
requests made for mutual legal assistance under an IMAC.  See Note 1, 
supra.  The Cayman and Bahamian MLATs generally exclude offenses 
relating to tax laws except for tax matters arising from unlawful activities 
otherwise covered by the MLATs. FN2] Furthermore, each of these 
three treaties contains specific limitations on the use of evidence obtained 
for covered offenses, and, thus, evidence obtained for some other offense, 
is generally not available for tax purposes in civil or criminal 
investigations or proceedings which are subsequently conducted. FN3]


41.02[4]    Designation of a Central Authority to Administer the
            MLAT for Each Treaty Partner

      Every MLAT specifies central authorities to act on behalf of each 
treaty partner to make requests, to receive and execute requests, and to 
generally administer the treaty relationship. Under all of the MLATs to 
which the United States is a party, the central authority designated for the 
United States is the Director, Office of International Affairs (OIA), 
Criminal Division, U.S. Department of Justice.  [28 C.F.R § 0.64-1.]  
The central authority for the treaty partner is generally an entity located 
within the ministry of justice or its equivalent agency. 


41.02[5] Public Law Enforcement Purpose of MLATs

      The central authorities make requests under MLATs on behalf of law 
enforcement and judicial authorities in their respective countries who are 
legally responsible for investigating and prosecuting criminal conduct.  For 
the United States, such authorities include federal and state prosecutors, 
as well as  governmental agencies responsible for investigating criminal 
conduct,   or government agencies responsible for matters ancillary to 
criminal conduct, such as civil forfeiture.  Private parties are not 
permitted to make requests under MLATs.


41.02[6] Matters for Which Assistance Is Available under MLATs

      Assistance is available under the MLAT once an investigation or 
prosecution has been initiated by an appropriate law enforcement or judicial 
authority in the requesting state.  Thus, the United States may initiate a 
request for assistance under an MLAT when a criminal matter is at the trial 
stage, or is under investigation by (1) a prosecutor, (2) a grand jury, (3) 
an agency with criminal law enforcement responsibilities, such as the 
Criminal Investigation Division of the Internal Revenue Service, or (4) an 
agency with regulatory responsibilities, such as the Securities and Exchange 
Commission.


41.02[7] Types of Assistance Available under MLATs

      Generally, MLATs provide for the following types of assistance:

      a.    serving documents in the requested state;

      b.    locating or identifying persons or items in the requested state;

      c.    taking testimony or statements from persons in the requested 
      state;

      d.    transferring persons in custody in either state to the other for 
            testimony or other purposes deemed necessary or useful by the 
            requesting state;

      e.    providing documents, records, and articles of evidence located 
            in the requested state;

      f.    executing requests for searches and seizures in the requested 
      state;
            

      g.    immobilizing assets located in the requested state;

      h.    assisting in proceedings related to forfeiture and restitution; 
      and

      i.    any other form of assistance not prohibited by the laws of the 
            requested state.

      MLATs are specifically designed to override local laws in the 
requested states pertaining to bank secrecy and to ensure the admissibility 
in proceedings in the requesting state of the evidence obtained.  Thus, for 
example, MLATs typically contain provisions which, in conjunction with 
certain statutes, are directed at securing the admissibility of business 
records, or establishing chain of custody over an evidentiary item, without 
having to adduce the in-court testimony of a foreign witness.


41.02[8] Procedures for Making Requests for Assistance

      To make a request for assistance under a particular MLAT, a prosecutor 
or investigator should contact OIA at (202) 514-0000, request to speak to 
the attorney in charge of the country from which assistance will be 
requested, and collaborate on the preparation of the request.  Once the 
Director of OIA signs a request, it must be translated into the official 
language of the requested state, unless the particular MLAT provides 
otherwise.  The request will then be submitted in both language versions 
(English and the official language of the requested state) to the central 
authority of the requested state.


41.02[9] Contents of a Request

      Generally, MLATs require that a request contain the following 
      information:

      a.    the name of the authority conducting the investigation, 
            prosecution, or other proceeding to which the request relates;

      b.    a description of the subject matter and the nature of the 
            investigation, prosecution, or proceeding, including the 
            specific criminal offenses which relate to the matter;

      c.    a description of the evidence, information, or other assistance 
            sought; and

      d.    a statement of the purpose for which the evidence, information, 
            or other assistance is sought. 

