Yesterday, the Second Circuit remanded a case involving foreign bank records for further development. In U.S. v. Natalio Fridman, the taxpayer asserted his act of production privilege over certain foreign bank records demanded by an IRS summons. The District Court held that such records must be produced based on the foregone conclusion doctrine, the collective entity doctrine, and/or the required records exceptions to the Fifth Amendment's protection. The Second Circuit found that the record was insufficient to allow meaningful Appellate review of these rulings, and remanded this portion of the case for further development.
This case is important in that it will again examine whether a taxpayer is compelled to produce foreign bank records that may be incriminating under the required records exception. If the summons is ultimately upheld for those records falling within the 5-year record retention requirement of the required records exception, any remaining records falling outside of that timeframe may need to be analyzed under the forgone conclusion and collective entity doctrines, which were raised by the government. If the case proceeds in this manner, it will be interesting to see how those doctrines will be applied to foreign bank records involving a trust structure, in yet another foreign bank record production case.
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