The DOJ petitioned the U.S. District Court for the Western District of North Carolina to authorize IRS summonses to uncover the identities of Finnish residents using U.S.-issued payment cards in Finland. The DOJ and IRS are pursuing this matter under the U.S.-Finland tax treaty and at the request of the Finnish government.
The petition states: "Finnish taxpayers may use foreign payment cards in an attempt to avoid reporting income and paying Finnish income tax. Such Finnish residents divert income to a U.S. bank, maintain an account there, and use the account to make purchases in their home country through payment cards issued by the U.S. bank."
The Court granted the request, authorizing the IRS to serve "John Doe" summonses to identify the individuals who hold three payment cards issued by Bank of America, Charles Schwab and TD Bank. Each of the cards was used to make withdrawals and purchases in Finland worth between $85,000 and $135,000 in the period from 2013 to 2014.
The DOJ stated that it does not allege that Bank of America, Charles Schwab or TD Bank violated any U.S. or Finnish laws with respect to the card accounts.
Commentary / Christian Larson
While it may be counterintuitive for the U.S. to assist in enforcing Finnish tax laws, this is a tax treaty at work. As the DOJ notes in its press release, "Courts have previously approved John Doe summonses allowing the IRS to identify individuals using offshore accounts to evade their U.S. obligations, and have also approved John Doe summonses to be used to identify individuals using U.S. financial institutions or accounts to evade foreign tax obligations."
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