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Black Enterprise
New York, NY
November 6, 2005
PayPal Names Names As IRS Chases Tax Evaders
By Paul Lashmar
PayPal, the internet money-transfer arm of eBay, is to disclose the identity of customers who use the service to evade paying US taxes.
The Internal Revenue Service (IRS) is demanding records of customers using Paypal through offshore accounts in all tax havens, including Jersey, Guernsey, Isle of Man, Gibraltar and other UK dependencies.
According to the IRS, PayPal's services have proved very attractive to tax evaders and the problem is growing. Customers can buy goods from eBay and many other shopping websites, pay for them from untaxed income held offshore and get the goods sent to their home address.
Tax authorities are also concerned that PayPal can be used to 'launder' untaxed money between an individual's offshore and domestic accounts.
The IRS said: 'Because the elements necessary to transfer money require only two email addresses attached to two bank accounts and/ or credit or debit cards, PayPal's structure not only allows persons with monies held in a foreign account to purchase goods and services, it also allows a person with assets secreted in a foreign country to repatriate them to their own domestic bank account without going through traditional banking methods such as a bank- initiated wire transfer.'
The IRS is the first domestic tax agency to take action against tax evaders using PayPal.
Founded in 1998, PayPal has 76 million accounts and is available in many parts of the world. It now has more account holders than American Express, and eBay's 2005 second-quarter figures celebrated a 49 per cent increase in the value of payments made through PayPal, to a record annual total of $6.5bn (pounds 3.7bn).
The IRS has asked a federal court for permission to serve a 'John Doe' summons on PayPal as part of a clampdown on tax evasion using offshore credit and debit cards. The IRS petition says: 'The records requested in the summons will identify the holders of bank accounts at, or payment cards issued by banks in, the listed jurisdictions.'
It follows successful IRS applications to file similar summonses on MasterCard, American Express and Visa as part of its investigation of offshore tax evasion. The IRS says 'over $40bn in federal tax revenue is lost every year due to the use of credit cards linked to accounts held in foreign tax havens'
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Thu Nov 10, 2005 4:38 am Post subject:
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Materials that the IRS/DOJ used to justify its request that a John Doe summons be issue to PayPal can be viewed at the site below:
**broken link removed**
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Joey Smith
Infidel Enslaver
Joined: 13 Jan 2003
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Posted: Thu Nov 10, 2005 5:47 pm Post subject:
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Supposedly, the Service collected a ton of money by going after offshore Amex, MC and Visa holders, so it is not surprising that they would try the same thing with PayPal, although I'm skeptical that the numbers will be anywhere near as big.
Isn't there some new treaty that goes into effect on January 1 that makes it easier for the IRS to get bank information from abroad?
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Fri Nov 11, 2005 6:48 pm Post subject:
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Joey Smith wrote:Quote:
Supposedly, the Service collected a ton of money by going after offshore Amex, MC and Visa holders, so it is not surprising that they would try the same thing with PayPal, although I'm skeptical that the numbers will be anywhere near as big.
Isn't there some new treaty that goes into effect on January 1 that makes it easier for the IRS to get bank information from abroad?
If I remember correctly, while the original estimates of what might be collected were enormous, the Offshore Credit Card Project did not really live up to its hype. Last summer the acting head of TIGTA gave numbers which were relatively disappointing, the OCCP was apparently not collecting a whole lot more than the cost of examiner time. The Offshore Voluntary Compliance Initiative (OVCI) was much more successful. The IRS revamped the OCCP audits to look a lot more like OVCI audits, adopting a "last chance" format. I haven't heard whether recent results showed improvement.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sat Nov 19, 2005 4:07 pm Post subject:
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Quote:
The IRS has asked a federal court for permission to serve a 'John Doe' summons on PayPal as part of a clampdown on tax evasion using offshore credit and debit cards. The IRS petition says: 'The records requested in the summons will identify the holders of bank accounts at, or payment cards issued by banks in, the listed jurisdictions.'
It follows successful IRS applications to file similar summonses on MasterCard, American Express and Visa as part of its investigation of offshore tax evasion. The IRS says 'over $40bn in federal tax revenue is lost every year due to the use of credit cards linked to accounts held in foreign tax havens'
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition? What does "listed jurisdictions" mean...everywhere in the world? If the IRS manages to get this summons PayPal will wither on the vine, sellers and buyers will just move to the next transfer company.
