Supreme Court Ends Case Involving Records of Offshore Accounts
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In an opinion filed November 8, 2005, the Third Circuit Court of Appeals determined that the production of the Cayman National Bank (CNB) records by Gippetti would have no testimonial significance and therefore the Fifth Amendment claim is without merit. The production of the records are not testimonial because the taxpayer did not prepare the papers and was not competent to authenticate them even if he is required “to locate, retrieve and collect” them from CNB. The opinion did, however, state that the District Court where the case was originally heard needed to rule explicitly on the possession or control of the records in order to enforce the IRS summons and/or court order to produce the records.
The IRS summons to produce records pertaining to his CNB bank and credit card accounts was issued in February 2003 as part of a civil investigation by the IRS into the 1999 and 2000 federal income tax liabilities of Gippetti and his late wife. Gippetti reported interest income from the CNB bank account on the 1999 and 2000 federal income tax returns and disclosed the existence of the account on forms for reporting foreign bank and financial accounts filed to the IRS. The existence of the CNB credit card accounts came to light as a result of the IRS Offshore Credit Card Project (OCCP), and Gippetti did not dispute their existence. The court case was initiated by the IRS after Gippetti failed to comply with the summons.
The OCCP is an IRS initiative aimed at bringing into compliance with U.S. tax laws those taxpayers and other participants using “offshore” payment cards or other offshore financial arrangements to mask or shelter their income.