Chapter 8 – Criminal Law QuizCouch v. United States

Business Law

Chapter 8 – Criminal Law QuizCouch v. United States, 409 U.S. 322 (1973)Background Facts:Lillian Couch owned a restaurant. Couch operated the restaurant as a sole proprietor, meaningthat the she was the only owner of the business and that the restaurant was not incorporated.Couch hired an accountant named Harold Shaffer to prepare her federal income tax returns.Shafer ran his own business, preparing tax returns for several clients, including Couch. He wasan independent contractor and not an employee of Couch’s business.Shaffer prepared Couch’s returns from 1955 through 1968. Couch provided her business recordsto Shaffer so that he could prepare Couch’s income tax returns.In 1969, the Internal Revenue Service (IRS) began to review Couch’s income tax returns,suspecting that she had been underreporting her business income for the years 1964 to 1969, andthus paying less in taxes than what she should have been paying. An IRS special agentinterviewed Couch. Before interviewing Couch, the IRS special agent gave Couch the Mirandawarning.Based on the IRS special agent’s interview of Couch, the IRS conducted an additionalinvestigation to determine whether or not to file criminal charges against Couch for criminal taxevasion/fraud for knowingly underreporting business income on her income tax returns. Taxevasion is a felony crime under the Internal Revenue Code.Section 7602 of the Internal Revenue Code authorizes the IRS to demand records from taxpayers.The IRS issued a summons, demanding Shaffer produce “[a]ll books, records, bank statements,cancelled checks, deposit ticket copies, workpapers, and all other pertinent documents pertainingto the tax liability of [Couch].” Shaffer gave all of Couch’s business record he had in his officeto Couch’s attorney. Couch refused to give her business records to the IRS. The IRS filed alegal action with the federal court demanding that Couch comply with the summons and provideIRS investigators with her business records. Couch lost her case before the lower federal courtsand ultimately appealed her case to the United States Supreme Court. She argued that complyingwith the IRS’ summons would violate her Constitutional rights. 1. Which of the following legal rules were most likely important to the Supreme Court’s decision in Couch’s appeal? (select all that apply) The right, or privilege, against self-incrimination is an individual/personal right that can be waived (“given up”). Under the Internal Revenue Code, taxpayers are required to provide the IRS with documentation supporting the information reported in their individual tax returns. Couch had a limited expectation in the privacy of her business records because she had given those records to Shaffer for approximately 13 years. Unlike the doctor-patient evidentiary privilege which protects communications between doctors and patients, there is no similar accountant-client evidentiary privilege under federal law. 2. The Supreme Court decided to: (select all that apply) deny Couch’s appeal because the IRS summons did not require Couch to turn over information or testify against herself in a criminal trial. deny Couch’s appeal because the business records were not in her possession at the time when the IRS issued its summons to Couch’s accountant (Shaffer). grant Couch’s appeal because Couch’s privilege against self-incrimination extended to the business records that her accountant (Shaffer) had in his possession. deny Couch’s appeal because she voluntarily gave her business records to her accountant so that he could prepare her federal tax returns.

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