Ed Robbin's Excellent Blog on Section 6501(c)(8) Extending the Statute of Limitations for Certain International Reporting (8/31/13)

I encourage readers to study Ed Robbins most recent contribution to the Tax Crimes / Tax Procedure literature.  Edward Robbins, You Should Worry About Section 6501(c)(8) (Tax Controversy (Civil & Criminal) Report 8/31/13), here.  The author, a prominent tax controversy practitioner, here, discusses Section 6501(c)(8)'s special statute of limitations for certain international reporting, including Forms 8938, 5471, etc..  Section 6501 may be reviewed here.  Section (c)(8) is:

(8) Failure to notify Secretary of certain foreign transfers
(A) In general
In the case of any information which is required to be reported to the Secretary pursuant to an election under section 1295 (b) or under section 1298 (f), 6038, 6038A, 6038B, 6038D, 6046, 6046A, or 6048, the time for assessment of any tax imposed by this title with respect to any tax return, event, or period to which such information relates shall not expire before the date which is 3 years after the date on which the Secretary is furnished the information required to be reported under such section.
(B) Application to failures due to reasonable cause
If the failure to furnish the information referred to in subparagraph (A) is due to reasonable cause and not willful neglect, subparagraph (A) shall apply only to the item or items related to such failure.

Note that the heading of the subsection does not indicate the sweep of the text of the provision.  To summarize the sweep of the provision, where the required information is not provided with the original return, the statute of limitations for the entire return stays open indefinitely until 3 years after the information is provided.  Ed's article is excellent.  Without taking away from the article, I just quote excerpts from the opening and the ending to encourage you to read the whole article (the bold face is mine):

Most tax practitioners understand the basic assessment statute of limitations rules in the Code: three years after the return is filed, six years after the return is filed for 25% omission of income, or forever in the case of fraud and/or failure to file. Practitioners may be less familiar with the raft of additional special assessment statutes of limitation rules found in the Code, but one of these additional rules demands special attention.  That rule is section 6501(c)(8) which provides that in the case of any information on foreign activities which is required under section 6038, 6038A, 6038B, 6046, 6046A, or 6048, the time for assessment of any tax shall not expire until three years after the date on which the IRS is furnished the information required to be reported.
Until recently, section 6501(c)(8) was  often overlooked both for assessment and financial statement tax provision purposes.  As stated above, section 6501(c)(8) set forth an exception to the general rule.  In March of 2010 the Hiring Incentives to Restore Employment Act (the “HIRE Act”), amended the section 6501(c)(8) exception to the general statute of limitations and it has been made applicable to the entire income tax return – not just the tax consequences related to the information required under the relevant foreign information reporting provision.  The new section 6501(c)(8) is applicable to any tax return filed after March 18, 2010 and any other return for which the assessment period specified in section 6501 had not yet expired as of that date.  As long as a failure to comply with one of the specified foreign information reporting requirements for a tax return exists, the limitations period for that tax return remains open indefinitely.  The statute will not commence to run until the time at which the information required under the reporting provision is filed with the IRS and will not expire before three years after the filing of the required information.

JCT Staff Review of $2 Million + Refunds (8/24/13)

I was reading today a letter to the editor of Tax Notes from Professor George K. Yin, here, formerly tax counsel to the Joint Committee on Taxation.  George K. Yin, Let's Get the Facts of the Couzens Investigation Right!, 2013 TNT 165-12 (8/26/13).  The subject is some esoterica about the requirement that, prior to making a $2 million refund, the IRS must submit a report to the Joint Committee on Taxation ("JCT").  Section 6405(a), here.  The staff reviews and comments on the refund.  Technically, the review is not a veto, but given JCT's role in the system it might practically have that effect.

