A proffer agreement is sometimes made in criminal tax cases. It is an agreement, usually written, between a federal prosecutor and an individual who are under criminal investigation. It is designed to give the person some legal protection from criminal prosecution in exchange for giving up information to the government. Basically, it is a sit down with federal prosecutors, and any other attorneys or agents involved in the matter representing agencies involved, for a question and answer session.
That protection, though, is limited. A proffer session is serious business, indeed. The individual deciding to enter into a proffer agreement with a federal prosecutor over income tax issues should always seek experienced criminal tax defense counsel first. In law, we are careful to qualify our statements with “sometimes,” “often,” or “it depends.” This is the exception: Individuals should always seek legal counsel prior to deciding to “proffer” with the government.
The U.S. Attorney’s Office usually asks the person under investigation or facing prosecution to sign the proffer agreement before the session (interview) starts. The agreement governs the terms of the interview—and when your statements can and cannot be used against you.
There are some possible benefits to proffer agreements (see below). However, it is essential to know that such agreements do not offer complete immunity. The government typically cannot use the actual statements one makes from a proffer session in the government’s case-in-chief—but it can use the information gleaned to pursue leads for impeachment purposes (refute a subsequent lie) and other investigations.
Understanding Proffers in Criminal Cases
In the broader realm of criminal law, a proffer—often called a “queen for a day immunity” agreement—can arise when a defendant (or suspect) agrees to provide information about potentially criminal activities in the hope of receiving leniency or other benefits. These benefits might include reduced criminal tax charges, lighter sentencing, or even, in rare cases, immunity. However, proffers in criminal tax cases carry significant criminal tax risks, and it would be wise to understand them completely before entering into one.
Defining the Proffer Agreement
A proffer is typically a written understanding where a defendant offers information to prosecutors or law enforcement officials. In criminal tax matters, this might involve details of one’s own role in a scheme or incriminating information about others involved. While the proffer agreement usually states that the government will not use the defendant’s statements against them in its primary case, this protection has multiple exceptions (discussed below).
Mechanics of a Proffer Agreement
Both sides—the defendant and the government—sign a formal document. The protection often extends only to direct use of the defendant’s statements in the government’s case-in-chief, not to derivative leads or if the defendant lies. Any falsity can invalidate the agreement. Moreover, the proffer typically does not guarantee any outcome; it simply opens the door to negotiations, which may or may not yield a favorable deal.
Types of Proffers
- Attorney Proffer: The defense attorney provides an overview of what the client could disclose without the client personally speaking.
- Defendant Proffer: The defendant directly meets with prosecutors. Though riskier, it can produce more tangible benefits if the defendant’s information is deemed critical.
- Written Proffer: The defendant submits written statements to the government, which can be carefully composed to avoid misstatements that occur in live interviews.
A proffer agreement is embodied in written form by a proffer letter. The agreement allows those who may be subject to a criminal tax investigation, either as a witness or a direct subject of the crime, to “tell their side” of the events, with the (alleged) assurance that what they say will not be used against them later at trial. Usually, it is individuals who are directly under investigation that enter into proffer agreements rather than merely a witness. Typically, the witness is the less culpable co-conspirator, a tax return preparer, a tax professional (or other advisor), or an employee of a corporation that is under investigation.
When Proffer Statements Can Harm You
Typical proffer agreements may state that if you are (eventually) prosecuted, “no statements made by you during the interview can be used against you in the government’s case-in-chief at trial or for purposes of sentencing, except as provided below” (emphasis added). Notice that last part—“except.” The government builds into the agreement various exceptions where statements uttered by you can be used against you.
For example, the government typically inserts a clause in the agreement providing that you may be impeached if you make a statement (in a proffer session) that contradicts what you later say in a legal proceeding. It is for this reason that it is essential to state your responses very carefully during a proffer session.
The number of exceptions allowing your statements to be used against you varies with each proffer agreement. These agreements are “boilerplate” for the most part because a committee at the Department of Justice crafts them, but there are differences with each jurisdiction. It is essential to review the proffer agreement very carefully; your lawyer should do this. Each and every word of the agreement has been precisely chosen by the Department of Justice, and when you agree to be bound by the agreement, you certify that you understand each term and are in agreement with each provision.
Potential for Self-Incrimination
Even though a proffer aims to provide some measure of protection, defendants can inadvertently incriminate themselves. The agreement usually only restricts the government from using direct statements in its main case. If the defendant lies, or if those statements generate or leads to the discovery of new evidence, the government can still use that derivative material in later proceedings.
Derivative Evidence and New Investigative Leads
Following Kastigar v. United States, any new leads the government derives from the defendant’s statements can be independently verified and used in subsequent criminal proceedings. Thus, while your words might be protected, the investigators can still pursue any investigative leads suggested by your disclosure.