I have a serious problem with the government using dubious reasoning like this. More and more the government is circumventing the constitution by saying something "can" be used to initiate an illegal transaction so that it gives them the right to monitor all transactions. Is this really where we want our government to go? People could be hiding information concerning illegal transactions in their homes, should we allow house to house searches? I mean, if no one has done anything wrong then they have nothing to worry about right, only the guilty will be prosecuted.
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Tax Man
Captain
Joined: 09 Jun 2003
Posts: 459
Posted: Sat Nov 19, 2005 10:10 pm Post subject:
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Quote:
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition? What does "listed jurisdictions" mean...everywhere in the world? If the IRS manages to get this summons PayPal will wither on the vine, sellers and buyers will just move to the next transfer company.
We'll have to wait and see if youre right about Paypal.
Quote:
I have a serious problem with the government using dubious reasoning like this. More and more the government is circumventing the constitution by saying something "can" be used to initiate an illegal transaction so that it gives them the right to monitor all transactions. Is this really where we want our government to go?
One of these days, I'm going to post a list of fallacies and use Steve's posts as examples of each.
Quote:
People could be hiding information concerning illegal transactions in their homes, should we allow house to house searches?
Probable cause?
Quote:
I mean, if no one has done anything wrong then they have nothing to worry about right, only the guilty will be prosecuted.
Probable cause?
Just out of curiousity, show me exactly where the Constitution says a warrant is required to search someone's house.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sat Nov 19, 2005 11:18 pm Post subject:
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Tax Man wrote:
Quote:
People could be hiding information concerning illegal transactions in their homes, should we allow house to house searches?
Probable cause?
Quote:
I mean, if no one has done anything wrong then they have nothing to worry about right, only the guilty will be prosecuted.
Probable cause?
Just out of curiousity, show me exactly where the Constitution says a warrant is required to search someone's house.
So I take it you would be fine with house to house searches?
btw, what's this BS with saying "probable cause". The IRS doesn't have "probable cause" concerning the people they are going to get information on. They're simply assuming it's there, that's the problem with the summons. Sure they might find a few people doing what they are claiming however they have no probable cause to believe all of them are doing it. What they are doing is going on a fishing expedition to find probable cause.
Quote:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
What good is this amendment if anything qualifies including simply assuming someone could be committing a crime. That's the problem with people like you. You don’t have a shred of common sense...you allow such loose interpretations the amendments and the clauses they might as well not even exist.
btw, how about you do a little research someday and understand why that amendment was put in place. My guess is you simply don't care why it was put there or what was happening back then to so that they thought it was important to put it there. Problem is people like you are so lacking in their knowledge of history you'll be the ones that allow the very reason the amendment was put in place to happen.
Notice this very important wording "the place to be searched, and the persons or things to be seized". Do you really think the word "persons" was meant to be described as "anyone"? You probably do....you're so open minded your brains fell out.
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Tax Man
Captain
Joined: 09 Jun 2003
Posts: 459
Posted: Sun Nov 20, 2005 12:09 am Post subject:
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Quote:
btw, what's this BS with saying "probable cause".
gee steve, i dont know. what is all this "probable cause" BS about? i mean, its not like the constitution mentions it.
I asked where the constitution specifically requires a warrant. Your response:
Quote:
btw, how about you do a little research someday and understand why that amendment was put in place
i thought you didn't like all that context and intent crap. you only need to revert to extrinsic evidence of the law if you can't reach your desired conclusion based on a cross-eyed reading of the text - no? nothing says a warrant is required, it just says you need probable cause if you issue one. Don't you like this game?
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"Again, I ask you does Quatloos plant bombs?"
-Stevesy
"To have probable cause you would have to conclude that an assumption equates to probable cause."
-Stevesy, from his treatise on the 4th Amendment and Search and Seizure
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sun Nov 20, 2005 3:50 am Post subject:
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Tax Man wrote:
Quote:
btw, what's this BS with saying "probable cause".
gee steve, i dont know. what is all this "probable cause" BS about? i mean, its not like the constitution mentions it.
Ok and? You simply stated "probable cause" as if they had probable cause.
To have probable cause you would have to conclude that an assumption equates to probable cause. They have no idea if the people they are getting the information on commited any crime whatsoever. It's simply a mass fishing expedition to find a crime, which is the very reason the amendment was put in place to prevent.
