IRS Going After Offshore Debit Cards With John Doe Summons

The IRS has been using a John Doe summons to get access to taxpayers’ bitcoin information and is now using the same tactic to get debit card information.

According to a report by Forbes, a federal court in Montana gave the IRS permission to serve Michael Behr of Bozeman, Montana, a John Doe summons to get information about taxpayers in the U.S. that may have offshore accounts created by Panamanian company Sovereign Management & Legal LTD. The IRS is looking for the records of people in the U.S. that received a Sovereign Gold Card debit card from 2005 to 2016. The IRS alleges the cards can be used to get access to the offshore funds and avoid paying taxes in the U.S. The report noted taxpayers in the U.S. that are trying to hide assets held offshore will often use offshore trusts, as well as corporate service providers, to open up accounts, create companies and even act as officers of the company.

The IRS alleges in its petition requesting the John Doe summons that Sovereign Management & Legal advertises packages that let taxpayers hide their assets outside of the U.S. Some of the services in the so-called packages include corporations owned by others, such as a fake charitable foundations, bank accounts for the entities and debit cards in the name of the nominee to the U.S. taxpayer.

In late November, the IRS filed documents showing it is fiercely going after both tax evaders big and small, who are using bitcoin-based transactions in an attempt to hide funds from the agency, by simply not reporting them. The tax agency sent a broad request to Coinbase, the largest bitcoin exchange in the United States, asking for the records of all customers who bought virtual currency from the company from 2013 to 2015.