Professor Yin reviews the history for the provision.  His concluding paragraph makes a good point about the requirement for JCT staff review of refunds but not of IRS decisions to forgo deficiencies, both of which have the same effect on the revenue and both of which could be means for effecting agency favoritism (which was the concern in enacting Section 6405).  Here is the paragraph:

Congress's fixation on refunds might be of mere historical curiosity but for the fact that it had clear policy consequences: Congress gave the Joint Committee authority to review all large tax refunds, a responsibility that continues to this day. The irony of this decision is quite evident. While it was true that the Board of Tax Appeals provided independent review of certain agency decisions prior to the assessment of taxes, the only ones considered by the Board were those unfavorable to taxpayers. Agency decisions improperly favorable to taxpayers were not appealed, and therefore never reached the Board or any other independent reviewer. Yet a taxpayer-favorable decision not to assert a deficiency was directly analogous to an unjustified refund that Congress was so suspicious about. Indeed, a failure to assert a deficiency was actually much more worrisome than a refund. Because a refund involved an affirmative act that went through several levels of agency review for approval, an illegal refund required the unlikely existence of widespread corruption throughout the agency. In contrast, a decision not to assert a deficiency conceivably could have begun and ended with the inaction of a single, rogue employee. Thus, if Congress was seriously concerned with possible, corrupt favoritism by the agency (rather than mere posturing to gain political advantage), it badly missed the mark.

For those desiring an introduction to the JCT refund revise process, I cut and paste below my discussion (footnotes omitted) of Section 6405 in my Tax Procedure book:

IV. Joint Committee Review of Large Refunds. 

Section 6405(a) prohibits refund of income or estate and gift taxes and most other refunds in excess of $2,000,000 until 30 days after the IRS has submitted a report to the Joint Committee on Taxation (“JCT”), where it is reviewed by the staff of the JCT.  The $2,000,000 threshold is determined based on net over-assessments for the audit cycle in a multi-year review.  The IRS report details the IRS's findings and conclusions with respect to the refund it proposes to make.  This gives the Joint Committee Staff an opportunity to review the proposed refund and comment thereon.  

6-Year Return Adequate Disclosure By Reference to Other Returns (8/23/13)

The normal statute of limitations in tax matters is 3 years from the date the return was filed.  There are exceptions.  One is the six-year statute that applies if there is 25% omission rule that figured most prominently in the recent Home Concrete case,  Section 6501(e)(1)(A)(i), here; see United States v. Home Concrete & Supply LLC, 132 S. Ct. 1836 (2012).  Even where there is a 25% omission, the six-year statute does not apply if the taxpayer made adequate disclosure.

In CCA 201333008, here, the author discusses the disclosure requirements in the context of a flow-through entity return (partnership or S corporation).  To use the S-corporation context discussed in the CCA, if the shareholder reports income from the S-Corporation, it will usually be a number with no explanation other than identifying the S-Corporation.  The S-Corporation return (Form 1120-S) will have the detail and any disclosures about any income omissions.  The question is whether the Form 1120-S disclosures, if otherwise adequate to put the IRS on notice, will be deemed notice as to the shareholder's return which does not include the disclosures.  The answer is yes.  The CCA does a very good job of discussing the authority supporting that answer.

The caveat noted in the CCA is that the Form 1120-S must have been filed on or before date of the shareholder's return.  The reason for this spin on the incorporation by reference rule is that the law is "well-settled" that an amended return disclosure will not suffice to ex post facto supply an adequate disclosure if the original return did not make the disclosure.  See Houston v. Commissioner, 38 T.C. 486, 489 (1962). The CCA takes the position -- logically it seems to me -- that an 1120-S filed after the shareholder's return is filed is conceptually the equivalent for purposes of the notice requirement to an amended shareholder return.  In other words, the shareholder must make sure that, in filing his or her original return, the "disclosure by reference" is to a return that has been filed (rather than one that will be filed later).

I have just revised my Tax Procedure text discussion to include the following paragraph inspired by the CCA (footnotes omitted):\

The disclosure contemplated is one filed on or with the taxpayer’s own original return which contains the substantial omission.  For this reason, the filing of an amended return will not cure the original return failure to disclose that caused the extended statute of limitations.  (Students will recall that the same concept applies with respect to the filing of a nonfraudulent amended return where the original return was fraudulent; the amended return does not cure the fraud that triggers the unlimited statute of limitations.)  Where, however, the taxpayer’s original return provides a reference to another return that has been filed on or before the date the taxpayer’s return is filed, the references can constitute adequate notice. For example, where a taxpayer reports on his return items from a flow-through entity such as a partnership or an S-corporation, the information on the referenced entity return filed on or before the filing of the taxpayer’s return can be considered in assessing whether the taxpayer has made adequate disclosure.

