John Doe summonses were issued at the end of 2014 on eight entities (FedEx Express, FedEx Ground, DHL, UPS, Western Union, the FRBNY, Clearing House and HSBC USA) to produce records that will assist the IRS in identifying U.S. taxpayers who, from 2005 through 2013, used Sovereign’s services to establish, maintain, operate or control of any foreign financial account or other assets; any foreign corporation, company, trust, foundation or other legal entity; or any foreign or domestic financial account in the name of such foreign entity.
This event constitutes a public disclosure (see OVDP FAQ 7.2). Any taxpayer who is associated with these “John Doe” summonses that has not fully complied with their filing and reporting obligations with the IRS can still enter the Offshore Voluntary Disclosure Program (see OVDP FAQ 21) but their uniform penalty will jump from 27.5% to 50% (see OVDP FAQ 7.2). Once the Service or the Department of Justice obtains information under the John Doe summons that provides evidence of a specific taxpayer’s noncompliance with the tax laws or Title 31 reporting requirements, that particular taxpayer will become ineligible for OVDP and Criminal Investigation’s Voluntary Disclosure Practice. The takeaway here is that if you are taxpayer that is noncompliant and could potentially be implicated in this massive summons, now is the time to come into the Offshore Voluntary Disclosure Program. Failure to do so could lead to an “ineligible” status and potential criminal and civil liability/penalties.
About Five Stone Tax Advisers
Five Stone Tax Advisers has years of experience negotiating directly with the IRS to get the best possible outcome. Our Tax Preparation and Planning unit has a team of tax attorneys, certified public accountants and enrolled agents that form a single sourced point of contact to ensure you stay compliant and pay less taxes.