Recently a taxpayer wrote to me asking if the IRS needed a warrant to “look at [her] mail.” Technically, the IRS needs a warrant to open your mail but not to examine the physical letter itself. If that sounds like a distinction without a difference, you are mistaken.

People living in the United States have certain privacy protections under the 4th Amendment to the U.S. Constitution. That amendment says:

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

In layman’s terms, the IRS needs to have a warrant before it can read your papers (mail.) There is no court recognized expectation of privacy in the outside of the envelope in which your mail is delivered, however.

The U.S. Postal Service operates a program called Mail Isolation Control and Tracking (MICT) that allows the postal service to photograph the outside of mail and share the information with law enforcement including the IRS.

What could be so important about the outside of mail? Plenty. Most envelopes bear the return address, sending date, city and country of origin. If you have a foreign bank account and are delinquent on your FBAR filings, the IRS can quickly determine if you are getting mail from an overseas location. Depending on whether there is a return address, the IRS may even be able to determine where your account is located.

Once the IRS believes you have an unreported account, it can ask the Postal Service to photograph your incoming and outgoing mail. That information can then be used to obtain a search warrant to open and read your mail.

The IRS also uses the MICT procedure in tax evasion investigations.

Even without a warrant, he IRS can read your mail once you throw it away. A series of court rulings have determined there is no expectation of privacy in garbage. Literally, it means the IRS can sift through your trash can.

Some folks reading this may be thinking of shredders, remailing services, etc. The smarter choice is to come into compliance before the IRS finds you.

The penalties for an unfiled FBAR or tax evasion are quite high. Both are criminal offenses and the willful failure to file and FBAR also carries civil penalties of up to the greater of $100,000 or 50% of the highest historical account balance.

If the IRS is already looking at your trash or reading your mail, chances are quite good that the Service has launched a criminal tax evasion investigation. Traditional revenue agents don’t ordinarily order MICT investigations (called a “mail cover.”)