Restraining Taxpayers for Tax Debts (8/19/13)

This morning, I read a recent case involving the writ ne exeat republica.  I suspect that many readers will not have heard of the writ.  While the case I read this morning was unexceptional, I thought it readers might find the introduction from my Tax Procedure book helpful as an introduction (footnotes omitted; footnotes can be reviewed the the downloadable text):

2. Writ of Ne Exeat Republica - Constraining the Person. 

The United States does not generally allow imprisonment – or, more broadly, constraining a person’s liberty -- for the nonpayment of debt.  The exception for purposes of tax matters is the statutory approval in § 7402(a) for the writ of ne exeat republica.  The Latin is “let him not go out of the republic,” and was developed in England as a chancery writ.  The writ is sometimes used in domestic relations contexts to restrain someone from leaving the jurisdiction.  In tax collection contexts: 

The writ ne exeat republica is an extraordinary remedy and should only be considered when all other administrative and judicial remedies would be ineffective. In appropriate cases, the writ ne exeat may be used as a collection device against a United States taxpayer who is about to depart from the territorial jurisdiction of the United States, or who no longer resides but is temporarily present in the United States and who has transferred his assets outside of the United States in order to avoid payment of his federal tax liabilities. The writ ne exeat is a court order which generally commands a marshal to commit to jail a defendant who fails to post bail or other security in a specified amount. The authority for the United States District Courts to issue writs ne exeat in tax cases is found in I.R.C. section 7402(a) and 28 U.S.C. section 1651.  

The debt relied on to support the writ must be enforceable against the defendant, be of a pecuniary nature and be presently payable. Thus, in tax cases, an assessment should be outstanding against the taxpayer.  

The purpose of the writ in tax cases is to prevent taxpayers from defeating the collection of tax liabilities by removing themselves and their assets from the territorial jurisdiction of the United States. As a practical matter collection by administrative means is ineffective where the taxpayer has either secreted his assets or removed them from the United States. If the taxpayer leaves the United States, judicial remedies may be likewise defeated since the court would then be powerless in most cases to enforce its orders or judgments against the taxpayer or his property, if located outside of the United States. Thus, the writ ne exeat ensures the continuing submission of the taxpayer to the jurisdiction of the court. 

The writ may be used in conjunction with the appointment of a receiver. 

The writ is very, very rarely used.  I have never encountered it in my practice nor, anecdotally, have I heard of other practitioners’ encountering it.  The cases are sparse.

Remittance to IRS -- Is it a Payment or a Deposit? (8/19/13)

Whether a remittance to the IRS is a payment of tax or a deposit can have significant consequences.  For example, if it is a payment of tax, there is a statute of limitations to obtain refund of the repayment; if it is a deposit, the refund statute of limitations does not apply.  Further, if it is a payment, the taxpayer can only get the remittance back by filing a claim for refund showing that he is entitled to the refund; if it is a deposit, the taxpayer can get it back simply by asking. There are complexities in this example, but in broad strokes that is the distinction.  The IRS has procedures whereby, in submitting a remittance, the taxpayer can designate whether the remittance is a payment or a deposit and the designation will (usually)  be honored by the IRS.

In Syring v. United States, 2013 U.S. Dist. LEXIS 111712 (D WI 8/15/13, amended order), here, a taxpayer, an estate, confronted this distinction.  The taxpayer had remitted tax of $170,000 to the IRS along with a timely request for extension of time to file the estate tax return.  The taxpayer did not designate the remittance as either payment of tax or deposit.  More than 3 years later (and just after the 3-year lookback limitations period for refunds), the taxpayer filed the estate tax return (then well over due), showing no tax due.  After audit the IRS determined that about $25,000 tax was due.  The taxpayer then requested return of the balance.  The IRS denied the request because, it determined, the original remittance was a payment and the return, effectively requesting the refund, was not filed within the required lookback period under Section 6511(b).

The court held that the original remittance was a payment rather than a deposit.

Despite having strong equities on its side, the court finds that the Estate has failed to meet its burden of putting forth sufficient evidence from which a reasonable trier of fact could find that the remittance was a deposit.  Plaintiff’s motion for summary judgment will, therefore, be denied and defendant’s motion for summary judgment will be granted.

