Warning: If you had or have an offshore bank account at
If you had or have an offshore bank account at
- Belize Bank International Limited
- Belize Bank Limited
- Belize Corporate Services
Then, call us immediately.
The United States District Court in Miami just entered an order permitting the Internal Revenue Service (IRS) to begin serving “John Doe” summons on Bank of America, N.A. and Citibank N.A. seeking information about U.S. taxpayers who may hold offshore accounts at Belize Bank International Limited (BBIL) or Belize Bank Limited (BBL).
The order was entered by U.S. District Judge Ursula Ungaro and granted the United States’ U.S. Department of Justice, DOJ, the petition seeking records of BBIL’s and BBL’s correspondent accounts at Bank of America, N.A. and Citibank, N.A. Those records will allow the IRS to identify U.S. taxpayers who hold or held interests in financial accounts at BBIL and BBL, as well as other financial institutions that used the same correspondent accounts.
“The Department and the IRS are using every tool available to identify and investigate those individuals determined to evade their U.S. tax and reporting obligations through the use of offshore financial accounts and foreign entities. These John Doe summonses will provide detailed information about individuals using financial institutions in Belize and, to the extent funds were transferred, other jurisdictions. But rest assured, we are receiving information from many sources regarding hidden foreign accounts and offshore schemes. The time to come clean is now – before we knock on your door.” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
“This court action further demonstrates our relentless efforts to pursue and catch those evading taxes with hidden offshore accounts no matter where they are or what structures are used to hide behind…This court action also reinforces the ongoing importance of the John Doe summons in international tax enforcement”, said Commissioner John Koskinen of the Internal Revenue Service.
Within the actual IRS declaration, BBL is incorporated and based in Belize, and directly owns BBIL. The IRS declaration further states that Belize Corporate Services (BCS) is incorporated and based in Belize and offers corporate services including the purchase of “shelf” Belizean international business companies. BBL, BBIL and BCS are all corporate subsidiaries of BCB Holdings Limited, according to the declaration. The declaration describes and IRS Revenue Agent’s review of information submitted by BBL and BBIL customers who disclosed their foreign accounts through the IRS offshore voluntary disclosure programs. The customers in the “John Doe” class may have failed to report income, evaded income taxes, or otherwise violated the internal revenue laws of the United States.
A common and effective tool of the IRS is “John Doe” summonses utilized to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown. The approved John Doe summonses now direct Citibank and Bank of America to produce records identifying U.S. taxpayers with accounts at Belize Bank International Limited, Belize Bank Limited, or their affiliates, including other foreign banks that used BBIL and BBL’s correspondent accounts to service U.S. clients. With this above mentioned tool, the IRS does not need to seek foreign jurisdiction to obtain personal bank records of individuals, the IRS merely seeks U.S. banks and/or financial institutions private records as they relate to Citibank’s and Bank of America’s correspondent accounts for BCS and information related to BCS’s deposit accounts at Bank of America.
As an explanation, a correspondent account is a bank account that one bank maintains for another bank. Financial transactions involving U.S. dollars flow through U.S. banks; therefore, foreign banks that do business in U.S. dollars, but do not have an office in the United States, obtain a correspondent account in order to reach U.S. customers. Transactions in the correspondent account leave a trail in the United States that the IRS can follow simply by using a John Doe summons. The John Doe summons allows the IRS obtain records of money deposited, paid out through checks, and moved through the correspondent account through wire transfers.
Remember, U.S. tax laws requires U.S. taxpayers to pay taxes on all income earned worldwide. U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year and willful failure to report a foreign account can result in a fine of up to 50 percent of the highest amount in the account for each year of the violation. So, if you had five years of willful failure to report a foreign bank account with the same highest balance, the fine would be 250% of what was in the account!
I believe that a person can predict the outcome of this Federal court order by looking at similar court orders that allowed the IRS to use the same tool for John Doe summons on UBS AG for records of Swiss bank Wegelin & Co.’s correspondent account at UBS and John Doe summons on Wells Fargo, N.A., for records of the Barbados-based Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB).
If you believe that this high tech dragnet tool may find yourself caught with these banks or banks still not targeted by the I.R.S. or D.O.J., then contact us for a private attorney/client conversation. We stand ready to help and provide immediate representation.
Michael B. Nelson, Esq.