      In addition, MLATs require that the following information be provided 
to the extent that such information is available:

      e.    information on the identity and location of any person from whom 
            evidence is sought;

      f.    information on the identity and location of a person to be 
            served, that person's relationship to the proceeding, and the 
            manner in which service is to be made;

      g.    information on the identity and whereabouts of a person to be 
            located;

      h.    a precise description of the place or person to be searched and 
            of the items to be seized;

      i.    a description of the manner in which any testimony or statement 
            is to be taken and recorded;

      j.    a list of questions to be asked of a witness;

      k.    a description of any particular procedure to be followed in 
            executing the request;

      l.    information as to the allowances and expenses to which a person 
            asked to appear in the requesting state will be entitled; and

      m.    any other information which may be brought to the attention of 
            the requested state to facilitate execution of the request.


41.02[10] Limitations on Use of Evidence or Information Obtained

      Generally, MLATs have provisions resticting the use of information or 
evidence furnished under their provisions, including conditions of 
confidentiality.  Accordingly, the law enforcement authorities of the 
requesting state must comply with these restrictions in using the 
information or evidence in the course of an investigation or prosecution.  
Although some MLATs are more restrictive, generally, once the information or 
evidence properly used in the investigation or prosecution becomes a matter 
of public record in the requesting state, it may be used for any purpose.


41.02[11] Obligation to Return the Items Provided

      Generally, MLATs provide that all original documents, records, or 
articles of evidence provided pursuant to an MLAT request must be returned 
as soon as possible to the state providing such items unless that state 
waives the right to have the items returned.  Items are typically returned 
by the prosecutor through the central authority.  Generally, copies of 
documents provided under an MLAT need not be returned unless the state which 
provides such copies specifically requests their return.    

 
 41.03  MUTUAL LEGAL ASSISTANCE UNDER FOREIGN STATUTES WHERE NO FORMAL 
        TREATY RELATIONSHIP EXISTS

      New effective approaches have been recently developed for obtaining 
assistance from countries with which the U.S. has no MLAT relationship.   As 
a result, letters rogatory issued by a court are no longer the exclusive 
means of securing formal legal assistance from a country with which the 
United States has no MLAT relationship.  Thus, there are a number of 
non-Mutual Legal Assistance Treaty countries with which OIA has established 
a practice of making and receiving formal legal assistance requests, dealing 
directly with its counterpart office in the foreign ministry of justice. 

      Such requests typically follow a format similar to that employed under 
MLATs, and are sometimes referred to as "MLAT-Type" requests.  Legal 
assistance in these circumstances is provided to the extent permitted by 
relevant domestic legislation.  Countries in this category include Ireland, 
Japan, New Zealand, Channel Islands, Isle of Man, and Liechtenstein.  
Contact the appropriate OIA Team at (202) 514-0000 for further details.

   
   41.04 OBTAINING FOREIGN EVIDENCE UNDER TAX INFORMATION EXCHANGE 
   AGREEMENTS AND TAX TREATIES

41.04[1] Background

      Tax information exchange agreements (TIEAs) and income tax treaties 
constitute bases for obtaining foreign-based documents and testimony, often 
in admissible form, for criminal and civil tax cases and investigations.  
These pacts are concluded by the United States Department of Treasury, with 
the assistance of the Internal Revenue Service and the Tax Division of the 
Department of Justice, and are administered by the Director, International, 
of the IRS.  For the purposes of obtaining foreign evidence, TIEAs are more 
specialized and effective than tax treaties. 


41.04[2] Tax Information Exchange Agreements (TIEAs)

      TIEAs are agreements which specifically provide for mutual assistance 
in criminal and civil tax investigations and proceedings.  This assistance 
comprises obtaining foreign-based documents, including bank records, and 
testimony in admissible form.  TIEAs are statutory creatures of the Internal 
Revenue Code. See 26 U.S.C. §§ 274(h)(6)(C) and 927(e).  
This statutory framework initially authorized the Secretary of the Treasury 
Department to conclude agreements with countries in the Caribbean Basin 
(thereby qualifying such countries for certain benefits under the Caribbean 
Basin Initiative), but later expanded this authority to conclude TIEAs with 
any country.


