Last December, a US court granted the Internal Revenue Service (IRS) permission to serve what are known as “John Doe” summonses on FedEx Express, FedEx Ground, DHL, UPS, Western Union, the Federal Reserve Bank of New York (FRBNY), Clearing House, and HSBC US.
The purpose of the court order is to produce information about US taxpayers who may be evading, or have evaded, taxes by using the services of Sovereign Management & Legal Ltd – a multi-jurisdictional offshore service provider based in Belize and Hong Kong – to establish or maintain foreign accounts, assets and entities.
The IRS discovered during its investigation that Sovereign used FedEx Express, UPS and DHL to communicate with US clients, and Western Union to transmit funds to and from clients in the US. Additionally, the IRS might obtain further evidence from financial transactions between Sovereign and its US clients from the wire services operated by the FRBNY and Clearing House, and the US correspondent bank accounts that HSBC US holds for Sovereign’s banks in Panama and Hong Kong.
This is another in a series of actions that demonstrates just how serious the IRS is about finding US taxpayers that have not complied with their tax obligations by hiding money overseas. The IRS also has a powerful new tool at its disposal – FATCA, the Foreign Account Tax Compliance Act – through which it aims to clamp down on those who would seek to evade their US tax obligations.
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