"Group I approval is required for any Internal Revenue Service undercover operation which involves a reasonable expectation of one or more of the following factors:
An undercover employee or cooperating private individual will attend a meeting between a subject of the investigation and his or her lawyer which is covered by the attorney-client privilege.
An undercover employee or cooperating private individual may pose as an attorney, physician, clergyman, or member of the news media. For example, an agent may pose as an attorney in a setting where he or she purports to represent some other identified party, such as another agent or cooperating private individual, or when the impersonation will clearly not involve a setting conducive to the initiation of an attorney-client relationship with any third party. Further, when assuming such roles, agents will not perform professional services associated with these cover occupations or assume such a cover occupation for developing a privileged relationship.
A request for information will be made by an undercover employee or cooperating individual to an attorney, physician, clergyman, or other person who is under the obligation of a legal privilege of confidentiality, and the particular information would ordinarily be privileged.
A request for information will be made by an undercover employee or cooperating private individual to a member of the news media concerning any individual with whom the newsperson is known to have a professional or confidential relationship.
There is a significant risk of violence or physical injury to individuals or a significant risk of financial loss to an innocent individual.
The operation will earn income which will be used to offset expenses of the operation, referred to as churning. (See 184.108.40.206.3.)
The undercover operation will result in significant civil claims against the United States either arising in tort, contract, or claims for just compensation for the "taking" of property.
The undercover operation will require indemnification agreements for losses incurred in aid of the operation.
The undercover operation will have a significant impact on investigations in more than one region.
The undercover operation will involve an investigation of possible corrupt action by a public official, a political candidate, the activities of a foreign government, the activities of a religious or political organization, or the activities of the news media.
The undercover operation will involve damaging untrue representations by an undercover employee or cooperating private individual concerning the activities or involvement of an innocent person.
An undercover employee or cooperating private individual will engage in any activity that is proscribed by federal, state, or local law as a felony or that is otherwise a serious crime, except for the making of false representations to third parties in concealment of personal identity or property or involvement in illegal gambling activities necessary for the maintenance of the operation.
An undercover employee or cooperating private individual will seek to supply an item or service that would be reasonably unavailable to criminal actors but for the participation of the government.
An undercover employee or cooperating private individual will run a significant risk of being arrested by seeking to continue in an undercover capacity.
An undercover employee or cooperating private individual will be required to give sworn testimony in any proceeding using a false identity."
-- Internal Revenue Manual - Criminal Investigation, Undercover Operations, May 2, 2001
"It is important to distinguish between investigative techniques used in surveillance activities and certain undercover operations.
The following characteristics apply to surveillance:
The purpose is to observe ongoing activities and individuals.
Interaction with subjects and third parties is usually not initiated.
Conversations are incidental to the surveillance.
Conversations are not monitored or recorded, except as set forth in above.
The special agent has limited cover, used to protect the integrity of the surveillance.
Local special agents are used.
Special agents need not be trained in undercover techniques.
Initiated surveillance activity bears little resemblance to an undercover operation. The following situations indicate the surveillance activity evolved into an undercover operation:
The activity continues for an extended period, and begins to focus on certain individuals.
Reliance on cover identities increase.
Contacts with targets and other individuals are more in-depth.
Agents become participants rather than observers of the activities of interest.
The following characteristics apply to undercover operations:
The purpose is to initiate or participate in activities with identified targets.
Interaction with subjects and third parties is sought.
Undercover agents or other authorized individuals initiate and direct conversations to further the objectives of the operation.
Conversations may be monitored and recorded.
The undercover agent has a documented cover. This cover is used as a basis for contacts with targets or witnesses. The lack of a documented cover does not mean the activities engaged in do not constitute an undercover operation.
Trained undercover agents are suitable for this operation; in most cases local special agents should not be used.
The services of a Confidential Informant can be utilized to perform undercover activities."
SOURCES FOR THE ABOVE QUOTED INFORMATION:
Click. IRS Undercover Operations
Click. IRS Surveillance and Covert Monitoring
Click. IRS Criminal Investigation Handbook