“John Doe” Summons is New IRS Tool to Fight FATCA Avoiders – Los Angeles Income Tax Planning and Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on November 6, 2013

With the goal of collecting unpaid taxes due on offshore assets, the Internal Revenue Service (IRS) continues to step up its game in finding any taxpayer who has not voluntarily and completely complied with FATCA, the Foreign Account Tax Compliance Act. To comply with FATCA, taxpayers with offshore assets must file Form 8938, Statement of Specified Foreign Financial Assets, with their federal income tax return. FinCen Form TD 90-22.1, Report of Foreign Bank and Financial Accounts, may also be required. Taxpayers who fail to comply face staggering penalties and possibly prison time. Earlier this year, the Department of Justice asked federal judges to impose stricter prison sentences on any taxpayer who has not complied with FATCA.

Now the IRS is using a much used tool, the “John Doe” summons to help its tax treaty partners ferret out foreign citizens who may have unreported foreign, and possibly, unreported U.S. income. The benefit of a “John Doe” summons is that it allows the IRS to request a court to order a financial institution to turn over any account information that covers a group of or specific person(s). The IRS must also show that it has reasonable evidence that the group or individual is in noncompliance with the tax code and that the information it seeks cannot be easily obtained any other way. 26 U.S.C. §7609(f). To utilize the “John Doe” summons for a foreign country, the tax treaty with the U.S. must allow for the “gathering and exchanging information to assist each other in administering the tax laws.” IRS Collecting Process Handbook, Part 5, Chapter 21, Section 2.

If you have an offshore account which has not been reported, contact a tax professional immediately.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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