Jacob Hoback, Associate Member, University of Cincinnati Law Review
This article was originally published in Volume 89, Issue 4 of the University of Cincinnati Law Review. Click here to read the article in full.
Every calendar year includes fun holidays, such as Christmas, Valentine’s Day, and Independence Day. But not all famous dates of the calendar year are affiliated with the same joy as other holidays. On April 15th, taxpayers must file their tax returns with the Internal Revenue Service. Due to the complexity and cost of filing taxes, Tax Day is not a day that many citizens celebrate. In 2018, the average American family paid $15,748 in taxes. Further, taxpayers almost unanimously agree that the U.S. tax system is too complicated. Therefore, in both cost and practice, Tax Day is an onerous day for citizens.
An already unfavorable holiday is even more burdensome for taxpayers who have acquired income through illegal activity. When taxpayers report their gross income, they must include illegally-earned income. Additionally, they must disclose the income’s nature and source. As a result, the government can use that specific information to prove that a taxpayer engaged in illegal activity and is thus criminally liable. Nevertheless, taxpayers may invoke the Fifth Amendment on their tax returns to protect themselves from prosecution by not disclosing the incriminating information. But this protection is not sufficient, because if a court holds that a taxpayer’s Fifth Amendment claim is not valid, the government can prosecute the taxpayer under federal law for tax evasion, specifically for not providing the information necessary to calculate tax liability.
To provide taxpayers with the full protection of the Fifth Amendment, the government should offer taxpayers precompliance review. Precompliance review is an opportunity to have a neutral decisionmaker review the validity of an individual’s Fifth Amendment claim before the individual would face penalties for tax evasion. Under the law today, when taxpayers invoke the Fifth Amendment on their tax returns, the IRS can sue the taxpayers for not disclosing the particular information on their tax returns necessary to calculate tax liability and will prevail if the court finds that their claims are invalid. On the other hand, however, offering precompliance review would allow taxpayers to receive a preliminary judicial ruling on the validity of their claims before facing penalties for failing to comply. Consequently, taxpayers would know whether their claims would prevail and not have to face federal tax evasion charges for invalid claims made in good faith. To be clear, this Note does not argue that taxpayers should be excused from paying taxes on illegally-earned income. Even if a taxpayer does have a valid claim of Fifth Amendment privilege, the taxpayer should still face tax liability, but the taxpayer should not have to disclose the specific incriminating information.
Taxpayers should not have to risk federal prosecution for tax evasion to invoke constitutional protection. Therefore, this Note argues that taxpayers who invoke the Fifth Amendment should be entitled to an opportunity for precompliance review. First, Section II presents the background of Fifth Amendment jurisprudence generally and as applied to tax returns. Next, Section III explains what precompliance review is and how the government offers precompliance review in other areas of the law. Finally, Section IV discusses why the government should afford taxpayers with an opportunity for precompliance review.
 26 U.S.C § 6072(a) (2020).
 Unless, of course, they received a significant refund.
 How much does the average American family pay in taxes?, USA Facts (Sept. 28, 2020, 11:35 AM), https://usafacts.org/articles/average-taxes-paid-income-payroll-government-transfers-2018/ [https://perma.cc/HP3Q-XCQP].
 Why are taxes so complicated?, Tax Pol’y Center, https://www.taxpolicycenter.org/briefing-book/why-are-taxes-so-complicated#:~:text=POLITICS%20OF%20TAX%20POLICY,sources%20and%20uses%20of%20income. [https://perma.cc/98XD-NGA7] (last visited Nov. 30, 2020).
 James v. United States, 366 U.S. 213, 218 (1961) (“[U]nlawful, as well as lawful, gains are comprehended within the term ‘gross income.’”).
 Richard B. Stanley, Comments: Conflict Between the Internal Revenue Code and the Fifth Amendment Privilege Against Self-Incrimination, 15 U. Balt. L. Rev. 527, 551 (1986).
 See, e.g., Garner v. United States, 424 U.S. 648 (1976).
 “Fifth Amendment” in this Article will refer exclusively to the privilege from self-incrimination. The use of “Fifth Amendment” does not include the other securities therein, such as the right to due process.
 United States v. Sullivan, 274 U.S. 259, 263 (1926). To be clear, under Sullivan, taxpayers would still have to provide the relevant, non-incriminating information. See Stanley, supra note 6, at 558.
 Garner, 424 U.S. at 663; 26 U.S.C. § 7203 (2020).
 City of Los Angeles v. Patel, 576 U.S. 409, 421 (2015).
 Garner, 424 U.S. at 663; 26 U.S.C. § 7203 (2020).
 See Stanley, supra note 6, at 558. (“A taxpayer must prepare a return, or make a similar calculation, to determine the exact amount of his annual liability. The filing of the return with the final tax payment is, of course, unnecessary for the IRS to receive the tax payment. The government’s power to collect tax, therefore, does not require the filing of an income tax return from individuals who are incriminated by filing.”).