What probable cause do they have? Is it the mere fact that someone has opened up an account using legal means? They have no idea if every one of the people they are getting ready to get information on committed a crime and they certainly don't have probable cause to show that they have.
So what was the purpose of simply stating probable cause in your post when it’s obvious they don’t have it?
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Tax Man
Captain
Joined: 09 Jun 2003
Posts: 459
Posted: Sun Nov 20, 2005 5:16 am Post subject:
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Quote:
To have probable cause you would have to conclude that an assumption equates to probable cause.
Things that make you go hmmmm......
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"Again, I ask you does Quatloos plant bombs?"
-Stevesy
"To have probable cause you would have to conclude that an assumption equates to probable cause."
-Stevesy, from his treatise on the 4th Amendment and Search and Seizure
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Sun Nov 20, 2005 6:13 pm Post subject:
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Stevesy wrote:Quote:
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition?
In response to some taxpayers who claimed that the IRS was on a "fishing expedition," one court characterized the IRS summons authority as making the IRS "licensed to fish."
Unlike most summonses, the John Doe summons requires that the IRS make a pre-issuance showing to a federal district judge that many of the participants whose names will be obtained may not be properly executing their federal tax obligations. If he or she is satisfied, the judge then issues an order permitting the issuance of a John Doe summons.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sun Nov 20, 2005 8:22 pm Post subject:
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jcolvin2 wrote:
Stevesy wrote:Quote:
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition?
In response to some taxpayers who claimed that the IRS was on a "fishing expedition," one court characterized the IRS summons authority as making the IRS "licensed to fish."
Unlike most summonses, the John Doe summons requires that the IRS make a pre-issuance showing to a federal district judge that many of the participants whose names will be obtained may not be properly executing their federal tax obligations. If he or she is satisfied, the judge then issues an order permitting the issuance of a John Doe summons.
Ok...I realize the courts will probably agree to the summons that doesn't make it right. It doesn’t make it right when a judge lets child molesters get off with 2 and 3 year sentences either. There is a serious problem when the courts get to decide when and where it's ok to violate the constitution. Judges are not endowed with some supernatural ability…they are simply men or woman like every other human. When you remove the limits (written law) and let them decide matters based on personal opinion you have basically ok’ed a single person’s opinion to dictate the guranteed constitutional rights of all Americans, in other words it’s called an oligarchy.
Btw, how do you think the government is going to show that many of the people using paypal with offshore accounts are committing crime if the government needs to get the summons to find out who is committing the crime through paypal? Again, it's an assumption. What constitutes "many" 1% or 60%? Who gets to determine when there is enough to say "many"? A single man in a black robe who is not basing his decision on law because there is no law defining what "many" is, but his own personal opinion of what constitutes enough to ok a summons that clearly violates the constitution. The constitution leaves no doubt about seeking information, the government is to identify the "persons", no one in their right mind would interpret that in such as way so that "anyone" is a proper description of persons. If such a thing was intended then there was no sense in placing that qualifier in the clause to begin with.
Maybe in the near future it will be ok to let the government monitor all transactions, it's clear "many" people are committing crime via electronic transactions.. thus there is probable cause to search them all....rarely if ever does the government lose power, to the contrary it's always increasing. You let them have an inch and there is no doubt they will end up having a mile.
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Sometimes it's really hard to keep this big conspiracy going. - TaxMan
Posted: Sun Nov 20, 2005 10:06 pm Post subject:
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Quote:
rarely if ever does the government lose power, to the contrary it's always increasing
steve, when you took criminal procedure, what did your professor say about the government and its powers over the course of the last 50 years?
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"Again, I ask you does Quatloos plant bombs?"
-Stevesy
"To have probable cause you would have to conclude that an assumption equates to probable cause."
-Stevesy, from his treatise on the 4th Amendment and Search and Seizure
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jg
FULL PIRATE
Joined: 25 Feb 2004
Posts: 957
Posted: Sun Nov 20, 2005 11:08 pm Post subject:
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SteveSy wrote:
Notice this very important wording "the place to be searched, and the persons or things to be seized". Do you really think the word "persons" was meant to be described as "anyone"? You probably do....you're so open minded your brains fell out.
