IRS Summons Wells Fargo for Data on Offshore Accounts

By Jason Bramwell

A ruling in a San Francisco federal court on April 29 allows the IRS to seek information on US taxpayers who may have offshore bank accounts in the Caribbean.
 
Senior District Judge Thelton E. Henderson authorized the IRS to serve a so-called "John Doe" summons on San Francisco-based financial services firm Wells Fargo & Co, according to the Justice Department. 
 
The summons will enable federal tax authorities to identify taxpayers who hold or held interests in financial accounts at Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB) and other financial institutions that used FCIB's Wells Fargo correspondent account from January 1, 2004, through December 31, 2012.
 
A John Doe summons is used by the IRS to obtain information about possible violations of Internal Revenue laws by individuals whose identities are unknown. 
 
"This John Doe summons is a visible indication of how we are using the many tools available to us to pursue this activity wherever it is occurring," Kathryn Keneally, assistant attorney general for the tax division of the Justice Department, says in a written statement. "Those who are still hiding should get right with their country and their fellow taxpayers before it is too late."
 
Representatives from Wells Fargo did not respond to requests for comment by AccountingWEB.
 
According to a written declaration made by IRS Revenue Agent Cheryl Kiger, FCIB has branches in eighteen Caribbean countries, but none in the United States. However, the bank maintains a correspondent account at Wells Fargo Bank N.A. 
 
According to the Justice Department, a correspondent account is a "bank deposit account maintained by one bank for another bank. . . . foreign banks that do business in US dollars, but have no office in the US, obtain a correspondent account at a US bank in order to engage in such transactions."
 
"Checks drawn on a correspondent account function like any check drawn on an account at a US financial institution and could be deposited or cashed for US dollars at other financial institutions," writes Kiger, who has worked on the IRS Offshore Private Banking Initiative since February 2011. "Based on my experience, I know that a correspondent account can also serve as a means of moving funds into the foreign respondent bank, in this case FCIB."
 
After researching FCIB in the IRS offshore voluntary disclosure program (OVDP) database, Kiger learned that at least 129 voluntary disclosures had been made by US taxpayers holding undisclosed accounts in the Caribbean.
 
"I have reviewed all of these voluntary disclosure submissions and they all involve taxpayers who failed to report income related to undisclosed accounts at FCIB and its predecessors," Kiger says in her declaration.
 
Steven Miller, acting commissioner of the IRS, says in a written statement that the summons marks another milestone in international tax enforcement.
 
"Our work here shows our resolve to pursue these cases in all parts of the world, regardless of whether the person hiding money overseas chooses a bank with no offices on US soil," he states.
 
Related articles:
 

You may like these other stories...

Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...
IRS chief: New rule on the way for tax-exempt groupsIRS Commissioner John Koskinen told the USA Today on Monday that the agency will likely rewrite a proposed rule regulating the political activities of nonprofit groups to...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.