The court looked at the facts and circumstances in making this test concluding:

Although the first factor articulated by the Seventh Circuit in Moran [there was no determination of tax due] weighs in favor of the plaintiff’s position, its intent to make a down payment on its tax liability and the fact that IRS treated the remittance as a tax payment tip the balance strongly to a finding of a tax payment. Based on this, the court finds that the Estate’s remittance does not constitute a deposit. This result may seem unfair -- after all the government is allowed to keep a payment that it concedes was not due -- but tax laws are “not normally characterized by case-specific exceptions reflecting individualized equities.” United States v. Brockamp, 519 U.S. 347, 352 (1997). Despite the equities, the court concludes that plaintiff is unable to meet its burden of demonstrating that the remittance was a deposit and, therefore, this court has no jurisdiction over its claim for refund. Dalm, 494 U.S. at 609

Practitioner Warns of IRS Letters and Notices to Not Ignore (8/17/13)

Edward M. Robbins, Jr., a prominent tax litigator (see bio page here), has posted a good series of articles on six IRS Letters and Notices You Must Not Ignore.  The articles present a good summary of the problems encountered in ignoring these letters and notices; or, to state it differently, the reasons you should pay attention to these letters and notices.  This articles are on a blog sponsored by the law firm of Hochman, Salkin, Rettig, Toscher & Perez, P.C, here, which has a strong team in tax controversy matters. Readers might also want to review that firm's publications web site, here.

Ed's list is:

1. Statutory Notice of Deficiency (Ninety Day Letter).
2. Final Partnership Administrative Adjustment (FPAA) under TEFRA.
3. The IRS Summons (including an IRS caused Grand Jury Subpoena).
4. The Final Notice Before Levy.
5. Statutory Notice of Denial of a Claim for Refund.
6. Notice of Computational Adjustment under TEFRA.

The series of articles is:

1. Six IRS Letters and Notices You Must Not Ignore (Tax Controversy (Civil & Criminal) Report 7/7/13), here, addressing items 1 and 2 on his list.
2. Part II – Six IRS Letters and Notices You Must Not Ignore (Tax Controversy (Civil & Criminal) Report 8/5/13), here, addressing items 3 and 4 on his list.
3. I will post the link to the final article when he posts it.

The Effect of Violation of the Statutory Requirements for a Notice of Deficiency (8/15/13)

Leslie Book has a good blog entry titled What Happens When The IRS Violates a Statutory Requirement Relating to Notices of Deficiency? (Procedurally Taxing 8/13/13), here.  His general topic is when courts will treat a failure to meet the statutory requirements for a notice of deficiency as invalidating the purported notice of deficiency.  The statutory requirements for the notice are:

1. The date to file a petition for redetermination in the U.S. Tax Court.
2. Notice of Taxpayer Advocate's Contact Information.
3. Notice sent to Taxpayer's Last Known Address.
4. Explanation of Basis for Deficiency.

I encourage readers to read Professor Book's blog entry for more detail than I offer here (except as to item 4).  The unifying theme is whether the taxpayer has been prejudiced by some IRS footfault in meeting these statutory requirements.  Professor Book discusses that prejudice issue in the context of requirements 1 and 2.  It is also present in #3, for the cases hold that, if, despite not being sent to the last known address, the taxpayer actually receives the notice of deficiency in time to file a petition for redetermination, the notice of deficiency will not be invalidated (so that it will operate to suspend the statute of limitations and support the ultimate assessment if the taxpayer did not petition the Tax Court or even if he did petition the Tax Court and loses the last known address issue).

I would like to address briefly the Scar case (Scar v. Commissioner, 814 F.2d 1363 (9th Cir. 1987)) which Professor Book discusses briefly.  I offer the following from  my book (footnotes omitted):

As noted above, the deficiency notices must describe the basis for the deficiency but failure to do so will not invalidate the deficiency.  Thus, the taxpayer appears to have a statutory right to the information in the notice of deficiency, but no statutory remedy if he does not receive it in the notice of deficiency.  As we shall note, however, there may be some remedies short of invalidity of the notice for failure to meet this requirement of § 7522(a). 

Usually, there will be some explanation.  It may be summary or even cryptic because the determination usually follows an audit in which the taxpayer participated and was aware of the issues the IRS was raising.  Indeed, in such cases, usually the taxpayer will have been provided some type of report (often referred to as a Revenue Agent's Report (“RAR”)) that explains the proposed adjustments.  But again, although the Code provides that the taxpayer be notified of the basis for the deficiency, there is no Code remedy if one is not provided.