Federal Rule of Evidence Section 410
Sometimes clients ask, “Don’t the Federal Rules of Evidence protect me? It’s a plea negotiation, right?” This is a good question. Typically, Federal Rule of Evidence §410 provides a defendant with protections by rendering inadmissible communications made during plea-bargaining. Specifically, that Rule says that, whether it is a civil or criminal case, “evidence [i.e. a statement] . . . is not admissible against [a] defendant who made the plea or participated in the plea discussions” where the “statement [was] made during plea discussions with an attorney for the prosecuting authority if the discussions did not result in a guilty plea or they resulted in a later-withdrawn guilty plea.”
Exception to Section 410—Waiver
However, as an exception, a defendant may waive the protection that Rule §410 provides. Interestingly, a waiver is not one of the exceptions noted in Section 410; rather, that exception was created by case law (i.e. judges).
This was one of the main takeaways of U.S. v. Mezzanatto, 513 U.S. 196, 115 S. Ct. 797 (1995). There, the Court ruled that “[b]ecause the plea-statement Rules were enacted against a background presumption that legal rights generally, and evidentiary provisions specifically, are subject to waiver by voluntary agreement of the parties, we will not interpret Congress’ silence [i.e. Congress’ failure to include a waiver exception in Rule §410] as an implicit rejection of waivability.” The Court then pushed the burden to the defendant to “identify [sic] some affirmative basis for concluding that the plea-statement Rules depart from the presumption of waivability”—which the defendant in that case was unable to do.
There are other times when one’s proffer statements made during plea negotiation are admissible. In one case, they were allowed to rebut the defendant’s proffer statements, even if the defendant did not testify at trial. His proffer agreement stated that he waived his right to preclude those statements on cross-examination or rebuttal if he testified (or if evidence was offered on his behalf). Several other witnesses testified defending him, and his attorney made some other statements that were inconsistent with the proffer statements. Accordingly, the prosecution sought to use those inconsistencies to its benefit and was allowed by the court to do so. See U.S. v. Rebbe, 314 F.3d 402 (9th Cir. 2002).
The Main Benefit: The Chance to Get a Plea Bargain or Immunity Agreement
The main benefit of making a proffer agreement is the possibility of obtaining an immunity agreement or plea bargain if you are facing an anticipated prosecution. This is (potentially) a big deal—since it might be the only chance you have of avoiding a criminal tax conviction. The decision on whether to proffer is potentially very beneficial. Still, it should be made after considering all the possible downsides (noted elsewhere in the proffer-related Q and A on this website). As mentioned, after a proffer session, the government will often provide you with either (1) a written plea bargain or (2) an immunity agreement.
Before entering into a “proffer session”—the actual sit-down with you, your attorney, and the federal prosecutor—you should have carefully planned out exactly what you will proffer and what the details of the immunity agreement or plea bargain would be. Your “post-proffer game plan” needs to be well thought out. Otherwise, if the prosecutor decides to indict you, you are headed into deep waters.
Other Benefits of Proffering
One of the benefits that proffering (talking with the government prosecutor) affords you is the possibility that your attorney can persuade the government to see you as a valuable witness against a more culpable participant in tax evasion rather than a primary target of a criminal tax investigation. Through the plea bargaining process, at best amnesty and at worst, a much lighter sentence can be negotiated in exchange for becoming a cooperating witness.
Where you were the most culpable active participant in a tax crime, it may be advisable to proffer where there is a high likelihood that you will be prosecuted and the government has amassed overwhelmingly persuasive evidence against you based on your attorney’s assessment of the fact pattern.
If you do decide to proffer, keep in mind that if you make a false statement, and the prosecutor has information that can prove you are lying, he or she could prosecute you for lying to federal agents in violation of 18 U.S.C. § 1001.
Potential for Leniency or Immunity
A proffer can sometimes open the door to leniency. If the information you provide is crucial, the prosecutor might offer reduced charges, a lighter sentence, or even immunity in exchange for your cooperation. This is especially critical when the government believes you can help them prosecute higher-level targets or more serious offenses.
Influencing Sentencing
In federal cases, substantial assistance can lead to motions under U.S. Sentencing Guidelines §5K1.1, allowing courts to impose sentences below the guideline range. This underscores the importance of a meaningful proffer for those facing significant incarceration.
