Audrey Strauss, the US attorney for the Southern District of New York, David A. Hubbert, assistant attorney general for the Department of Justice’s tax department, and Charles P. Rettig, commissioner for the Internal Revenue Service (“IRS”), announced that the US district judge Gregory H. Woods yesterday issued an order authorizing the IRS to issue subpoenas requiring multiple couriers and financial institutions to provide information about US taxpayers who may be using the services of Panama Offshore Legal Services (“POLS”) and its employees have used (collectively the “POLS Group”) to evade federal income taxes. In particular, the IRS subpoenas are intended to track courier deliveries and electronic money transfers between the POLS Group and its customers in order to identify the POLS Group’s US taxpayer customers who have used the POLS Group’s services to transfer foreign assets and businesses create or control to avoid compliance with their US tax obligations.
Manhattan US Attorney Audrey Strauss said: “This move underscores our office’s commitment to holding accountable those who use offshore service providers to avoid US taxes. In issuing these John Doe subpoenas, we continue our joint efforts with the IRS to investigate tax evaders who use foreign financial accounts and defraud foreign companies to hide their assets. “
Assistant Attorney General David A. Hubbert said, “The Department of Justice, which works with the IRS, is seeking to expose the use of foreign bank accounts to evade US taxes. We will use the many tools at our disposal, including subpoenas from John Doe such as those authorized today, to ensure that taxpayers fully meet their responsibilities. “
IRS Commissioner Charles P. Rettig said, “These court-ordered subpoenas should alert any person or company that is trying to avoid their fair share of taxes by hiding assets in offshore accounts and businesses. These records will enable the IRS and the Department of Justice to locate those trying to evade their tax obligations and ensure their compliance with US tax laws. “
Federal tax law requires US taxpayers to pay tax on all income earned worldwide. U.S. taxpayers are also required to disclose certain foreign financial accounts and assets. According to the allegations in the documents filed in support of the motion for approval of the subpoena of John Doe and other information in the public records:
POLS is a Panamanian law firm that advertises services, including to US based clients, to help conceal the ownership of offshore companies and accounts. POLS and its partners offer support with the establishment of companies and foundations as well as with the creation of offshore financial accounts for the purpose of asset protection. POLS highlights confidentiality as a major benefit of its entity establishment services and promises its customers “100% anonymity, privacy and confidentiality”. Other members of the POLS Group also advertise that they can support customers in the concealment of assets and the avoidance of taxes. A member of the POLS Group assures his customers that “a carefully worked out corporate strategy enables you to look after your loved ones free of estate, inheritance taxes and other legal and tax problems”. The IRS has learned from at least one identified US taxpayer who has used POLS ‘services to create an unreported offshore company and account in Panama through the IRS’ Offshore Voluntary Disclosure Program (“OVDP”). The OVDP enables U.S. taxpayers to voluntarily disclose foreign accounts or companies used for tax evasion in exchange for fixed penalties.
In that lawsuit, the court granted the IRS permission to serve “John Doe” subpoenas on 10 companies: Federal Express Corporation; FedEx Ground Package System, Inc .; DHL Express; United Parcel Service, Inc .; the Federal Reserve Bank of New York; The Clearing House Payments Company LLC; HSBC Bank USA, NA; Citibank, NA; Wells Fargo Bank, NA; and Bank of America, NA. There is no allegation in this lawsuit that the subpoena recipients committed any wrongdoing. Instead, the IRS uses subpoenas from John Doe to obtain information about possible violations of the Internal Income Law by individuals whose identities are unknown. John Doe’s subpoenas instruct these couriers and financial institutions to keep records that enable the IRS to identify U.S. taxpayers who have used the POLS Group’s services, along with other documents pertaining to the business from the POLS Group.
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This case is handled by the Office’s Tax and Insolvency Department. Deputy US Attorney Talia Kraemer is leading the case.