Criminal Defense Lawyers

Challenging Overly Broad Grand Jury Subpoenas for Tax Records

Challenging Overly Broad Grand Jury Subpoenas for Tax Records

Grand jury subpoenas for tax records have been in the news lately, as former President Trump has challenged subpoenas issued by the Manhattan District Attorney‘s office for his personal and business tax records. Trump‘s legal team has argued that the subpoenas are overly broad and amount to harassment. While every case is different, there are some strategies that can be used to challenge an overly broad subpoena for tax records.

What Makes a Subpoena Overly Broad?

A subpoena can be considered overly broad if it requests more information than is reasonably necessary for the grand jury‘s investigation. Some signs that a subpoena may be overly broad include:

• It asks for records covering an unreasonably long period of time. For example, a subpoena seeking 10 years of tax returns when the investigation covers activities within the past year.
• It requests tax records for people or entities outside the scope of the investigation. For example, seeking records for family members not involved in the business activities under investigation.
• It asks for all records rather than specific, relevant records. A subpoena for “all tax returns” or “all communications with accountants” is likely overbroad.
• It requests supporting records that are not directly relevant, such as drafts of returns or notes between a taxpayer and accountant.
• It seeks records that duplicate information already obtained or available from other sources.

How Can You Challenge an Overly Broad Subpoena?

If you receive a grand jury subpoena for tax records that seems overly broad, there are several options for challenging it:

• File a motion to quash: This asks the court to invalidate or cancel the subpoena because it is improper. Grounds can include that it is overbroad, seeks privileged information, or constitutes harassment. This is the most direct way to challenge a subpoena.
• Seek to modify or limit the subpoena: You can ask the court to narrow the scope of the subpoena, such as by limiting the time period covered or types of documents requested. This allows you to provide some responsive records while still protecting against overbreadth.
• Raise privilege objections: Certain communications and documents may be protected by privileges like attorney-client privilege or tax practitioner privilege. These can be grounds for limiting a subpoena or requiring redactions.
• Argue relevance: The motion to quash can argue that the requested records are not sufficiently relevant to the grand jury’s investigation. This helps refute overbreadth.
• Allege improper purpose: If you have evidence the subpoena was issued in bad faith or to harass, you can argue the grand jury is abusing its authority. This can support quashing the subpoena.
• Request an in-camera review: This asks the court to privately review the disputed records to assess relevance and privilege issues before requiring production. It can be a check against overbreadth.

What Arguments Should You Make Against Overbreadth?

Some of the key arguments to make when challenging a subpoena as overbroad include:

• Time period covered is excessive: Argue that the number of years of records requested far exceeds what could be relevant to the investigation’s scope. Propose a more reasonable time period.
• Requests information about irrelevant parties: Object that the subpoena seeks records concerning people and entities unrelated to the investigation’s focus. Seek to exclude those parties from the subpoena.
• Seeks production of all records rather than specific materials: Point out that requesting “all” tax returns or communications is by nature overbroad. Offer to provide specific, relevant materials instead.
• Requests supporting records that lack relevance: Note that drafts, notes, and communications between a taxpayer and tax preparer stray beyond the core documents needed. Seek to exclude these from production.
• Duplicative information can be obtained elsewhere: If the same information is available through other records or witnesses, argue this subpoena is unnecessarily cumulative and duplicative.
• Imposes undue burden: Demonstrate the breadth of the subpoena imposes an unreasonable burden in terms of time, effort, and cost required to comply. A more tailored subpoena reduces undue burden.

What Defenses Can You Raise Against Tax Record Subpoenas?

