New Offshore Tax Evasion Investigation: Trident Trust

The John Doe summons remains one of the IRS’s most formidable tools for uncovering tax noncompliance among individuals who seek to evade U.S. tax obligations through offshore activities. Unlike a standard summons, the John Doe summons allows the IRS to obtain information about individuals or entities whose identities are unknown but are suspected of violating federal tax laws.

On December 23, 2024, the U.S. District Court for the Southern District of New York authorized the IRS to issue John Doe summonses targeting individuals suspected of using the services of Trident Trust Group or its affiliates to obscure foreign assets or evade U.S. tax reporting requirements. The summonses, which will be directed to delivery services, financial institutions, clearinghouses, and Nevis Services Limited—a U.S. affiliate of Trident—seek records related to U.S. taxpayers who utilized Trident and its affiliates to facilitate:

  1. The establishment or management of foreign financial accounts or other financial assets;
  2. The creation or operation of foreign corporations, companies, trusts, foundations, or other entities; and
  3. The concealment of assets held under the names of such entities.

In support of its petition, the government cited evidence involving nine U.S. taxpayers who had previously utilized Trident’s services and later disclosed their noncompliance through the IRS’s Offshore Voluntary Disclosure Program (OVDP).

This summons demonstrates the IRS’s relentless pursuit of offshore tax evasion. Taxpayers who have utilized such services are strongly urged to reassess their compliance. Failure to disclose foreign assets or accounts accurately under IRC §§ 6038, 6038D, and 6048 can result in substantial civil penalties, including penalties of up to 50% of the account balance per year for willful violations under the Foreign Bank and Financial Accounts (FBAR) regulations. Moreover, willful tax evasion may lead to criminal prosecution under IRC § 7201, carrying the potential for both hefty fines and imprisonment.

The IRS and Department of Justice have unequivocally signaled their intent to close every loophole in offshore reporting. U.S. taxpayers engaged in such practices should promptly seek legal counsel to address potential exposure, as the penalties for noncompliance are severe and the likelihood of detection is rapidly increasing.

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