41.04[3] TIEAs Currently in Effect

      As of June 1, 2001, the United States had TIEAs in effect with the 
following countries:  Barbados, Bermuda, Costa Rica, Dominica, the Dominican 
Republic, Grenada, Guyana, Honduras, Jamaica, Marshall Islands, Mexico, 
Peru, St. Lucia, and Trinidad & Tobago. FN4]


41.04[4] Information Exchange under Tax Treaties

      The United States has income tax treaties with more than 50 countries 
in the world.  There are two principal purposes of these treaties:  (1) to 
reduce or eliminate double taxation of income earned by residents of either 
country from sources within the other country; and (2) to prevent avoidance 
and evasion of the income taxes of the two countries party to the treaty.  
To address the latter purpose, almost all U.S. income tax treaties contain a 
provision for exchanging information, similar in concept to TIEAs.  The 
Treasury Department places great importance on information exchange in these 
tax treaties and will not enter into a treaty relationship with any country 
that cannot meet the minimum standards of information exchange. 


41.04[5] Tax Treaties Currently in Effect

      As of June1, 2001, the United States had income tax treaties in force 
-- including exchange of information provisions -- with the following 
countries: Australia, Austria, Barbados, Belgium, Bermuda, Canada, China, 
Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, 
Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, 
Japan, Kazakhstan, South Korea, Latvia, Lithuania, Luxembourg, Mexico, 
Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, 
Portugal, Romania, Russia, Slovak Republic, South Africa, Spain, Sweden, 
Switzerland, Thailand, Trinidad & Tobago, Tunisia, Turkey, Ukraine, the 
United Kingdom, and Venezuela.  

      The Treasury Department is very active in the negotiation of new 
income tax treaties, as well as the renegotiation of income tax treaties 
currently in force. Thus, new treaty partners should be added to this list 
regularly.


41.04[6] Scope of TIEAs and Income Tax Treaties

      Under most of the TIEAs and tax treaties to which the United States is 
a party, requests for assistance may be made for any civil or criminal tax 
investigation or proceeding regarding any tax year not barred by the statute 
of limitations of the state seeking the information.


41.04[7]    Designation of a Competent Authority to Administer TIEAs and 
            Tax Treaties for Each Treaty Partner

      Every TIEA and tax treaty specifies competent authorities to act on 
behalf of each treaty partner to make requests, to receive and execute 
requests, and to administer generally the treaty relationship.  The 
Director, International (DI), Internal Revenue Service, has been designated 
to act as the Competent Authority for exchanging information under TIEAs and 
tax treaties under the authority of the Secretary of Treasury.  The specific 
office acting under the direction of the DI to make and receive requests for 
information under TIEAs and income tax treaties is the Exchange of 
Information Team.  The competent authority for the treaty partner is 
generally an entity located within the ministry of finance or its equivalent 
agency.  


41.04[8] Procedures for Making Requests For Information

      If you wish to explore making a request for evidence or information 
under a TIEA or tax treaty, simply call the general number for the Exchange 
of Information Team ((202) 874-1624) in the Office of the DI and ask to 
speak to the Exchange Analyst who is responsible for the country where the 
information is located.  Usually, the investigator or prosecutor in charge 
of the case will draft the initial version of the request and forward this 
draft to the Exchange Analyst, or the Revenue Service Representative (RSR) 
in charge of the country where the information is located, FN5]  for 
review.  Subsequently, the request is formalized and sent to the foreign 
Competent Authority for execution.


41.04[9] Contents of a Request

      A request under a TIEA or income tax treaty should contain, 
inter alia, the following:

      a.    The taxpayer's (defendant's) name and address, and, if 
            applicable, social security number, place and date of birth, and 
            whether the taxpayer is a citizen of the United States;

      b.    The names and addresses of pertinent entities affiliated with 
            the taxpayer and the nature of such affiliations;

      c.    A brief resume of the case with particular reference to the tax 
            issues; 

      d.    A detailed statement of the information sought and why it is 
      needed;

      e.    A statement of the efforts made to secure the desired 
            information prior to the request and why the efforts were not 
            successful (including comment on any relevant data supplied by 
            the taxpayer and the reasons for considering such data 
            inadequate);

      f.    If the records of a foreign affiliate of the taxpayer are to be 
            examined, the name and address of the custodian of the records 
            and a document authorizing the custodian to permit the 
            examination or an explanation as to why the authorization was 
            not obtained;

      g.    All pertinent names, addresses, leads, and other  information 
            that may be helpful in complying with the request; and

      h.    Requests for bank account information should specify the branch.

      To the extent known, the following information should also be 
transmitted with the request:

      i.    Date upon which a response is required (e.g., for statute 
            of limitations purposes) or any other facts indicating the 
            urgency of the information;

      j.    Information concerning the importance of the case and any other 
            facts which make the case unusual or worthy of preferential 
            treatment; and

      k.    The taxable years and approximate tax liability or additional 
            income involved.  


