Tip # 3: Interview All Potential Witnesses As Soon As Possible

The careful practitioner will want to interview all potential witnesses as soon as possible. The reason is to learn the lay of the land. But, more subtly, there can be an important benefit to nailing down each witness’s testimony before the civil agent has had an opportunity to influence the witness’s memory by leading questions and other mind-shaping techniques.

The witness may be much more amenable to a taxpayer-favorable recollection before being put upon – maybe even intimidated – by an IRS agent, particularly a Special Agent. However, obtaining witness interviews in a potential criminal case is rife with danger for the practitioner.

Why? Because there are two competing interests at hand. On the one hand, the practitioner wants to acquire a balanced understanding of the witness’s potential testimony. On the other hand, the practitioner wants a taxpayer-friendly version of the witness’s memory. The latter imperative can lead the practitioner to suggest testimony and shade testimony that was previously given, thus edging towards the risk of charges of witness tampering or obstructing justice.

For this reason, it is recommended that the practitioner remove himself from interviewing witnesses altogether. Instead, a private investigator should be used. This is easier than you might expect. You merely provide the investigator with a list of questions to ask the witness. He or she can then interview the witness and obtain a formal statement, perhaps in affidavit form. Such a statement will commit the witness to a version of facts that could potentially be helpful to the client or, at the very least, mitigates the potential for damage.

Even more fraught with danger than practitioner interviews of witnesses are attempts by the client himself to get (or shape) the witness’s version. Of course, your client has a vested interest in what a potential witness says and is much more likely to try to influence the witness improperly.

The circumstances are ripe for the IRS to charge that he acted improperly to influence the witness, which could ultimately result in an obstruction of justice charge. The better course is to prohibit your client from talking to the witness at all. However, to the extent that communication between your client and the witness is unavoidable – such as in the case where they are business partners or work together – then instruct your client not to discuss the criminal matter with the witness.

After getting the lay of the land from all of the potential witnesses and from carefully reviewing all of the documents, the practitioner will be in a position to best serve the client in an eggshell audit.

Next:  Tip #4: Control and Advise The Client

In accordance with Circular 230 Disclosure