For any individual who has taken up a passing interest in taxes, Bitcoin, offshore investments, and other related financial transactions the concept of a John Doe summons should be reasonably familiar. John Doe summons have been used successfully by the IRS and Department of Justice in a number of previous tax enforcement matters. Most famously, John Doe summons were utilized as part of the tax enforcement efforts in the Swiss Bank Program and a larger crackdown on American use of Swiss banking laws to commit offshore tax evasion. However, John Doe summons are also currently in use to discover the identities of U.S. taxpayers who may have failed to report Bitcoin income or pay taxes on capital gains.
Now the IRS and DOJ are looking to once again apply the John Doe summons tool in the context of suspected offshore tax evasion. In this instance, a federal court in Montana unsealed an order authorizing the IRS to serve a John Doe summons on Michael Behr of Bozeman, Montana. The summons is in pursuit of information about U.S. taxpayers who may hold offshore accounts established by Sovereign Management & Legal LTD (SML), a Panamanian entity.
There is simply no shortage of companies marketing to wealthy Americans promises regarding “protecting your wealth,” making oneself “judgment proof,” or “insulating yourself from liabilities.” While the exact methods these companies use will vary, they generally involve setting up a web of offshore entities. These entities often include numerous trusts, holding companies, and other entities intended to obscure the true owner of the accounts and assets.
A number of company’s market “asset protection packages” and similar products to protect the assets of wealthy Americans. At least some of these advertisements will even go so far as to falsely assure the taxpayer that the arrangement is legal. Unfortunately, what taxpayers do not know can hurt them. By and large, offshore asset protection packages encourage Americans to take steps that, at best, are questionable and highly aggressive. At worst, these tactics are highly likely to lead to criminal tax charges for tax evasion and other violations of the law.
Sovereign Management & Legal LTD (SML) is a Panamanian entity that advertised various “wealth management” packages to Americans. These packages generally required the taxpayer to move his or her assets into an array of offshore entities and their accounts held in the name of nominee officers provided by SML. SML would provide each of its clients with a “Sovereign Gold Card” debit card in the name of the entity nominee. The client could use this debit card to access their foreign assets without revealing their true identity. On the basis of these facts, the IRS and Department of Justice believes that there is a reasonable basis for concluding that U.S. taxpayers utilized these accounts to commit tax fraud and other violations of the Internal Revenue Code and related laws.
The John Doe summons, which was recently unsealed by a court in Montana, seeks the identity of taxpayers who may have used the “Sovereign Gold Card” to commit tax evasion. Specifically, the John Doe summons filed by the IRS seeks the account records of SVG account holders from 2005 to 2016 who were issued a gold card. Any and all U.S. taxpayers who fit this description should immediately begin to take steps to address this tax oversight. While tax penalties can often be mitigated with a voluntary disclosure, this opportunity is lost when the taxpayer comes under investigation.
If you are worried about the advice you took from an offshore asset protection or wealth protection firm, the tax attorneys of the Tax Law Offices of David W. Klasing may be able to help. We can assess whether the offshore trust and accounts have been properly reported and whether taxes have been on all income. If we detect problems or oversights, we can provide a clear plan to correct errors and bring you back into compliance with the U.S. Tax Code. To schedule a confidential reduced rate consultation, call our Los Angeles or Irvine law offices at 800-681-1295 today.