41.04[10] Confidentiality of Information Obtained

      All of our TIEAs, and virtually all of our tax treaties, currently in 
effect contain language requiring that information obtained under such 
agreements be used only for tax purposes. Obviously, such language can raise 
troublesome issues for a prosecutor conducting a grand jury investigation 
directed at both tax and non-tax crimes.  Indeed, recently certain treaty 
partners have resisted executing requests for information made in such cases 
based on their view that the obligation of confidentiality forbids use by a 
grand jury considering non-tax crimes.  To address this situation, the 
Treasury Department and the Justice Department jointly decided to undertake 
using cautionary instructions to the grand and petit juries in such cases. 

      Under this approach, the prosecutor would caution the grand jury, as 
would the trial judge the petit jury, that the evidence obtained under the 
tax agreement could not be utilized to draw inferences of guilt regarding 
the non-tax offenses.  This approach would also require the trial judge to 
ignore the evidence for the purposes of a defendant's motion to dismiss 
under Fed. R. Crim. P. 29.


41.04[11]   Possible Problems with Exchanging Information under TIEAs and 
            Income Tax Treaties

      Although exchanging information under TIEAs and tax treaties has been 
relatively successful, there are a variety of problems which can arise.  For 
example, officials of some countries having civil law systems balk at 
executing tax treaty requests in criminal tax cases, especially those 
arising from grand jury investigations.  This hesistancy arises from the 
belief that tax treaties, which they consider to be part of an 
administrative governmental process, should not be used for 
judicial matters. This problem can be aggravated where non-tax 
offenses are also under investigation, given the ever-present provision in 
these agreements dealing with confidentiality.  See 41.04[10], 
supra.  Also, certain countries will provide treaty partners only 
with information which currently exists in their tax files regarding a given 
taxpayer, and will not undertake to gather information from other sources, 
including third parties.  Finally, some treaty partners, even if they will 
undertake to gather information from sources other than their tax files, 
will not obtain and provide financial information, such as bank records, 
because of bank secrecy laws. 

 
    41.05  USING LETTERS ROGATORY AND OTHER JUDICIAL PROCEDURES TO OBTAIN 
           EVIDENCE IN CRIMINAL TAX CASES

41.05[1] Background

      Before the advent of tax treaties, MLATs, TIEAs, and other types of 
mutual assistance agreements, law enforcement authorities (just as private 
litigants) primarily relied upon deposition by stipulation, deposition by 
notice, deposition by commission, and letters rogatory, all judicially 
sponsored procedures, to obtain evidence abroad in both civil and criminal 
cases.  See Fed. R. Crim. P. 15.  This section briefly explores the 
basics of these various procedures and their limitations, especially in 
criminal tax cases.


41.05[2] Deposition by Stipulation, Notice, or Commission

      There are three types of procedures under which a U.S. prosecutor can 
obtain foreign source testimony without the assistance of foreign 
authorities, assuming the witness is willing to testify voluntarily and the 
foreign country's laws do not prohibit the litigant's taking of that 
testimony.  

      First, the parties to the litigation may agree to take testimony 
abroad by stipulation.  See Fed. R. Crim. P. 15(g).  Under this 
procedure, the parties simply agree as to the necessary circumstances of the 
deposition, i.e., the official before whom the testimony will be 
taken, the time and place of the deposition, the type of notice to be given, 
the manner in which the deposition is to be conducted.   If the parties can 
so agree, the stipulation procedure is the most expeditious method of taking 
foreign testimony. 

      Second, a litigant may take a foreign deposition by notice.  
See Fed. R. Crim. P. 15(d), providing that depositions in criminal 
matters shall be taken and filed in the same manner as civil actions (as 
provided for in Fed. R. Civ. P. 28(g)).  Under this procedure, the moving 
party may arrange a deposition "on notice before a person authorized to 
administer oaths in the place in which the examination is [to be] held, 
either by the law thereof or by the law of the United States,..."  Fed. R. 
Civ. P. 28(b)(1).  This party must make the necessary arrangements for the 
deposition, such as assuring the presence of the witness, scheduling the 
services of an appropriate foreign official, a reporter for the transcript, 
and, if necessary, an interpreter. 

      Third, a litigant may take a foreign deposition by commission.  
See Fed. R. Crim. P. 15(d), providing that depositions in criminal 
matters shall be taken and filed in the same manner as civil actions (as 
provided for in Fed. R. Civ. P. 28(g)).  Under this procedure, the moving 
party may arrange a deposition "before a person commissioned by the court, 
and a person so commissioned shall have the power by virtue of the 
commission to administer any necessary oath and take testimony,..."  Fed R. 
Civ. P. 28(b)(2).  This procedure is similar to the notice procedure except 
that the court appoints the person, i.e., the commissioner, before 
whom the deposition is to be taken. 