SteveSy wrote:
The constitution leaves no doubt about seeking information, the government is to identify the "persons", no one in their right mind would interpret that in such as way so that "anyone" is a proper description of persons. If such a thing was intended then there was no sense in placing that qualifier in the clause to begin with.
Note it says that the persons that must be identified are the persons to be seized. If no persons are to be seized, no one needs to be identified. That is what the amendment says in the quote you provided.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sun Nov 20, 2005 11:50 pm Post subject:
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jg wrote:
SteveSy wrote:
Notice this very important wording "the place to be searched, and the persons or things to be seized". Do you really think the word "persons" was meant to be described as "anyone"? You probably do....you're so open minded your brains fell out.
SteveSy wrote:
The constitution leaves no doubt about seeking information, the government is to identify the "persons", no one in their right mind would interpret that in such as way so that "anyone" is a proper description of persons. If such a thing was intended then there was no sense in placing that qualifier in the clause to begin with.
Note it says that the persons that must be identified are the persons to be seized. If no persons are to be seized, no one needs to be identified. That is what the amendment says in the quote you provided.
Ok....
I really hope you're kidding....
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sun Nov 20, 2005 11:58 pm Post subject:
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Tax Man wrote:
Quote:
rarely if ever does the government lose power, to the contrary it's always increasing
steve, when you took criminal procedure, what did your professor say about the government and its powers over the course of the last 50 years?
I never took "criminal procedure" but then it doesn’t take someone else to tell me what powers the government has acquired over the last 50 or 100 years either. For some strange reason it appears I'm one of those exceptions to the general automaton rule (at least here).
The SS number alone is proof of the acquired power of the federal government. When SS was first purposed many people were very opposed to identifying everyone with a number. Of course as always they lied and claimed it would never be used for general identification.....it was clearly the lie of the century. The SS number alone has allowed the federal government to gain more power over the people than any event or thing imaginable.
What's sad is you think you're accepting that the government is going to get the bad guys by using this type of general search. The truth is someday in the near future something bad is going to happen like a dirty bomb or small nuclear device and instead of getting the terrorist they'll use it as an excuse to monitor everything you do and everything you say and they will have established precedent for doing so. They're already doing it with drug dealers and the patriot act.
They're really not interested in catching the bad guys they're interested in making everyone compliant with whatever they think people should be compliant with. What you might think is over the line today will be acceptable tomorrow because YOU allowed the line to be moved passed what was once not acceptable. It’s much easier to accept small changes, unfortunately people like you fail to realize that all those small changes equated to a huge change.
There is a point where people will not be able to stand up and stop or expose a real tyrannical government; it will be just like it was in Germany in the early 30’s. You scoff at assertions such as that but what are you doing to help prevent it from happening again. You're simply doing what the people back then did and assume they'll never do such a thing because we have courts and checks and balances. They had those things back then too, they had a democracy with an elected government and courts. Mass searches based on nothing but a "maybe" should never be allowed in a free country....
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Joey Smith
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Joined: 13 Jan 2003
Posts: 3460
Posted: Mon Nov 21, 2005 12:58 am Post subject:
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This discussion has now eclipsed "Tax Policy and Practice" and now gone into the political. Please take it to Ranting & Raving.
Although I am not a tax practitioner, I am aware that the pendulum of tax enforcement swings back-and-forth from lax enforcement to heavy handed, and back again. Most of the recent IRS actions are in direct response to prior lax enforcement which encouraged people to use undisclosed offshore accounts that were accessible by offshore debit and credit cards, and PayPal and similar accounts.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Mon Nov 21, 2005 4:07 am Post subject:
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Joey Smith wrote:
This discussion has now eclipsed "Tax Policy and Practice" and now gone into the political. Please take it to Ranting & Raving.
Although I am not a tax practitioner, I am aware that the pendulum of tax enforcement swings back-and-forth from lax enforcement to heavy handed, and back again. Most of the recent IRS actions are in direct response to prior lax enforcement which encouraged people to use undisclosed offshore accounts that were accessible by offshore debit and credit cards, and PayPal and similar accounts.
Ok...I'll keep on topic....I think mass searches are wrong and can only lead to a bad result.
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Joey Smith
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Posted: Mon Nov 21, 2005 4:23 am Post subject:
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SteveSy wrote:
Joey Smith wrote:
This discussion has now eclipsed "Tax Policy and Practice" and now gone into the political. Please take it to Ranting & Raving.
