Tuesday, May 21, 2019

Another IRS Summons on Behalf of a Foreign Government

On March 13, 2018 we posted District Court upholds Another IRS Summons Issued Pursuant to a Tax Treaty Request where we discussed that a district court has upheld a summons that IRS issued to an American law firm, pursuant to a request from the French tax authorities, with respect to transfers of funds made by an alleged French citizen to a client trust account maintained by the law firm. (Franck Hanse v. US, Case No. 1:2017cv04573).

Previously we posted on August 1, 2013 Federal Courts Authorize John Doe Summonses Seeking Identities of Credit Card Use For Norweign Tax Authority!  where we discussed that federal courts in Minnesota, Texas, Pennsylvania, Oklahoma, Virginia and California had entered orders authorizing the Internal Revenue Service (IRS) to serve John Doe summonses on certain U.S. banks and financial institutions, seeking information about persons who have used specific credit or debit cards in Norway.  

Now the DOJ, petitioned the U.S. District Court for the Western District of North Carolina to authorize IRS summonses to uncover the identities of Finnish residents using U.S.-issued payment cards in Finland. The DOJ and IRS are pursuing this matter under the U.S.-Finland tax treaty and at the request of the Finnish government.
“Our continued success in combatting Offshore Tax Noncompliance has been helped by the Assistance We Receive through the Network of Tax Treaties Around the Globe,”
said IRS Commissioner Charles Rettig. 
“Yesterday’s effort reflects that the U.S. will return this help by working under the law with tax administrators in other nations to help them in their fight against tax evasion and avoidance. A global economy should not be allowed to serve as a possible vehicle for tax evasion in any country.”

The petition states: "Finnish taxpayers may use fo's reign payment cards in an attempt to avoid reporting income and paying Finnish income tax. Such Finnish residents divert income to a U.S. bank, maintain an account there, and use the account to make purchases in their home country through payment cards issued by the U.S. bank."

The Court granted the request, authorizing the IRS to serve "John Doe" summonses to identify the individuals who hold three payment cards issued by Bank of America, Charles Schwab and TD Bank. Each of the cards was used to make withdrawals and purchases in Finland worth between $85,000 and $135,000 in the period from 2013 to 2014.

The DOJ stated that it does not allege that Bank of America, Charles Schwab or TD Bank violated any U.S. or Finnish laws with respect to the card accounts. 
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