      Each of these procedures is available to United States prosecutors 
handling criminal tax cases, FN6] but, as mentioned above, only 
where the foreign-based witness voluntarily submits to the deposition and 
the particular country does not object to the evidence taking within its 
borders.  The latter condition becomes prohibitive if the state in question 
is a civil law country.  Such jurisdictions are inclined to regard evidence 
taking by any person other than their own legal authorities as violative of 
their sovereignty.  Where such circumstances bar any of these three 
approaches and no treaties or agreements for assistance are available, the 
last resort is usually to a letter rogatory to obtain evidence abroad.


41.05[3] Depositions by Letters Rogatory

      The traditional method used by United States litigants to enlist the 
assistance of foreign authorities to obtain evidence abroad, in both civil 
and criminal cases, is a letter rogatory, also known as a letter of request. 

      Basically, a letter rogatory is a formal request from a court, in 
which an action is pending, to a foreign court to perform some judicial act.  
If the foreign court honors the request, it does so based on comity rather 
than any sort of strict obligation.  As this definition suggests, a letter 
rogatory can usually only be used in a proceeding which has actually 
commenced, such as in the post-indictment stages of a criminal case or the 
post-complaint stages of a civil case, but this is not an iron-clad rule. 
FN7]  The route of a letter rogatory is quite circuitous and 
involves many diverse entities in an uncoordinated process.  Typically, a 
litigant initiates the process by applying to the court, before which the 
particular action is pending, for the issuance of a letter rogatory, 
supporting the application with a set of complicated and formalistic 
pleadings. 

      Upon signature by the court, the letter rogatory must be transmitted 
through diplomatic channels, which involves not only the U.S. State 
Department but also the foreign ministry of the country involved.  The 
foreign ministry delivers the request to the country's ministry of justice, 
which in turn delivers it to the foreign court originally contemplated to 
execute the letter request. If the request is successfully executed, the 
evidence must retrace the path of the request.


41.05[4] Procedures for Obtaining Assistance by Letters Rogatory

      The procedures for utilizing the letters rogatory process, once a 
prosecutor has secured the court's leave to do so under Fed. R. Crim. P. 15, 
are not as well defined and standardized as those for obtaining assistance 
under MLATs, TIEAs, and tax treaties.  For example, the channel for sending 
a "letter request" (the term often employed for a letter rogatory request, 
especially for the countries following the common law system of the United 
Kingdom) to certain countries is the State Department, as generally 
described above.  However, for certain countries, such as the United Kingdom 
and Hong Kong, OIA has developed an expedited channel for transmitting 
letter requests, so that certain stopping points along the way of the 
traditional channel have been eliminated, thereby speeding up the overall 
process.

      Also, the form of the letter request can vary according to the country 
of destination.  Thus, the best approach for initiating a letter request is 
to follow the initial phase of the MLAT procedure, namely, contact OIA 
(202-514-0000) and request to speak to the attorney in charge of the country 
from which assistance is sought.


41.05[5] Problems with the Letters Rogatory Process Generally

      While the letter rogatory procedure is the traditional method of 
obtaining assistance abroad, it is certainly not without its flaws.  Thus, 
there is no obligation that the foreign country honor the request; the 
foreign country's enabling legislation, if any, may not provide any 
exceptions to that country's bank secrecy laws; there are no mutually agreed 
upon procedures which ensure the obtaining of evidence in admissible form; 
the multiple stages of the process, involving diverse entities, generate 
serious time delays; and, the procedure may not be available at all crucial 
stages of a proceeding, e.g., the investigation of a criminal 
offense, where it may be needed most.  To address these critical problems, 
law enforcement authorities developed new methods to gather foreign 
evidence, such as the MLAT.


41.05[6]    Specific Problems with the Letters Rogatory Process When
            Used in Criminal Tax Cases

      In addition to the problems which afflict the letters rogatory process 
generally, prosecutors seeking to obtain foreign evidence through this 
process for tax cases may face a unique roadblock in jurisdictions following 
the common law tradition of the United Kingdom. FN8]  This possible 
obstacle is the international rule of comity that one nation will not 
directly or indirectly enforce the revenue laws of another nation.  