Although I am not a tax practitioner, I am aware that the pendulum of tax enforcement swings back-and-forth from lax enforcement to heavy handed, and back again. Most of the recent IRS actions are in direct response to prior lax enforcement which encouraged people to use undisclosed offshore accounts that were accessible by offshore debit and credit cards, and PayPal and similar accounts.
Ok...I'll keep on topic....I think mass searches are wrong and can only lead to a bad result.
I don't disagree with you. But I'm not sure the Service is actually doing much with their search results, and instead are simply trying to scare a number of those who weren't reporting into voluntarily doing so. As John Colvin points out, the IRS's offshore credit card campaign was not particularly successful and did not result in any large number of prosecutions, although apparently it did highlight a few promoters and thus lead to their clients.
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Mon Nov 21, 2005 5:35 am Post subject:
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Background on the OCCP and OVCI:
In the late 1990s, the IRS became aware that there were many American using credit and debit cards to access funds on deposit in offshore banks. In particular, one individual brought substantial information to the IRS regarding U.S. depositors in one Caribbean bank. In 2000, the IRS and DOJ began a campaign to obtain information regarding accounts issued by banks in tax-haven jurisdictions. The IRS and DOJ were successful in obtaining court orders issuing John Doe summonses on the international affiliates of MasterCard, Visa, and American Express with respect to accounts held by taxpayers in various jurisdictions.
As many of the accounts were held in corporate names, or could not otherwise be associated with U.S. persons, the IRS followed this effort up with John Doe summonses on retailers to determine if a US person received the economic benefit of transactions paid for by the cards. For example, the IRS obtained a John Doe summons on Amazon.com to determine who received the merchandise purchased with the offshore cards, and a John Doe summons on Southwest Airlines to determine whose travel was purchased with the offshore cards. Most recently, the IRS has obtained court approval to serve John Doe summonses on two or three large processors of credit card information. With this information in hand, the IRS began to identify and aggressively audit the taxpayers.
The IRS made this program a high priority because preliminary estimates indicated that perhaps as many as 1 to 2 million Americans may have had offshore accounts. However, the results of this program have been somewhat mixed, and the original estimates probably a large exageration. In a July 21, 2004, statement to the Senate Finance Committee prepared for hearing addressing the so-called “tax gap,” the Acting Inspector General of TIGTA (Pamela Gardiner) provided the following assessment of the offshore credit card program:
"The IRS has begun addressing taxpayers’ attempts to avoid taxes through the use of offshore techniques. Congressional witnesses have estimated that 1 to 2 million taxpayers avoid $40 to $70 billion in taxes annually using offshore bank accounts. The IRS developed the Offshore Credit Card Project (OCCP) to address this problem and made it a strategic priority for FYs 2003-2004. The OCCP uses information from the transactions of credit cards issued from offshore banks to identify taxpayers evading taxes and the promoters of this type of scheme.
"IRS results as of March 31, 2004, for this Project have been mixed. Although nearly $5 million in additional assessments have been made on approximately 300 cases, the direct examiner cost associated with these cases is almost $1.5 million. This cost does not include the intensive labor costs associated with initiating these cases. In addition, the vast majority of the more than 3,000 completed cases have been closed without an assessment of any additional taxes."
In early 2003, the IRS announced a limited amnesty, providing that individuals who had participated in offshore financial arrangements that were not properly reflected on their tax returns could come forward and disclose this information to the IRS through April 15, 2003. The IRS in return would agree to limit the potential penalty exposure to only the accuracy and delinquency penalties (foregoing fraud). This program was known as the Offshore Voluntary Compliance Initiative (OVCI).
The OVCI program was far more successful than the credit card program had been on a costs and results basis, as Acting Inspector General Gardiner indicated in her July 21, 2004 statement:
"Another IRS Project, called the Offshore Voluntary Compliance Initiative (OVCI), grew out of the OCCP and provided an opportunity for users of offshore accounts to come forward and pay back taxes, interest, and certain penalties but avoid fraud penalties or criminal prosecution. This initiative ran from January 14 to April 15, 2003. The OVCI reflected attempts to bring taxpayers back into compliance quickly while simultaneously gathering more information about the promoters of these offshore schemes. As part of the request to participate in the OVCI, applicants were required to provide full details on those who promoted or solicited the offshore financial arrangement. "
IRS results for the OVCI were more encouraging than those from the OCCP. In February 2004, the IRS reported this initiative had yielded over $170 million in taxes, interest, and penalties to the United States Treasury. The data the Treasury Inspector General for Tax Administration (TIGTA) reviewed indicated that the direct examiner costs associated with this project were only around $220,000. However, the data showed that even though the applicants voluntarily provided the tax information, over half of the completed cases had been closed without additional assessments.
