The IRS sought the court order authorizing it to serve a John Doe summons to the California Board of Equalization for certain a certain discrete record set that would help the IRS identify persons making gift transfers to non-spouse related parties which, the IRS imagined, might have compliance issues with the gift tax. I won't get into the details of the focus of the IRS's interest, since the principal focus would be civil compliance initiatives. The judge refused to authorize the summons, finding that the IRS had not shown that the information and documents were not otherwise reasonably available. Further, although dismissing the motion for authorization without prejudice on the basis stated, the Court cautioned that, if the IRS were to repackage the motion, the court had some serious concerns about whether the IRS could otherwise qualify. The opinion is here.
The point for present purposes is that the John Doe Summons, which is a prominent feature in the criminal tax arena and particularly in the offshore bank initiatives, does have procedural protections that courts will enforce. Of course, the information and documents sought from offshore banks is not otherwise reasonably available so I have not seen banks denying requests for John Doe Summonses for offshore bank documents and information.
I also remind readers that the John Doe Summons suspends the civil and criminal statutes of limitations for any taxpayer within the scope of the summons for a period from 6 months after the date the John Doe summons is issued through the date of compliance. See Section 7609(e)(2). Regulations Section 301.7609-5 has this example:
A John Doe summons is issued on April 1, 2004, to the promoter of a tax shelter and seeks the names of all participants in the shelter in order to investigate the participants' income tax liabilities for 2001 and 2002. The district court approves service of the summons on April 30, 2004, and the summons is served on the promoter on May 3, 2004. The promoter does not provide the names of the participants. The periods of limitations for the participants' income tax liabilities and criminal prosecution for 2001 and 2002 are suspended under section 7609(e)(2) beginning on November 3, 2004, the date which is six months after the date the John Doe summons was served until the date on which the promoter's response to the summons is finally resolved.I don't know how many John Doe Summonses have been obtained in the offshore initiative, but there are public indications of such summonses for HSBC India, the Stanford related companies, and UBS. My quick search indicated that the UBS summons was approved on 7/1/08 and was presumably resolved by the agreement reached August 19, 2009. Although it was resolved by producing document pursuant to a treaty request procedure, presumably the statute of limitations on all taxpayers within the scope of the summons was suspended. So, it looks like the IRS got a statute extension of perhaps slightly over 6 months for the taxpayers within the scope of the John Doe Summons. I believe the imagined number of U.S. taxpayers within the scope of the original summons was 52,000 or some such number.