      In its most basic form, the rule is that the courts of one country 
will not enforce a judgment for taxes issued by the court of another 
country. FN9]  The rule seems to have originated in two opinions of 
Lord Mansfield in 1775 and 1779. FN10]  However, the modern bedrock 
of the rule seems to be the House of Lords' decision in Government of 
India v. Taylor, [1955] 2 W.L.R. 303 (hereinafter India v. 
Taylor), FN11] where the tax authorities of India sued to 
collect moneys in the United Kingdom based on a tax judgment issued by an 
Indian court.  While most common law jurisdictions, including the United 
States, seem to accept this basic form of the rule as elementary and without 
dispute, FN12] its application beyond this realm has varied.   In 
one of its broader forms, the rule prohibits one country from granting 
another country's request for information or evidence for any tax-related 
proceeding in the requesting country, either in a civil  or criminal  
matter. 

      In any event, until the decision was overturned, there had been 
serious fallout from the decision of the United Kingdom Court of Appeal in 
In re State of Norway's Application, [1987] 1 Q.B. 433 (C.A.), where 
that Court construed the rule to operate in the broader sense.  Thus, the 
United Kingdom and the common law countries which follow its legal precedent 
were rejecting the letter rogatory requests of U.S. tax authorities based on 
the dicta in that decision.  Fortunately for U.S. prosecutors seeking 
foreign evidence in tax cases, the House of Lords, the highest court of the 
United Kingdom, reversed the Court of Appeal in In re State of Norway's 
Application, [1989] 1 A.C. 723 (consolidated appeals and cross appeals), 
holding that simply providing evidence to another state for that state to 
use to enforce its revenue laws does not constitute the direct or indirect 
enforcement of another state's revenue laws.  This decision should 
dramatically enhance mutual assistance from countries following English 
Common Law in civil and criminal tax cases, especially between governmental 
authorities.

   
   41.06 USING COMPULSORY MEASURES TO OBTAIN FOREIGN EVIDENCE

41.06[1] Background

      The United States tax authorities do not always have an effective 
mutual assistance means available to them for obtaining evidence abroad.  
For example, in a "pure tax" case involving evidence in the Cayman Islands 
or the Bahamas, United States authorities cannot use a tax treaty,  and the 
current MLATs with these countries exclude assistance for pure fiscal 
matters from their scope. Thus, the United States may have to resort to 
unilateral action, such as a subpoena, to obtain the needed evidence.  The 
various types of unilateral compulsory process which can be directed at 
obtaining foreign-based evidence will now be explored.


41.06[2] The Use of Subpoenas or Summonses to Obtain Foreign 
         Evidence Directly

      One form of process used by government attorneys to obtain evidence 
abroad is the subpoena power applied directly to a domestically-based entity 
having some relationship to the foreign-based entity holding the records.   
If a Department of Justice attorney, or an Assistant United States Attorney, 
wants to use a grand jury or criminal trial subpoena to obtain evidence 
located in a foreign country, the prosecutor must obtain the concurrence of 
the OIA, Criminal Division, before both issuing and enforcing such subpoena.   
In determining whether to concur in such actions, OIA considers the 
following factors:  (1) the availability of alternative methods for 
obtaining the records in a timely manner, such as use of mutual assistance 
treaties, tax treaties or letters rogatory; (2) the indispensability of the 
records to the success of the investigation or prosecution; and (3) the need 
to protect against the destruction of records located abroad and to protect 
the United States' ability to prosecute for contempt or obstruction of 
justice for such destruction.   Once the concurrence of OIA to issue and 
enforce a subpoena for foreign records has been obtained, the prosecutor 
will then be required to plead a so-called comity analysis and the 
enforcement court will be required to balance the comity factors in favor of 
the government before the subpoena can be properly enforced. 


41.06[3] The Use of Subpoenas to Obtain Testimony of a Nonresident
         Temporarily in the United States

      Prosecutors assisting federal grand juries in their investigations can 
subpoena critical witnesses, such as foreign bankers, who are temporarily 
found in the United States.   United States courts have held that the 
principle of comity between nations does not require one state to relinquish 
its compulsory process on a potential witness, temporarily within that 
state, simply because his testimony may subject him to criminal prosecution 
in the other state. Furthermore, such a witness must produce documentary 
evidence notwithstanding claims that the attorney-client relationship of the 
other state is broader than that of the jurisdiction issuing the subpoena. 