On another level, it was more successful. Shortly after the OVCI closed, in June of 2003, Kevin Brown (Chief of Staff to Commissioner Everson) provided some information about the number of promoters identified at the Virginia Conference on Federal Taxation. Mr. Brown indicated that the IRS had received 1,253 applications to participate in the OVCI program. He also indicated that, thanks in part to the effectiveness of the OVCI program, the number of promoters of Abusive Tax Avoidance Transaction (ATAT) in agency databases had soared from 25 in 2001 to 888 in June of 2003, providing substantial assistance to the IRS’s efforts to track down promoters.
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Kimokeo
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Joined: 25 Jan 2005
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Posted: Fri Nov 25, 2005 5:54 pm Post subject:
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Steve, you mentioned that the judges may make a mistake in how they rule on a summons. If the judge agrees with the IRS and allows the summons, does Paypal have the right to appeal the judge's decision?
check and balances...I'm curious if there's an appeal available.
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AndyK
Ye Olde Pirate of the Fiscal Quatloosian
Joined: 04 May 2004
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Posted: Fri Nov 25, 2005 6:00 pm Post subject:
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Kimokeo wrote:
Steve, you mentioned that the judges may make a mistake in how they rule on a summons. If the judge agrees with the IRS and allows the summons, does Paypal have the right to appeal the judge's decision?
check and balances...I'm curious if there's an appeal available.
All the way up to SCOTUS.
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Fri Nov 25, 2005 11:34 pm Post subject:
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Kimokeo wrote:Quote:
Steve, you mentioned that the judges may make a mistake in how they rule on a summons. If the judge agrees with the IRS and allows the summons, does Paypal have the right to appeal the judge's decision?
I think that the judge already ordered that the John Doe summons be issued to PayPal. I don't think that PayPal can directly appeal the ex parte order. Having received prior court approval, the summons will now be served on PayPal. PayPal can refuse to comply, and then litigate the merits in a summons enforcement action. This is what Jenkens & Gilchrist did with respect to a John Doe summons issued on that law firm with respect to noticed transactions which they allegedly structured for clients.
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with account information
Black Enterprise
New York, NY
November 6, 2005
PayPal Names Names As IRS Chases Tax Evaders
By Paul Lashmar
PayPal, the internet money-transfer arm of eBay, is to disclose the identity of customers who use the service to evade paying US taxes.
The Internal Revenue Service (IRS) is demanding records of customers using Paypal through offshore accounts in all tax havens, including Jersey, Guernsey, Isle of Man, Gibraltar and other UK dependencies.
According to the IRS, PayPal's services have proved very attractive to tax evaders and the problem is growing. Customers can buy goods from eBay and many other shopping websites, pay for them from untaxed income held offshore and get the goods sent to their home address.
Tax authorities are also concerned that PayPal can be used to 'launder' untaxed money between an individual's offshore and domestic accounts.
The IRS said: 'Because the elements necessary to transfer money require only two email addresses attached to two bank accounts and/ or credit or debit cards, PayPal's structure not only allows persons with monies held in a foreign account to purchase goods and services, it also allows a person with assets secreted in a foreign country to repatriate them to their own domestic bank account without going through traditional banking methods such as a bank- initiated wire transfer.'
The IRS is the first domestic tax agency to take action against tax evaders using PayPal.
Founded in 1998, PayPal has 76 million accounts and is available in many parts of the world. It now has more account holders than American Express, and eBay's 2005 second-quarter figures celebrated a 49 per cent increase in the value of payments made through PayPal, to a record annual total of $6.5bn (pounds 3.7bn).
The IRS has asked a federal court for permission to serve a 'John Doe' summons on PayPal as part of a clampdown on tax evasion using offshore credit and debit cards. The IRS petition says: 'The records requested in the summons will identify the holders of bank accounts at, or payment cards issued by banks in, the listed jurisdictions.'