Risks of Proffer Agreements
- Limited Protection Compared to Immunity or Plea Deals
Unlike a complete immunity agreement or finalized plea bargain, the government can still conduct follow-up investigations (“derivative use”) based on the leads or information you disclose. - Bolstering the Prosecutor’s Confidence
If you reveal incriminating details during your proffer, the prosecutor may feel more assured they have the correct target—prompting intensified investigation or refusal to offer leniency. - Impeachment at Trial
Most proffer agreements permit the government to use your session statements to impeach you if you later contradict them under oath or if your defense introduces evidence inconsistent with those statements. - Compromised Legal Defense If You Lie
Making false statements in a proffer session can harm your future defense strategy. As the hypothetical example of visiting New York City demonstrates, a single lie can block potentially useful witnesses or cross-examinations—lest your entire proffer statement gets introduced against you at trial.
Drawbacks Beyond the Immediate Scope
- No Guarantee of a Favorable Outcome: Prosecutors are not required to grant immunity or offer leniency, even if you cooperate.
- Possible Breakdown in Negotiations: If the government deems your information unhelpful or unreliable, negotiations may collapse, leaving you in a worse position than before.
- Impact on Co-Defendants: A proffer can strain relationships with co-conspirators who see your cooperation as a betrayal.
Strategic Considerations for Defendants Facing a Proffer
- Assess the Strength of the Government’s Case
If the prosecutor’s evidence is overwhelming, a proffer might be your best path to reduce charges or sentencing. Conversely, if your attorney sees strong defenses, it may be unwise to volunteer information that could bolster the government’s case. - Evaluate Your Personal Goals
Weigh the potential benefits—leniency, reduced charges, or immunity—against the risk of self-incrimination or derivative use of your statements. The decision may hinge on whether you prioritize minimal jail time or the chance to defend yourself fully at trial. - Preparation and Counsel
Legal counsel should meticulously review every aspect of the proffer agreement, clarifying its scope and any exceptions that might allow your statements to be used against you. An experienced attorney can also guide you in deciding whether a defendant proffer or an attorney proffer is most suitable. - Possible Impact on Co-Defendants
If you implicate others during a proffer, this can lead to tension or even retaliation. Your strategic decision must factor in any real-world fallout from cooperating with the government.
In summary, the main benefit of entering into a proffer session with the government is that it gives a (likely guilty) taxpayer who committed tax fraud (or some other tax crime) the opportunity to obtain immunity or a plea bargain—and this could be their last chance to do so. A taxpayer’s punishment/fine could thereby be drastically reduced by proffering. However, things are not always straightforward, as the decision to proffer needs to be made in light of the potential risks, including that the government may use statements “indirectly” to conduct further investigations, that it may give the prosecutor newfound motivation to investigate you; that it contains a risk that the government may impeach you using proffer statements which, if successful, would allow all your proffer statements to be admissible (i.e. against you); and it could compromise your legal defense if you are less than truthful during your proffer session. The risks here numerically outweigh the benefits, but the decision whether to proffer should not be made simply on that basis: It is something you and your attorney should discuss.
Always Tell the Truth
Whatever you do, always tell the truth, even if you are embarrassed, desire to deny (or spin) your involvement, or something similar. It is better to state the truth than to prove that you lied down the road. But keep the truth simple and short; do not elaborate. Proffer agreements are tricky and very serious business with potentially life-altering consequences. Remember that your liberty is at stake.
Contact The Tax Law Offices of David W. Klasing Today
When facing a high-stakes criminal tax matter, the Tax Law Offices of David W. Klasing stands out as an unrivaled choice. Our team is dual-licensed, meaning you will receive the benefit of seasoned tax attorneys who are also CPAs. This rare blend of legal advocacy and in-depth accounting proficiency equips us to tackle the full spectrum of financial complexities in your case. Importantly, unlike non-attorney tax professionals, our attorney-client privilege ensures that what you disclose remains confidential and cannot be used against you. With decades of experience, we have prevented countless criminal tax referrals, secured reduced civil and criminal tax penalties through strategic negotiations and disclosures, and protected our clients’ liberty, livelihoods, and reputations. Whether you need a robust defense in court or an early intervention to stave off charges, we leverage a track record of success in both civil and criminal tax forums to achieve your optimal outcome. Put simply, we don’t just defend you; we tirelessly advocate for you—fusing legal knowledge, negotiating skills, and rigorous financial analysis into a comprehensive, results-driven approach. When your freedom and economic security are on the line, trust the Tax Law Offices of David W. Klasing to deliver the unmatched protection you deserve.
If you have further questions about proffer agreements or are currently under a life-altering criminal tax investigation, our dual-licensed Criminal Tax Defense Attorneys and CPAs at the Tax Law Offices of David W. Klasing stand ready to assist. We offer aggressive representation—merging legal advocacy and accounting expertise to protect your liberty, finances, and professional reputation. For a reduced-rate initial consultation, contact us online here or call (888) 310-3543 today to discuss whether a proffer is in your best interest and how to avoid the exponential risks of self-incrimination.