Beyond claims of overbreadth, other defenses can also be raised to fight subpoenas for tax records, such as:

• Attorney-client privilege: Communications with an attorney for purpose of legal advice are privileged. File privilege logs and seek redactions to protect these.
• Tax practitioner privilege: Many states recognize a privilege for tax advice communications with accountants and tax preparers. Use this to exclude protected records.
• Fifth Amendment privilege: The Fifth Amendment protects against self-incrimination. Assert this privilege selectively for testimonial records that may incriminate.
• Burdensomeness: Argue that compliance would impose an unreasonable burden based on volume of records requested or difficulty accessing them. Seek cost-shifting for production.
• Irrelevance: Maintain that the requested records lack relevance to the investigation and will not produce information substantially advancing it.
• Improper purpose: Allege bad faith or harassment if there is evidence the subpoena was issued to embarrass, threaten or retaliate rather than investigate.
• Presidential records: The Presidential Records Act limits access to records of a sitting president. This applied to former President Trump’s subpoenas while in office.

What Are the Standards for Quashing a Grand Jury Subpoena?

The bar for quashing a grand jury subpoena is high. Courts recognize grand juries have broad investigative powers and discretion. A party seeking to quash a subpoena typically must show:

• The information sought is clearly irrelevant to the grand jury’s investigation
• Compliance would be unreasonable or oppressive
• The purpose is improper, such as to harass or obtain information for another, unrelated investigation
• Constitutional or recognized privileges protect the records sought

This is a difficult standard to meet. Courts will generally only quash subpoenas in extreme cases of overbreadth, harassment or unreasonableness. But you can often achieve modification of a subpoena by negotiating limits and reductions in scope.

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What Was Trump’s Basis for Challenging the Tax Subpoenas?

Former President Trump challenged the grand jury subpoenas issued by the Manhattan DA’s office on several grounds:

• Overbreadth: Trump argued the subpoenas were extremely broad, seeking tax records and related documents going back nearly 10 years for Trump and his businesses. He claimed this exceeded any reasonable scope.
• Bad faith/harassment: Trump alleged the subpoenas were issued in bad faith, intended to harass him and retaliate for his policies, not conduct a legitimate investigation.
• Relevance: Trump contended the materials sought were irrelevant to the DA’s investigation into possible financial crimes.
• Presidential immunity: While in office, Trump also claimed he had absolute immunity from criminal process under the Constitution. The Supreme Court rejected this argument.

Trump was not successful in blocking the subpoenas entirely. He achieved delays by appealing, but ultimately some records were produced in February 2021 after he left office.

What Are the Stages of Litigation Over a Grand Jury Subpoena?

Challenging a grand jury subpoena often involves several stages of litigation:

• A motion to quash is filed asking the court to invalidate the subpoena. This can also seek modification of the subpoena.
• The district court rules on the motion to quash. It can quash, modify or uphold the subpoena. This can involve an in-camera review of records by the judge.
• The district court’s decision can be appealed to the Court of Appeals. This interlocutory appeal is allowed because complying with a subpoena is irreversible.
• The Court of Appeals’ decision may be appealed to the Supreme Court. The Supreme Court has discretion whether to hear such appeals.
• If appeals fail, the subpoena recipient must comply or risk being held in contempt of court for defying a court order enforcing the subpoena.
• After complying, a party can still seek return of records or sealing if the grand jury improperly retains or uses them.

What Are the Stakes in Fighting a Tax Subpoena?

Challenging a grand jury subpoena involves high stakes:

• Privacy: Tax records contain highly sensitive personal and business information. There is an interest in protecting privacy.
• Reputation: Public release of tax records can be embarrassing and damage reputations, even if no illegality is found.
• Self-incrimination: Tax records may reveal potential crimes. Individuals have a Fifth Amendment right against self-incrimination.
• Legal costs: Fighting subpoenas through lengthy court battles can be extremely expensive in legal fees. But so can complying.
• Business harm: Disclosure of confidential business records in tax returns could hurt competitiveness and give rivals an advantage.
• Contempt sanctions: Defying a court order to comply with a subpoena can lead to substantial contempt fines or even jail time.
• Criminal liability: If records ultimately reveal tax, financial or other crimes, it can lead to criminal prosecution.

Weighing these stakes against the broad powers of a grand jury makes challenging tax subpoenas a complex calculation. The rights of individuals must be balanced against the grand jury‘s role in investigating crimes.