It follows successful IRS applications to file similar summonses on MasterCard, American Express and Visa as part of its investigation of offshore tax evasion. The IRS says 'over $40bn in federal tax revenue is lost every year due to the use of credit cards linked to accounts held in foreign tax havens'
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Thu Nov 10, 2005 4:38 am Post subject:
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Materials that the IRS/DOJ used to justify its request that a John Doe summons be issue to PayPal can be viewed at the site below:
**broken link removed**
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Joey Smith
Infidel Enslaver
Joined: 13 Jan 2003
Posts: 3460
Posted: Thu Nov 10, 2005 5:47 pm Post subject:
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Supposedly, the Service collected a ton of money by going after offshore Amex, MC and Visa holders, so it is not surprising that they would try the same thing with PayPal, although I'm skeptical that the numbers will be anywhere near as big.
Isn't there some new treaty that goes into effect on January 1 that makes it easier for the IRS to get bank information from abroad?
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Fri Nov 11, 2005 6:48 pm Post subject:
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Joey Smith wrote:Quote:
Supposedly, the Service collected a ton of money by going after offshore Amex, MC and Visa holders, so it is not surprising that they would try the same thing with PayPal, although I'm skeptical that the numbers will be anywhere near as big.
Isn't there some new treaty that goes into effect on January 1 that makes it easier for the IRS to get bank information from abroad?
If I remember correctly, while the original estimates of what might be collected were enormous, the Offshore Credit Card Project did not really live up to its hype. Last summer the acting head of TIGTA gave numbers which were relatively disappointing, the OCCP was apparently not collecting a whole lot more than the cost of examiner time. The Offshore Voluntary Compliance Initiative (OVCI) was much more successful. The IRS revamped the OCCP audits to look a lot more like OVCI audits, adopting a "last chance" format. I haven't heard whether recent results showed improvement.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sat Nov 19, 2005 4:07 pm Post subject:
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Quote:
The IRS has asked a federal court for permission to serve a 'John Doe' summons on PayPal as part of a clampdown on tax evasion using offshore credit and debit cards. The IRS petition says: 'The records requested in the summons will identify the holders of bank accounts at, or payment cards issued by banks in, the listed jurisdictions.'
It follows successful IRS applications to file similar summonses on MasterCard, American Express and Visa as part of its investigation of offshore tax evasion. The IRS says 'over $40bn in federal tax revenue is lost every year due to the use of credit cards linked to accounts held in foreign tax havens'
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition? What does "listed jurisdictions" mean...everywhere in the world? If the IRS manages to get this summons PayPal will wither on the vine, sellers and buyers will just move to the next transfer company.
I have a serious problem with the government using dubious reasoning like this. More and more the government is circumventing the constitution by saying something "can" be used to initiate an illegal transaction so that it gives them the right to monitor all transactions. Is this really where we want our government to go? People could be hiding information concerning illegal transactions in their homes, should we allow house to house searches? I mean, if no one has done anything wrong then they have nothing to worry about right, only the guilty will be prosecuted.
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Tax Man
Captain
Joined: 09 Jun 2003
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Posted: Sat Nov 19, 2005 10:10 pm Post subject:
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Quote:
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition? What does "listed jurisdictions" mean...everywhere in the world? If the IRS manages to get this summons PayPal will wither on the vine, sellers and buyers will just move to the next transfer company.
We'll have to wait and see if youre right about Paypal.
Quote:
I have a serious problem with the government using dubious reasoning like this. More and more the government is circumventing the constitution by saying something "can" be used to initiate an illegal transaction so that it gives them the right to monitor all transactions. Is this really where we want our government to go?
One of these days, I'm going to post a list of fallacies and use Steve's posts as examples of each.
Quote:
People could be hiding information concerning illegal transactions in their homes, should we allow house to house searches?
Probable cause?
Quote:
I mean, if no one has done anything wrong then they have nothing to worry about right, only the guilty will be prosecuted.
Probable cause?
Just out of curiousity, show me exactly where the Constitution says a warrant is required to search someone's house.
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SteveSy
Resilient Keeper of the True 861 Truth
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Posts: 5296
Posted: Sat Nov 19, 2005 11:18 pm Post subject:
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Tax Man wrote:
Quote:
People could be hiding information concerning illegal transactions in their homes, should we allow house to house searches?
