he IRS announced that U.S. District Judge John P. Cronan entered an order on December 23, 2024 authorizing the IRS to issue summonses requiring certain entities to produce information about U.S. taxpayers, including individuals and trusts, who may have used the services of a multinational group of affiliated companies that operate under the trade name “Trident Trust” (collectively, the “Trident Trust Group”) to evade federal income taxes. Specifically, the IRS summonses seek records from a Trident Trust Group affiliate, as well as from companies that may have facilitated electronic fund transfers and courier deliveries to Trident Trust Group entities, to identify U.S. taxpayers who may have used the Trident Trust Group’s services to create or control foreign assets and entities to potentially avoid compliance with their U.S. tax obligations.
Acting U.S. Attorney Edward Y. Kim said:
“Today’s Action Is Part of This Office’s Steadfast Commitment To Hold Accountable Those Who Use Offshore Service Providers To Avoid Paying Their U.S. Taxes. In Obtaining Authority To Issue These Latest John Doe Summonses, We Continue Our Joint Efforts With The IRS To Investigate Tax Evaders Who Use Foreign Financial Accounts And Sham Foreign Entities To Hide Their Assets And Income"
IRS Commissioner Danny Werfel said: “U.S. taxpayers and their facilitators who hide offshore income generating activities and assets from the U.S. government are on notice that the IRS continues to prioritize combatting offshore abusive activities. These records will assist the IRS and its partners in finding those taxpayers, ensuring their compliance with the U.S. tax laws and delivering on our mission of a fair tax system.”
Federal tax law requires U.S.
citizens, resident aliens, and trusts with gross annual income above the
reporting threshold to pay taxes on all their income earned worldwide.
They must also disclose their interests in certain foreign financial accounts,
assets, and entities. Failure to report these offshore arrangements or
pay associated taxes can result in serious civil and criminal
consequences. According to the allegations set forth in the documents
filed in support of the petition to authorize the John Doe summonses, and other
information in the public record:
The Trident Trust Group is a
privately owned network of entities operating in nearly 30 jurisdictions
worldwide, including known tax havens. The Trident Trust Group has
provided corporate, trust, and fund administration services for over 40 years.
It offers, among other things, services that enable customers to conceal their
interests in offshore accounts and entities, including creating opaque
corporate structures in jurisdictions with strict privacy laws, providing
corporate directors and officers who act on their customers’ behalf, mail
forwarding and retention services, and inactive companies known as “shelf
companies” that are dormant and sitting “on a shelf” for purpose of later sale,
that are incorporated with a standard memoranda or articles of association and
have inactive shareholders, directors, and secretaries. The Trident Trust
Group advertises these services as assisting its clients in keeping
confidential their beneficial ownership of assets and avoiding public
reporting, including for “tax and estate planning.”
Some U.S. clients of the Trident Trust Group use or may use these services to conceal their interests in assets and avoid paying U.S. taxes on them. For example, Trident Trust Group employees have listed themselves as the founders, directors, and officers of thousands of Panamanian companies to help their U.S. taxpayer clients potentially conceal their interests in and income from these foreign entities.
Indeed, at least nine U.S. taxpayers who used the Trident Trust
Group’s services to conceal their interests in foreign assets have reported
their tax non-compliance to the IRS through the agency’s Offshore Voluntary
Disclosure Program, which allowed U.S. taxpayers to voluntarily disclose their
foreign accounts or entities used to evade tax liability in exchange for fixed
penalties.
In this action, the Court granted the IRS permission to serve what is known as a “John Doe” summons on Nevis Services Limited, a Trident Trust Group affiliate based in Manhattan, that seeks information about U.S. taxpayers who may have used its services or those of other entities within the Trident Trust Group to establish, maintain, operate, or control: any foreign financial account or other foreign asset; any foreign corporation, company, trust, foundation, or other legal entity; or any foreign or domestic financial account or other asset in the name of such foreign entity, from 2014 through 2023.
By Obtaining These Records, The IRS Expects To Be
Able To Identify Trident Trust Group Clients Who Used
The Group’s Services To Avoid Or Evade U.S. Taxes.
In addition, the Court also granted the IRS leave to serve summonses on twelve financial entities and courier services:
- the Federal Reserve Bank of New York;
- Clearing House Payments Company LLC;
- HSBC Bank USA, N.A.;
- the Bank of New York Mellon Corporation;
- Citibank, N.A.;
- UBS AG; Bank of America, N.A.;
- Deutsche Bank Trust Company Americas;
- FedEx Corporation;
- DHL Express (USA), Inc.; and
- United Parcel Service, Inc.
In parallel, the U.S. has sought
John Doe summonses in the U.S. District Courts for the Northern District of
Georgia and the District of South Dakota authorizing the IRS to issue summonses
to four other U.S.-based entities in the Trident Trust Group seeking
information about U.S. taxpayers who may have used the Group’s services.
A representative of Trident Trust responded to us that:
“We are aware of the IRS petitions. Each of our trust and corporate services businesses is regulated in the jurisdiction in which it operates and is fully committed to compliance with all applicable regulations. All clients are assessed via a thorough onboarding process.
“Trident Trust proactively informs the relevant
authorities where any compliance process gives rise to concerns. We also
fulfil our obligations in relation to the Automatic Exchange of Information in
taxation matters, including FATCA and CRS reporting.”
They also noted that the quote from the press release referencing U.S. taxpaying clients who have used the IRS’s Offshore Voluntary Disclosure Program, as per the court documents, where voluntary disclosures occurred between 2010 and 2014.
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