Friday, July 30, 2021

D.C. SDNY Approves John Doe Summons re Offshore Enablers (7/30/21; 7/31/21)

In The Matter of the Tax Liabilities of John Does, United States Taxpayers (S.D. N.Y. 7/15/21), CL here, the Court ordered the service of a John Doe Summons upon several prominent financial services businesses related to taxpayers who may have used an offshore law firm, Panama Offshore Legal Services for U.S. tax noncompliance.  I first cut and paste the order (short 2 pages) and then link to and excerpt from the USAO SDNY Press Release explaining more about the perfunctory order.

1. The Order



JOHN DOES, United States taxpayers who, at any time during the years ended December 31, 2013, through December 31, 2020, used the services of Panama Offshore Legal Services, including its predecessors, subsidiaries, and associates, to establish, maintain, operate, or control any foreign financial account or other 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.

Case No. 21 Misc. 424


THIS MATTER is before the Court upon the United States of America’s “Ex Parte Petition for Leave to Serve ‘John Doe’ Summonses” (the “Petition”). Based upon a review of the Petition and supporting documents, the Court has determined that the “John Doe” summonses to Federal Express Corporation a/k/a FedEx Express; Fed Ex Ground Package System, Inc. a/k/a FedEx Ground; DHL Express (USA), Inc.; United Parcel Service, Inc.; the Federal Reserve Bank of New York; The Clearing House Payments Company LLC; HSBC Bank USA, N.A.; Citibank, N.A.; Wells Fargo Bank, N.A.; and Bank of America, N.A. (the “Summoned Parties”) relate to the investigation of an ascertainable group or class of persons, that there is a reasonable basis for believing that such group or class of persons has failed or may have failed to comply with any provision of any internal revenue law, and that the information sought to be obtained from the examination of the records or testimony (and the identities of the persons with respect to whose liability the summonses are issued) are not readily available from other sources. Moreover, the information sought to be obtained by the summonses is narrowly [*2] tailored to information that pertains to the failure (or potential failure) of the group or class of persons to comply with one or more provisions of the internal revenue law. It is therefore:

ORDERED AND ADJUDGED that the Internal Revenue Service, through Revenue Agent Katy Fuentes or any other authorized officer or agent, may serve Internal Revenue Service “John Doe” summonses upon the Summoned Parties in substantially the form as attached as Exhibits A-F to the May 4, 2021 Declaration of Katy Fuentes, Dkt. No. 4, and Exhibits G-J to the July 15, 2021 Letter from Talia Kramer, Dkt. No. 18. A copy of this Order shall be served together with the summonses.


Dated: July 15, 2021
New York, New York


 United States District Judge

2. Added 7/31/21 9:15am:  The USAO SDNY Press Release, here, providing more detailed information (excerpts):

Federal tax law requires U.S. taxpayers to pay taxes on all income earned worldwide.  U.S. taxpayers must also disclose certain foreign financial accounts and assets.  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:

POLS is a Panamanian law firm that advertises services, including to U.S.-based clients, to assist in concealing ownership of offshore entities and accounts.  Among other services, POLS and its associates offer assistance with forming corporations and foundations and creating offshore financial accounts, for purposes of asset protection.  POLS highlights secrecy as a key advantage of its entity formation services, promising its clients “100% anonymity, privacy and confidentiality.”  Other members of the POLS Group similarly advertise that they can assist clients with concealing assets and avoiding taxes.  For example, one POLS Group member assures clients that “a carefully designed corporate strategy allows you to care for your loved ones free from probate, inheritance taxes, and other legal and tax problems.”  The IRS has learned of at least one identified U.S. taxpayer who used POLS’s services to create an unreported offshore entity and account in Panama, through the IRS’s Offshore Voluntary Disclosure Program (“OVDP”).  The OVDP allows U.S. taxpayers to voluntarily disclose foreign accounts or entities used to evade tax in exchange for fixed penalties.

In this action, the Court granted the IRS permission to serve what are known as “John Doe” summonses on 10 entities: Federal Express Corporation; FedEx Ground Package System, Inc.; DHL Express; United Parcel Service, Inc.; the Federal Reserve Bank of New York; The Clearing House Payments Company LLC; HSBC Bank USA, N.A.; Citibank, N.A.; Wells Fargo Bank, N.A.; and Bank of America, N.A.  There is no allegation in this action that the summons recipients have engaged in any wrongdoing.  Rather, the IRS uses John Doe summonses to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown.  The John Doe summonses direct these couriers and financial entities to produce records that will enable the IRS to identify U.S. taxpayers who have used the POLS Group’s services, along with other documents relating to the POLS Group’s business. 

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