Sunday, May 24, 2015

Recent Round of John Doe Summonses Reported (5/24/15)

I am catching up with some reading over the holiday.  Among the reading is Lee A. Sheppard, IRS Advertises Offshore Compliance Effort, 2015 TNT 86-1 (5/5/15), no link avaiable.  The article is Ms. Sheppard's report of the annual Offshore Alert conference on 5/4/15.  She includes in her report some comments by Bryan Stiernagle, director of the IRS offshore voluntary compliance initiative.  The key excerpt is (bold-face supplied by JAT):
Stiernagle has 16 specialists working on development of John Doe subpoenas to get information on offshore schemes. The IRS recently issued seven John Doe subpoenas to private banks. Stiernagle said that new subpoenas will go to intermediaries and service providers, not just banks, and not just Switzerland. These subpoenas are his unit's main method of operation.
While there is certainly such a thing as a John Doe subpoena (certainly a subpoena that would function like a JDS), I think he was referring to John Doe Summonses, since the IRS does not issue John Doe subpoenas.  The IRS JDS summons power is in Section 7609(f), here. Also, I infer that, if Lee correctly reports that the JDS were issued, that means that the court has already approved them and they have been served on banks within the IRS service power (which might be correspondent banks in the case of private banks, such as Swiss banks with no U.S. presence sufficient to support a JDS).

I don't recall having seen reports of such a large number of recent JDS's.  Here is my list of JDS's (which may certainly be incomplete):

Bank of N.T. Butterfield & Son Ltd.
CIBC FirstCaribbean Int'l Bank
HSBC India
Sovereign Management & Legal
Stanford Group Company
Stanford International Bank
Stanford Trust Company, Ltd.
Zürcher Kantonalbank

So, there apparently are some JDS's that are off my radar screen. I would appreciate hearing from readers as to JDS related to offshore accounts that are not on my list.  Please either leave the information by comment or by email to me at  Also, any surrounding information and/or links would be helpful.

The consequence of the JDS is, of course, that, when made public, the financial institutions get on the IRS list of Foreign Financial Institutions or Facilitators, here, which means that the offshore penalty in OVDP is increased from 27 1/2% to 50%.

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