The special agent’s report (SAR) normally contains a narrative of the agent’s investigative findings. Attached to the report are commonly exhibits containing statements of witnesses that were interviewed, copies of documentary evidence, schedules and computations of income prepared by the agent, and any other materials necessary for a fair administrative review of the case. The SAR and the exhibits are normally the only material on which reviewing attorneys at the District Counsel and the Justice Department base their recommendation either to prosecute or to return the case to the IRS for processing as a civil case.
Access to the SAR and accompanying exhibits are seldom available to the Taxpayer or Tax Counsel before charges are filed. Requests for the special agent’s investigation materials under the Freedom of Information Act (commonly called a FOIA request) have been consistently denied under the investigatory record exemption and the exemption for material exempt by statute. Courts have occasionally required the government to supply an index of material contained in the SAR. The complex interaction among the Freedom of Information Act, the Privacy Act of 1974, and the disclosure provisions of the Code have left many questions unresolved. The SAR should become available to the taxpayer’s tax counsel at any trial in which the agent testifies. For this reason, the IRS usually has two agents present for every interview so that the government can present its case at trial without calling the special agent to testify that wrote the SAR. In such cases, the SAR is never disclosed.