United States v. Brown
548 F.2d 1194 (1977)

  • Brown was a tax preparer and was arrested on suspicion of preparing fraudulent tax returns.
  • At trial, the prosecution put an IRS agent on the stand who testified that, “90-95% of Brown’s tax returns overstated the deductions.”
    • The IRS agent was testifying from memory about conversations she had had with the people Brown had prepared tax returns for.  She had no direct knowledge of whether the deductions were overstated, but she was relying on what people told her out of court.
    • Brown objected on the grounds that the evidence was hearsay.
  • The judge allowed the evidence to be admitted.
  • The Trial Court convicted Brown for tax fraud.  He appealed.
  • The Appellate Court overturned the conviction and remanded for a new trial.
    • The Appellate Court found that the testimony of the IRS agent was hearsay.
      • Brown did not have the opportunity to challenge the people who made the statements in Court.  In theory, he could have impeached the credibility of the witnesses or asked them questions to establish that he did not overstate the deductions.  But since they weren’t in Court, he had no way to defend against their accusations.
  • Notice that even though the evidence given (in-court testimony) is not the sort that is typically vulnerable to a hearsay objection, the testimony can still be hearsay if it is based on hearsay and not personal knowledge.
  • In a dissent, it was argued that the IRS agent audited the tax returns and therefore had enough ‘personal knowledge’ to make the statements without relying on what she heard from other people.
    • The IRS agent should have said something like, “I personally reviewed the records and in my opinion they overstated the deductions.”  That would be perfectly admissible.