41.06[4] The Use of Compelled Directives to Obtain Disclosure of 
         Financial Matters Covered by Foreign Secrecy Laws

      Prosecutors can obtain court orders compelling an account holder to 
direct a foreign bank or other institution to disclose to the prosecutor 
matters protected by foreign financial secrecy laws.   The Supreme Court has 
ruled that an order directing an account holder to sign a 
hypothetically-framed disclosure directive does not violate his Fifth 
Amendment privilege against self-incrimination. 

      Foreign courts have had mixed reactions to these directives.  A court 
of the Cayman Islands, a dependency of the United Kingdom, has held that 
such compelled disclosure directives do not constitute voluntary and freely 
given consent for disclosure as required under the secrecy laws of that 
jurisdiction. For other countries which do not have such stringent secrecy 
statutes and which follow the British common law, there is authority that 
such disclosure directives do constitute valid consent under the common law 
duty of a banker to keep the financial affairs of an account holder 
confidential.   

      Prosecutors have enjoyed widespread success in using compelled 
disclosure directives to obtain financial records from most countries, and, 
indeed, have used voluntary disclosure directives to gather financial 
records from virtually every country.  The use of disclosure directives is 
preferred over the use of compulsory process directed against U.S.-based 
branches or offices of financial institutions to obtain financial records 
located abroad, because using disclosure directives involves no real 
jurisdictional conflicts (except when seeking evidence in countries like the 
Cayman Islands) and lessens the inclination of most foreign countries to 
block production of the evidence. 


41.06[5] The Use of Subpoenas Issued to United States Citizens or 
         Residents Abroad

      Prosecutors can also use compulsory process to obtain documents or 
testimony from U.S. citizens or residents located in foreign countries.  
Thus, federal law enforcement attorneys may issue court-ordered subpoenas to 
any such individuals in any federal proceedings, criminal or civil, under 
the provisions of 28 U.S.C. § 1783, and seek sanctions under 28 U.S.C. 
§ 1784, if there is any failure to appear or produce documents. 


41.06[6] Jurisdictional Conflicts Arising from the Use of Certain 
         Unilateral Measures

      The use of certain of these unilateral measures, especially the 
subpoenas on domestic financial institutions for foreign-based records, is 
controversial and leads to protracted litigation which often fails to secure 
the intended result.  Indeed, these jurisdictional controversies led the 
Justice Department to adopt Section 9-13.525 of the United States Attorneys' 
Manual (USAM), described supra, which requires the concurrence of OIA 
for both the issuance and enforcement of such subpoenas in Department 
criminal matters.  When U.S. authorities resort to the enforcement of such 
measures, they encounter strong opposition from many different quarters.  
For example, the financial institutions served with process typically resist 
strenuously and raise every possible issue for resolution, including the 
bedrock of their position, the jurisdictional conflict between the laws of 
the two countries involved.  Even when these institutions suffer an adverse 
decision of the U.S. courts, they often choose to be subject to sizeable 
contempt sanctions  rather than produce the subpoenaed or summonsed records.  
See, e.g., In re Grand Jury Proceedings (Bank of Nova 
Scotia), 691 F.2d 1384 (11th Cir. 1982). Officials of foreign 
jurisdictions also object to the use of these measures, by instructing their 
foreign ministries to complain to the U.S. State Department, entering 
amicus appearances in the protracted litigation, and sometimes 
directing their own law enforcement authorities to take blocking measures, 
which may include the seizure of the foreign-based records to thwart 
production.  Needless to say, production of the evidence sought by the use 
of certain of these unilateral measures is not a foregone conclusion.

      At all events, as mentioned above, before a Bank of Nova 
Scotia-type subpoena can be authorized by the Criminal Division 
(see USAM., Section 13.525) or enforced by a district court, a 
prosecutor will need to establish that no alternative methods exist for 
obtaining the foreign records sought.

                        
                        41.07 CONCLUSION

      New law enforcement treaties and agreements are continually being 
negotiated and concluded by the various responsible authorities.  
Accordingly, new means for obtaining foreign evidence may appear on the 
horizon following publication of this analysis.  For further details 
regarding the matters set forth herein, or for developments following 
publication, contact James P. Springer, Senior Counsel for International Tax 
Matters, Tax Division, Department of Justice, at (202) 514-2427.

