IRS Petitions for More ?Joe Doe? Summons Against Master Card Records of U.S. Taxpayers with Accounts in Tax Haven Countries

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Tuesday, October 1, 2002
Author: 
Bruce Zagaris
Volume: 
18
Issue: 
10
399
Abstract: 
On August 15, 2002, the Internal Revenue Service petitioned the U.S. District Court in Miami for approval to serve its second ?John Doe? summons on MasterCard International to obtain records for U.S. taxpayers with accounts in tax haven countries. The petition covers records for the years 1999, 2000, and 2001 on cards issued by foreign banks in more than 30 tax haven countries, including Liechtenstein, Switzerland, and numerous Caribbean nations. The petition is the newest effort in a series to combat tax-avoidance schemes involving credit cards issued by offshore banks. In the petition, Joseph West, a revenue agent and international examiner with the Large and Mid-Size Business Division at IRS, described a typical offshore scheme. The Schemes, often advertised on the Internet, usually involve an offshore practitioner creating an entity in the offshore jurisdiction for a U.S. taxpayer. The entity will have local nominee owners who declare they own shares for the U.S. taxpayer, who becomes the beneficial owner and whose identity is protected by local secrecy law. After the taxpayer transfers the funds, s/he uses a credit card to access the funds.