What is a John Doe Summons?
A John Doe Summons is an IRS summons authorized by Internal Revenue Code Section 7609(f). Unlike other IRS summonses it does not list the name of the taxpayer under investigation because the taxpayer is unknown to the IRS. The term John Doe summons achieved notoriety in July 2008 when the procedure was used to crack the back of Swiss secrecy laws and ultimately ended up in UBS turning over the names of about 4,500 holders of Swiss bank accounts to the IRS. It ushered in the current regime of stepped enforcement of the foreign bank account reporting rules. It also resulted in the Internal Revenue Service’s Offshore Voluntary Disclosure Program (OVDP), and numerous criminal tax fraud prosecutions, as well as criminal prosecutions for willfully failing to file Foreign Bank Account Reports (FBARs) on Form TDF 90-22.1
In 2013 the IRS used a John Doe summons to obtain information about clients of Wegelin & Co., Switzerland oldest bank who had failed to file FBARs.
Unlike other IRS summons which can be issued by the IRS virtually at will, a John Doe Summons must be approved by a federal district court judge. The judge may approve only if:
- The summons relates to the investigation of a particular person or ascertainable group or class of persons,
- there is a reasonable basis for believing that such person or group or class of persons may fail or may have failed to comply with any provision of the tax law, and
- the information sought to be obtained from the examination of the records or testimony (and the identity of the person or persons with respect to whose liability the summons is issued) is not readily available from other sources.