We previously posted DOJ / IRS Obtains Court Orders to Seek Offshore Account Data From 5 U.S. Banks!
where we discussed that U.S. District Judge Kimba M. Wood of the Southern District of New York entered an order on Nov. 7, 2013, authorizing the IRS to issue summonses requiring:
- Bank of New York Mellon (Mellon) and
- Citibank NA (Citibank) to produce information about U.S. taxpayers
who may be evading or have evaded federal taxes by holding interests in
undisclosed accounts at Zurcher Kantonalbank and its affiliates (collectively, ZKB) in Switzerland.
U.S. District Judge Richard M. Berman of the Southern District of New
York entered an order Nov. 12, 2013authorizing the IRS to issue
summonses requiring:
- Mellon, Citibank,
- JPMorgan Chase Bank NA (JPMorgan),
- HSBC Bank USA NA (HSBC), and
- Bank of America NA (Bank of America) to produce similar information in connection with undisclosed accounts at The Bank of N.T. Butterfield & Son Limited and its affiliates (collectively, Butterfield) in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland, and the United Kingdom.
In these actions, the Court granted the IRS permission to serve what are known as
"John Doe" summonses on
Mellon, Citibank, JPMorgan, HSBC, and Bank of America.
The IRS uses John Doe summonses to obtain information about possible tax
fraud by individuals whose identities are unknown. The John Doe
summonses approved today direct these
five banks to
produce records identifying U.S. taxpayers with accounts at ZKB,
Butterfield and
their affiliates, including other foreign banks that used ZKB and
Butterfield's U.S. correspondent accounts at Mellon, Citibank, JPMorgan,
HSBC, and Bank of America to service U.S. clients.
This includes the names of taxpayers who had an account with CIBC
FirstCaribbean International Bank over an eight-year period ending Dec.
31 without disclosing it to the IRS. It is too soon to say how many U.S.
citizens held undeclared accounts at FirstCaribbean or what penalties
they may face, Justice Department spokeswoman Dena Iverson said Nov. 12,
2013. FirstCaribbean does not have any branches in the United States
but it has what's known as a correspondent account with Wells Fargo that
allowed U.S. citizens to do business with the bank.
The
U.S. obtained the order from a judge Nov. 12, 2013.after an IRS revenue
agent reviewed information from 129 people who voluntarily came forward
to disclose offshore accounts and decided further scrutiny of
FirstCaribbean was warranted.
“Our goal is to drive people into compliance,” said Carolyn Schenk,
senior counsel with the IRS in Los Angeles. “We realize that we are not
going to audit our way out of this problem.”
The
private banking focus will therefore continue. Ms. Schenk announced
that “in the near future you are going to see John Doe summonses again
with regard to correspondent accounts here in the U.S. of multiple
offshore banks.”
By issuing these John Doe summonses, we continue our joint efforts with
the IRS to identify and hold accountable those who try to evade their
legal responsibility to pay taxes."
The U.S. Internal Revenue Service is planning to
broaden the use of subpoenas of documents in cases where the name of a
taxpayer under investigation is not known.
Brian Stiernagle,
program manager of the IRS Offshore Compliance Initiative, speaking at
the Offshore Alert conference in Miami reiterated that the
IRS is now going to target service providers that help facilitate
offshore tax evasion both in the U.S. and abroad.
"International issues remain a major focus for the IRS, and we are
continuing our efforts to fight tax evaders who use offshore accounts to
skirt the law," said IRS Acting Commissioner Werfel. "These John Doe
summonses for correspondent account records show our determination
to
pursue evaders using offshore accounts, even if the person hiding money
overseas chooses a bank that has no offices on U.S. soil."
The IRS has
also identified a number of abusive offshore service providers and
consultants in the U.S. who help facilitate tax evasion and the agency
will issue further summonses against them.
“These consultants are
setting up structures, they are acting as nominees, providing mail
forwarding services, all types of things with the goal of helping U.S.
persons hide their assets,” Ms. Schenk said.
For
a John Doe summons to be granted by a court, the IRS has to provide
evidence that tax evasion by a class or group of unknown individuals may
have occurred at a bank. In recent years, the information that forms a
“reasonable basis” for suspecting tax evasion has come from two main
sources: various offshore voluntary disclosure programs and
whistleblowers.
Federal tax law requires U.S. taxpayers to pay taxes on all income
earned worldwide. U.S. taxpayers must also report foreign financial
accounts if the total value of the accounts exceeds $10,000 at any time
during the calendar year. Willful failure to report a foreign account
can result in a fine of up to 50 percent of the amount in the account at
the time of the violation.
Have Unreported Foreign Bank Accounts or Companies?
Contact the Tax Lawyers at
Marini & Associates, P.A.
for a FREE Tax Consultation
Toll Free at 888-8TaxAid ( 888 882-9243)
According to Law360 the U.S. Department of Justice Thursday, in exchange for $2.2 million in payments, agreed not to press criminal charges on four (4) Swiss banks accused of hiding millions of dollars in U.S. taxpayer money from the Internal Revenue Service.
“Today’s agreements reflect the Tax Division’s continued progress toward reaching appropriate resolutions with the banks that self-reported and voluntarily entered the Swiss Bank Program,” Caroline D. Ciraolo, acting assistant attorney general with the DOJ’s Tax Division, said in a statement.