Cheating, Visibility and Return Preparers (8/8/13)

A new tax procedure blog, Procedurally Taxing, here, has a new blog entry written by Professor Leslie Book, here, titled Cheating and Visibility on Taxes: IRS Efforts to Regulate Tax Return Preparers Should Continue (Procedurally Taxing 8/6/13), here.

The blog entry opens with the following:

It comes as no surprise that people cheat on their taxes. There is a rich literature discussing tax noncompliance, analyzing its causes and discussing ways that the government can deter, detect and if necessary sanction those who would cheat or help others cheat. I too have contributed to the discussion, primarily considering the role that commercial preparers play in decisions to comply with our tax laws in research reports commissioned by the Taxpayer Advocate Service and made part of the National Taxpayer Advocate Reports to Congress in 2007 and 2008.

The blog entry then follows with some very interesting insight and research on cheating and how the findings of this research can be deployed by increasing visibility in tax settings.  I particularly commend to readers the Halloween research study.  Visibility is enhanced through information reporting and the IRS's return preparer initiatives, one facet of which is in play in the recent Loving case now on appeal to the D.C. Circuit.

Tax Court Tanks Another Taxpayer's Bullshit Tax Shelter (8/6/13)

This is almost ho-hum now.  At some point, I will quit posting these items.  But, for now, I post it because the Tax Court elevated it to a full T.C. opinion and devoted 244 pages of words to pouring out the taxpayer.  In John Hancock Life Insurance Company (U.S.A.) v. Commissioner, 141 T. C. No. 1 (8/5/13), here, the taxpayer invested in two bullshit tax types of tax shelters -- LILOs and SILOs.  I recommend that readers interested in other failed attempts to snooker the courts in these types of transactions do a search on this blog on SILO and LILO.  John Hancock met the same fate.

As with most of the more sophisticated bullshit tax shelter, the facts are mind-numbingly complex to disguise the odor.  So, I won't get into the details.  Readers interested can read the case and the pundits who will claim that the world is coming to an end because taxpayers can't get their way.

I do address a burden of proof question that the Court address, but which ultimately was not outcome determinative.  For some reason, in the notice of deficiency and in the answer, the IRS did not raise the economic substance basis for disallowing the claims; instead the IRS raised it for the first time in a pretrial memorandum.  The Tax Court assigned the burden of proof to the IRS on that issue.  The IRS had timely asserted the related concept of substance over form, so the normal taxpayer burden of proof applied to that issue.

After exhaustive analysis of the proof, the court held that the IRS had not met its burden of proof with respect to lack of economic substance.  The Court seems to have been particularly piqued at the IRS' principal expert and his lack of a net present value calculation.  The Court formulated its bottom line conclusions on failure to meet burden of proof as follows:

Respondent has failed to demonstrate that John Hancock had no realistic expectation of profit when it entered into the test transactions. Though John Hancock's ABC reports lack a net present value analysis and are therefore inconclusive, respondent bore the burden of proof on this issue. Respondent has failed to meet his burden of proof, and we are therefore not persuaded that the test transactions fail the objective economic substance inquiry.

* * * * 

Respondent has failed to meet his burden of proving that the test transactions fail either the objective or subjective test under the economic substance doctrine. Therefore, we do not find that the test transactions lack economic substance.

IRS Has No Authority To Settle Cases Referred to DOJ Tax Even After They Are Returned (8/3/13)

In United States v. Jackson, 2013 U.S. App. LEXIS 1674 (3d Cir. 2013), here.  This is a non-precedential opinion, but it has a interpretation of a key provision of the statute dealing with the interface of DOJ Tax and the IRS.

The facts are simply stated.  The IRS referred a case to DOJ Tax to obtain a judgment against a taxpayer on a tax assessment.  DOJ Tax obtained the judgment and thereafter seems to have sent the case back to the IRS for collection action on the judgment.  The taxpayer and the IRS interacted.  I am deliberately fuzzy about that interaction.  It seems, however, that the taxpayer filed returns for at least some of the relevant years indicating less tax due and made payments.  The IRS apparently accepted the returns and abated the tax (apparently the IRS just processed and abated without substantive consideration).  Importantly, the IRS abated without DOJ Tax consent.  The taxpayer claimed that the result of the interaction was that the IRS compromised or affirmatively abated he tax liability (which might mean that the only way the IRS could restore the assessment was to invoke the deficiency procedures if there were sufficient time on the statute).  The taxpayer then moved to have the judgment declared satisfied.

