Government agencies around the globe are working together to find individuals that are hiding assets in an attempt to illegally reduce their tax obligations. A Justice Department statement recently provided an example of these collaborative efforts. It outlined how the Internal Revenue Service (IRS) is pushing a popular credit card company to provide the identity of account holders to the Dutch government.
The move is in support of a treaty that allows the two countries to cooperate in exchanging tax information to better ensure tax laws are followed in both countries.
How productive are these requests? A recent article by Bloomberg notes that the United States government has found treaties like the one noted above quite profitable. In fact, the U.S. has collected over $1.37 billion in penalties through similar requests from Swiss banks alone.
How do these requests work? Requests like the one noted above by the Dutch government often involve what is referred to as a "John Doe Summons."
This type of summons essentially involves a request for whoever has the account. The request does not involve an actual name, because the name is not known. Instead, the request is based on the belief that the individuals holding the accounts are evading taxes. Once information about the accounts is gathered, the requestor pursues the identities of the persons in question.
Is this common? Requests like this are not uncommon. In 2013, the IRS had a similar situation with the Norwegian government. Based on a treaty between Norway and the U.S., the Norwegians requested information about identities of individuals that used certain debit or credit card within the U.S. to determine if these individuals had violated Norwegian tax laws.
These two instances provide examples of the complex nature of governmental efforts to end tax evasion on a global scale. Due to these complexities, it is wise for anyone who is facing allegations of evading tax obligations to seek legal counsel to help better ensure their rights are protected.