Justice Dept. targets U.S. taxpayer accounts at Caribbean bank

By Nanette Byrnes

April 30 | Tue Apr 30, 2013 3:26pm EDT

April 30 (Reuters) – The U.S. Justice Department said on Tuesday that a federal court has authorized the Internal Revenue Service to seek information on U.S. taxpayers who may have accounts at Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB).

In a move resembling a recent IRS inquiry into Americans with Swiss bank accounts, the department said a court order will let the IRS serve a ‘John Doe’ summons seeking records of FCIB’s U.S. correspondent account at Wells Fargo & Co.

A correspondent account is a bank deposit account maintained by one bank for another bank.

The order will allow the IRS to identify U.S. taxpayers with “interests in financial accounts at FCIB and other financial institutions that used FCIB’s Wells Fargo correspondent account,” the Justice Department said in a statement.

Requests for comment to FCIB, CIBC and Wells Fargo were not immediately returned.

FCIB, based in Barbados, has branches in 18 Caribbean countries. According to its web site, the bank was formed in 2002 by Britain’s Barclays Bank and CIBC. In 2006, CIBC became the bank’s majority shareholder, the site said.

FCIB does not have U.S. branches, but has a correspondent account in the United States at Wells Fargo, Justice said.

The IRS uses ‘John Doe’ summonses to get information on possible tax law breakers whose identities are unknown. “This John Doe summons directs Wells Fargo to produce records identifying U.S. taxpayers with accounts at FCIB and other banks that used FCIB’s correspondent account,” the statement said.

In a declaration filed to the court, a senior IRS revenue agent said many FCIB customers in the John Doe class may have been under-reporting income, evading income taxes, or otherwise violating the internal revenue laws of the United States.

In a similar case in January 2013, a federal court allowed the IRS to serve a ‘John Doe’ summons on Switzerland’s UBS AG , seeking records of Swiss bank Wegelin & Co.’s U.S. correspondent account at UBS.

That action was part of a wide-ranging U.S. government effort to crack down on tax avoidance by Americans.

Wegelin, Switzerland’s oldest bank, in March agreed to pay nearly $ 58 million in penalties and said it would shut its doors after admitting to helping wealthy Americans evade taxes.

The serving of ‘John Doe’ summons on correspondent accounts is likely to become more common as the government widens its tax inquiries beyond Switzerland, Luxembourg and Liechtenstein, said William Sharp, a lawyer who represents taxpayers.

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Reuters: Financial Services and Real Estate

Justice Dept. targets U.S. taxpayer accounts at Caribbean bank