One issue was whether the IRS abated in the manner claimed (rather than just made a mistake that might be correctable).  But the predicate issue was whether the IRS even could abate or compromise the tax liability for less than the judgment obtained by DOJ Tax without DOJ Tax's approval.  Section 7122(a), here, provides:

(a) Authorization
The Secretary may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense; and the Attorney General or his delegate may compromise any such case after reference to the Department of Justice for prosecution or defense.

Certainly, any action the IRS took was "after" the reference to DOJ Tax.  So  a straight-forward literal reading of the statute meant that the IRS lost the ability to compromise the tax liability, even after the judgment had been obtained and only the IRS was involved in the collection of the tax now reduced to judgment.  That would mean that any abatement was void and hence the assessments could be reinstated.  Here is the court's reasoning:

Jackson's main contention is that the IRS abated his tax liabilities. Under 26 U.S.C. § 7122(a), the IRS "may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the [DOJ] for prosecution and defense; and the Attorney General or his delegate may compromise any such case after reference to the [DOJ] for prosecution or defense." However, "[o]nce a tax matter is referred to the [DOJ], only the Attorney General or a person to whom authority has been delegated by the Attorney General may settle the matter." United States v. Forma, 784 F. Supp. 1132, 1139 (S.D.N.Y. 1992); see also Slovacek v. United States, 40 Fed. Cl. 828, 833 (1998) (agreeing with Forma); Int'l Paper Co. v. United States, 36 Fed. Cl. 313, 321 (1996) (agreeing with Forma); Brubaker v. United States, 342 F.2d 655, 662 (7th Cir. 1965) (determining that excess tax "liabilities cannot be compromised by the Attorney General or the [DOJ] unless and until the Commissioner refers [the matter] to the [DOJ] for prosecution or defense"); cf. Bergh v. Dep't of Transp., 794 F.2d 1575, 1577 (Fed. Cir. 1986) (noting that a compromise is "within the discretion of the agency conducting the litigation"). 

Spousal / Marital Privileges (7/3/13)

In United States v. Brock, 2013 U.S. App. LEXIS 15574 (7th Cir. 2013). here, the Seventh Circuit offers a good summary of the marital privileges that can be invoked to prevent one spouse from testifying adversely to the other.  The opinion is a good succinct read.

After I read the opinion, I revised portions of my discussion of the privileges involved.  My discussion is more wordy, but covers more ground.  I recommend that readers read the opinion first and then, if still interested, readers might read the following which is the revised text without the footnotes (I do not indent the entire cut and paste, since all of it is from my books):

G. Spousal Privileges.

1. General Justification for Spousal Privileges.

The general societal value supported by the spousal privileges is the integrity of the marriage unit.  The justification for the particular subset of marital privileges are usually more fine-tuned than that, focusing on the nature of the testimony, its potential adverse effect on the marriage unit or marriage in general, and harm to society that justifies the privilege to deny access to information in dispensing justice.  For present purposes, readers should just recall that it is the marital unit and the societal value of fostering the marital unit that justifies these privileges.

2. Spousal Communications Privilege.

The spousal or marital confidential communications privilege covers “information privately disclosed between husband and wife in the confidence of the marital relationship" Trammel v. United States, 445 U.S. 40, 51 (1980).  The societal benefit is to ensure that spouses communicate confidentially without fear of exposure in court.  Either spouse “may invoke the privilege to avoid testifying or to prevent the other from testifying about the privileged communication.”  Either spouse may assert this privilege as to both that spouse’s communications to the other spouse and the other spouse’s communications to that spouse.

What are protected communications?  We all know that people – including spouses specifically – communicated by words and actions.  So, is everything one spouse learns about the other through words or actions communications?  The answer is that general verbal communications are what is protected rather than actions.  The following example is in a recent case [the Brock case linked above]:

[T]he protected subject matter includes only what one spouse communicates to the other, not what one spouse learns about the other in other ways, such as by observing the other's actions.  In Mr. Brock's  trial, the marital communications privilege could have applied to Mrs. Brock's testimony that he told her to take two guns from their home and put them in a car. It would not have applied to her testimony about Mr. Brock handling the guns or shooting possums.