John Doe summons are issued by the IRS to a third party to get them to provide information on an unnamed, unknown taxpayer with a potential tax liability.
On Wednesday, the Montana court authorised the serving of such a summons against Michael Behr, a locally-based director of Sovereign Management & Legal (SML), which has offices in Panama, Belize, and Hong Kong.
According to his LinkedIn profile, Behr is a customer care executive of Sovereign Gold Card, a service provided by SML.
“We offer Belieze and St Vincent-issued MasterCards and Cyprus-issed Visa Electron Debit Cards as one of many offshore services offered by our company,” the Soveriegn Gold Card website reads.
The cards have been offered by SML to thousands of clients around the world over the past two decardes, the company said.
They are described as maximising privacy without excessive fees or undue restrictions and as offshore, global, re-loadable no name debit cards.
Sovereign Gold Cards
The IRS is specifically seeking records of US taxpayers who, between 2005 and 2016, were issued a Sovereign Gold Card debit card that could be used to access funds in way that enabled them to “evade their obligations under internal revenue laws”.
In its petition, the US taxman alleged that SML advertises various “packages” to allow taxpayers to hide their assets offshore. These include corporations owned by other entities, all held in the name of nominee officers provided by SML.
SML then opens bank accounts for these entities and provides debit cards in the name of the nominee to the taxpayer. By using such cards, taxpayers seek to access their offshore funds without revealing their identities.
US District Court judge Brian Morris found that there is a reasonable basis for believing that US taxpayers may be using the Sovereign Gold Card to violate federal tax laws.
Cheating the system
“The Department of Justice and the IRS are committed to stopping the use of foreign bank accounts to evade US tax laws,” said acting assistant attorney general David Hubbert, head of the Justice Department’s Tax Division.
“This John Doe summons is yet another example of how we are using all available tools to identify, investigate and hold accountable those who cheat our nation’s tax system by hiding money offshore, as well as those individuals and entities facilitating US taxpayers engaged in this conduct. The time to come forward and come into compliance is running short, and those who continue to violate US tax and reporting laws will pay a heavy price.”
IRS commissioner John Koskinen said: “In seeking this John Doe summons, the IRS wants to ensure that certain pre-paid payment card users are meeting their responsibilities to properly pay their taxes.
“We are taking this step as part of our longstanding efforts against the use of secret offshore accounts. This action will help ensure that pre-paid cards aren’t being inappropriately used to repatriate hidden income and avoid taxes.”
