Monday, December 19, 2011

John Doe Summons Fishing for Domestic Tax Cheating (12/19/11)

After suffering an initial defeat in obtaining approval for California records of real property transfers to children and grandchildren by gift (see prior blog John Doe Summonses & Statutes Of Limitations (5/27/11), here, the IRS has persisted and come up with a winning formula for the John Doe Summons.  See Janet Novack, Federal Judge Green Lights IRS Search For California Gift Tax Cheats (Forbes 12/18/11), here. From Ms. Novack's article:
In an affidavit filed in the California case in October, Josephine Bonaffini, the Federal/State Coordinator for the IRS’ Estate and Gift Tax Program, said the agency has so far examined 658 taxpayers identified as transferring  property to relatives and concluded that 238 of them should have, but didn’t,  file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Twenty of those delinquent filers have already been assessed extra tax because they had exceeded the amount each person is allowed to transfer gift tax free, she said.
Sound like fertile ground for targeted use of limited audit resources.

The most famous use of the John Doe Summons -- at least in recent history -- is its use for offshore financial institutions, starting famously with the attack on the use of offshore credit cards and progressing most recently to its use against certain offshore banks, most prominently UBS.


  1. With citizenship based taxation, and FATCA coming, plus all the non willful penalties (guilty until you prove your innocence) for failures to file FBARs, I am glad to see that the IRS is extending its efforts to families in America and not just expats.... LOL This is equal opportunity fishing expeditions. Looks like they are casting a wide net in California, that other “offshore” tax evasion haven. :)

    Now, maybe some Americans might will pay attention! This isn't just about foreign account tax avoidance" anymore.

    Time to create a OVDI for Californians?

    A little additional commentary here...

    Hard to argue with these comments. Not sure I buy into the flat tax issue, with all this disproportional effects on the working poor, but something has to give. You think?

  2. The problem is clearly that the IRS is at war not just with US persons abroad but all the those within the country. The Federal Government is more of tyrant than King George ever was. How long will it be before the American people rise up and knock this tyrant off the throne so that there can be freedom once again? Frankly, I'm tired of this evil regime, and I will be fight it. Please join me, all who agree! Peter W. Dunn


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