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U.S. taxpayer Caribbean accounts targeted: Justice Department

The Department of Justice logo is seen on the podium during a news conference on the Gozi Virus in New York January 23, 2013. REUTERS/Carlo
The Department of Justice logo is seen on the podium during a news conference on the Gozi Virus in New York January 23, 2013. REUTERS/Carlo

By Nanette Byrnes

(Reuters) - The Justice Department said on Tuesday that a federal court had 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 Justice Department said a court order would 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 would 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.

"Our work here shows our resolve to pursue these cases in all parts of the world, regardless of whether the person hiding money overseas chooses a bank with no offices on U.S. soil," IRS Acting Commissioner Steven Miller said in a statement.

FCIB and CIBC did not immediately reply to requests for comment.

A spokesman for Wells Fargo said the bank would "review the summons and respond as legally required."

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

FCIB does not have U.S. branches but it 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.

The FCIB case stemmed from information from 129 customers of the Barbados bank and its predecessor banks who took part in an IRS voluntary disclosure program, the Justice Department said.

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.

(Reporting by Nanette Byrnes; Editing by Kevin Drawbaugh and Chris Reese)

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