FN 1. Indeed, the Swiss authorities and legal scholars are 
accustomed to referring to the term "tax evasion" as a civil matter, even if 
the conduct involved would constitute a felony under our law, such as the 
act of filing a false federal income tax return, where there are no other 
badges of fraud involved .  Thus, when the Swiss refer to fiscal crimes, 
they use the term "tax fraud," which, until the new tax treaty with 
Switzerland was negotiated, had a much more restricted meaning under Swiss 
law than under U.S. law. See, e.g., U.S.--Swiss MLAT, Art. 1, 
Sec. 1(a), and Art. 2, Secs. 1 and 2; J. Knapp, Mutual Legal Assistance 
Treaties as a Way to Pierce Bank Secrecy. Case W. Res. J. Int'l L. 
405-08, 418-20 (1988); J. Springer, An Overview of International Evidence 
and Asset Gathering in Civil and Criminal Tax Cases, 22 Geo. Wash. J. 
Int'l L. & Econ. 277, 303-08 (1988); Aubert, The Limits of Swiss Banking 
Secrecy under Domestic and International Law, 273 Int'l Tax & Bus. Law. 
273, 286-288 (1984). However, the Protocol to the new Income Tax Treaty with 
Switzerland expands the concept of tax fraud to include many of the badges 
of  fraud set forth in Spies v. United States, 317 U.S. 492, 499 
(1943), and the Memorandum of Understanding for the new Income Tax Treaty 
with Switzerland makes this expanded concept of tax fraud applicable to 
requests for mutual legal assistance made under an IMAC.

FN 2. Cayman MLAT, Article 19; Bahamian MLAT, Art. 2.

FN 3. Swiss MLAT, Art. 5; Cayman MLAT, Art. 7; Bahamian 
MLAT, Art. 8.

FN 4. On July 21, 1993, the United States and Colombia 
signed a TIEA that has not yet been placed into effect.

FN 5. Revenue Service Representatives (RSRs) are 
strategically posted at various US embassies throughout the world and 
represent the interests of IRS vis-a-vis the particular countries for which 
the RSRs are respectively responsible.  In certain situations, the RSRs will 
be responsible for sending and receiving requests for information.  In any 
event, no matter which country may be involved, contact should first be made 
with the Exchange of Information Team, and the Exchange Analyst on this Team 
who is responsible for the country where the information is located will 
specify the applicable procedures for making a request for information.

FN 6. The Federal Rules of Criminal Procedure, 
i.e., Fed. R. Crim. P. 15, specifically provide for these procedures, 
but in criminal cases, depositions, foreign or otherwise, can only be taken 
by order of the court, made in the exercise of discretion and on notice to 
all parties (Notes of the Advisory Committee on Rules), in contrast to the 
practice in civil cases where depositions may be taken as a matter of right 
by notice without permission of the court.

FN 7. See, e.g., United Kingdom Evidence 
(Proceedings in Other Jurisdictions) Act 1975, Secs. 1 and 5 (allowing for 
compulsory process to obtain evidence in the United Kingdom for judicial 
requests of foreign courts in civil proceedings which have been instituted 
or are "contemplated" and in criminal cases which have been instituted); 
Evidence Ordinance of Hong Kong, CAP. 8, Part VIII, Secs. 75 and 77B 
(allowing for compulsory process to obtain evidence in Hong Kong for 
judicial requests of foreign courts in civil proceedings which have been 
instituted or are "contemplated" and in criminal cases which have been 
instituted or are likely to be instituted if the evidence is obtained); 
United States v. Reagan, 453 F.2d 165, 171-74 (6th Cir. 1971) 
(affirming district court's issuance of a letter rogatory even though 
criminal case was in pre-indictment stage but noting some contrary 
authority).

FN 8. The number of countries which follow British common 
law is quite large, since both the present and former dependencies of the 
United Kingdom fall into this category.  For example, the Bahamas, 
Singapore, the Cayman Islands, and Hong Kong follow this legal precedent.

FN 9. Her Majesty, Queen in Right, Etc. v. 
Gilbertson, 597 F.2d 1161 (9th Cir. 1979) (hereinafter 
Gilbertson), aff'g, 433 F. Supp. 410 (D. Oregon 1977).

FN 10. Gilbertson, 597 F.2d at 1164.

FN 11. For authorities relying primarily on India v. 
Taylor, see, e.g., State of Norway's Application, 
[1987] 1 Q.B. 433, 445-46 (C.A.); R. v. Chief Metropolitan Stipendiary 
Magistrate, [1988] 1 W.L.R. at 1207, 1214-15; United States v. First 
National City Bank, 379 U.S. 378, 395-96 & n.16 (1965).

FN 12. See, e.g., First Nat'l City Bank, 379 U.S. 
at 396 (Harlan, J., dissenting on other grounds); Gilbertson, 597 
F.2d at 1163-66.