updated 2:28 PM CEST, May 24, 2023

IRS secures a court order to obtain U.S. taxpayer info from Panama-based firms

In what one U.S. official was quoted as saying was evidence of the government's "commitment" to go after American taxpayers who used "offshore service providers to avoid U.S. taxes," the U.S. Justice Department on Thursday announced that it had authorized the IRS to issue summonses that would require "multiple couriers and financial institutions" to produce information about U.S. taxpayers" who were believed to have used a firm known as Panama Offshore Legal Services, "and its associates," to evade U.S. income taxes.

The Justice Department described POLS as a Panamanian law firm. 

"Specifically, the IRS summonses seek to trace courier deliveries and electronic fund transfers between the POLS Group and its clients, in order to identify the POLS Group's U.S. taxapayer clients who have used the POLS Group's services to create or control foreign assets and entities to avoid compliance with their U.S. tax obligations," the Justice Department said, in a statement released on Thursday.

In its statement, the Justice Department said that the U.S. Attorney's Office for the Southern District of New York's action "granted the IRS permission to serve what are known as 'John Doe' summonses on 10 entities: Federal Express Corp.; FedEx Ground Package System, Inc.; DHL Express; United Parcel Service, Inc.; the Federal Reserve Bank of New York; The Clearing House Payments Co., Llc; HSBC Bank USA, N.A.; Citibank, N.A.; Wells Fargo Bank, N.A.; and Bank of America, N.A.

It stressed that there was "no allegation that the summons recipients[had] engaged in any wrongdoing" but that rather, the IRS uses such John Doe summonses to obtain information about possible violations of Internal Revenue laws by individuals whose identities were unknown.

It added: "The John Doe summonses direct these couriers and financial entities to produce records that will enable the IRS to identify U.S. taxpayers who have used the POLS Group's services, along with other documents relating to the POLS Group's business." 

Audrey Strauss, the U.S. Attorney for the Southern District of New York, said the action taken by the court "underscores our office's commitment to hold accountable" those who sought to hide their wealth offshore to avoid their tax obligations, and added: "In issuing these John Doe summonses, we continue our joint efforts with the IRS to investigate tax evaders who use foreign financial accounts and sham foreign entities to hide their assets." 

The Justice Department statement also included a comment from IRS Commissioner Charles P. Rettig, who said the court-ordered summonses "should put on notice every individual and business seeking to avoid paying their fair share of taxes by hiding assets in offshore accounts and companies.

These records will empower the IRS and the Department of Justice to find those attempting to skirt their tax obligations and ensure their compliance with the U.S. tax laws.”

Panama Offshore Legal Services didn't immediately reply to a request for comment. The case is being handled by the court's Tax and Bankruptcy Unit, with Assistant U.S. Attorney Talia Kraemer handling the case.