WASHINGTON – The Justice Department announced that late yesterday a federal court in San Francisco…
John Doe Summons: A potent investigative tool used by the IRS
The John Doe summons is a powerful investigative tool employed by the IRS to uncover the identities of taxpayers suspected of noncompliance with federal tax laws. Unlike traditional summonses, this device targets individuals or classes of persons whose identities remain unknown but who are believed to have failed to fulfill their tax obligations. A federal district court may authorize such a summons following an ex parte proceeding, provided the IRS establishes:
- The summons relates to a particular person or class of persons.
- The IRS has a reasonable basis to believe that the person or class has violated one or more provisions of the Internal Revenue Code.
- The requested information is not otherwise readily obtainable through other sources.
Crucially, the summons must be narrowly tailored to seek information that directly addresses the suspected noncompliance.
On December 20, 2024, the U.S. District Court for the Central District of California authorized the government’s use of a John Doe summons to be served upon JustAnswer, a digital platform where professionals such as attorneys, physicians, and tax experts provide answers to users’ questions. The summons, sought by the government through a December 10, 2024 petition, demands the disclosure of identities and payment records of any expert earning $5,000 or more annually on the platform between 2017 and 2020.
The government substantiated its request by presenting evidence from an IRS agent who identified five taxpayers compensated by JustAnswer who failed to report their earnings. The court found sufficient grounds to suspect widespread noncompliance among JustAnswer experts and granted the summons. In a subsequent press release, the Department of Justice Tax Division reiterated its commitment to combating tax evasion in the gig economy, stating: “No matter how income is earned, taxpayers must report it fully and pay their fair share. The IRS and DOJ will utilize every enforcement mechanism available to ensure compliance with the tax laws.”
Taxpayers falling within the scope of this summons should take immediate notice. Failure to report income accurately can lead to severe civil penalties under IRC § 6662, and willful noncompliance may trigger a criminal investigation under IRC § 7201, potentially resulting in fines and imprisonment. This development serves as a reminder that the IRS’s investigative tools are powerful, and no source of income, whether from traditional employment or digital platforms, is beyond its scrutiny.
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