Imagine this: You live in Canada, but have a source of income in the U.S., which you somehow neglected to disclose to the Canada Revenue Agency, and a U.S. debit or credit card, which you use to pay for some day-to-day expenses in Canada. If this is really you, you might be in trouble.
The scheme described above is the one some Norwegian citizens were reportedly using to shield part of their income from the prying gaze of the Norwegian Tax Administration. The NTA sniffed out the unusual Norway-based activity on their U.S. cards, but couldn’t identify the account holders. In the past, that might have been the end of the story. In this case, though, the Norwegian government got the IRS to do something it had never done before: Use a "John Doe" summons.
A John Doe summons allows the IRS to seek out information about taxpayers whose identity is unknown. The agency needs court approval to proceed, but John Doe summons have become a popular tool in the U.S. fight against tax evasion, according to Forbes contributor Robert Wood. That’s how the IRS forced UBS to turn over the names of U.S. taxpayers with Swiss bank accounts, and later busted Americans with tax-shelter accounts at HSBC in India. Now, it seems, the IRS is willing to use this powerful technique to help foreign governments pursue their own tax cheats, as well.
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