Probable cause?
Quote:
I mean, if no one has done anything wrong then they have nothing to worry about right, only the guilty will be prosecuted.
Probable cause?
Just out of curiousity, show me exactly where the Constitution says a warrant is required to search someone's house.
So I take it you would be fine with house to house searches?
btw, what's this BS with saying "probable cause". The IRS doesn't have "probable cause" concerning the people they are going to get information on. They're simply assuming it's there, that's the problem with the summons. Sure they might find a few people doing what they are claiming however they have no probable cause to believe all of them are doing it. What they are doing is going on a fishing expedition to find probable cause.
Quote:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
What good is this amendment if anything qualifies including simply assuming someone could be committing a crime. That's the problem with people like you. You don’t have a shred of common sense...you allow such loose interpretations the amendments and the clauses they might as well not even exist.
btw, how about you do a little research someday and understand why that amendment was put in place. My guess is you simply don't care why it was put there or what was happening back then to so that they thought it was important to put it there. Problem is people like you are so lacking in their knowledge of history you'll be the ones that allow the very reason the amendment was put in place to happen.
Notice this very important wording "the place to be searched, and the persons or things to be seized". Do you really think the word "persons" was meant to be described as "anyone"? You probably do....you're so open minded your brains fell out.
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Tax Man
Captain
Joined: 09 Jun 2003
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Posted: Sun Nov 20, 2005 12:09 am Post subject:
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Quote:
btw, what's this BS with saying "probable cause".
gee steve, i dont know. what is all this "probable cause" BS about? i mean, its not like the constitution mentions it.
I asked where the constitution specifically requires a warrant. Your response:
Quote:
btw, how about you do a little research someday and understand why that amendment was put in place
i thought you didn't like all that context and intent crap. you only need to revert to extrinsic evidence of the law if you can't reach your desired conclusion based on a cross-eyed reading of the text - no? nothing says a warrant is required, it just says you need probable cause if you issue one. Don't you like this game?
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"To have probable cause you would have to conclude that an assumption equates to probable cause."
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
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Posted: Sun Nov 20, 2005 3:50 am Post subject:
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Tax Man wrote:
Quote:
btw, what's this BS with saying "probable cause".
gee steve, i dont know. what is all this "probable cause" BS about? i mean, its not like the constitution mentions it.
Ok and? You simply stated "probable cause" as if they had probable cause.
To have probable cause you would have to conclude that an assumption equates to probable cause. They have no idea if the people they are getting the information on commited any crime whatsoever. It's simply a mass fishing expedition to find a crime, which is the very reason the amendment was put in place to prevent.
What probable cause do they have? Is it the mere fact that someone has opened up an account using legal means? They have no idea if every one of the people they are getting ready to get information on committed a crime and they certainly don't have probable cause to show that they have.
So what was the purpose of simply stating probable cause in your post when it’s obvious they don’t have it?
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Tax Man
Captain
Joined: 09 Jun 2003
Posts: 459
Posted: Sun Nov 20, 2005 5:16 am Post subject:
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Quote:
To have probable cause you would have to conclude that an assumption equates to probable cause.
Things that make you go hmmmm......
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"To have probable cause you would have to conclude that an assumption equates to probable cause."
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Sun Nov 20, 2005 6:13 pm Post subject:
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Stevesy wrote:Quote:
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition?
In response to some taxpayers who claimed that the IRS was on a "fishing expedition," one court characterized the IRS summons authority as making the IRS "licensed to fish."
Unlike most summonses, the John Doe summons requires that the IRS make a pre-issuance showing to a federal district judge that many of the participants whose names will be obtained may not be properly executing their federal tax obligations. If he or she is satisfied, the judge then issues an order permitting the issuance of a John Doe summons.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
Posts: 5296
Posted: Sun Nov 20, 2005 8:22 pm Post subject:
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jcolvin2 wrote:
Stevesy wrote:Quote:
Do you really think it's wise to let the IRS assume everyone is guilty by initiating a fishing expedition?
In response to some taxpayers who claimed that the IRS was on a "fishing expedition," one court characterized the IRS summons authority as making the IRS "licensed to fish."
Unlike most summonses, the John Doe summons requires that the IRS make a pre-issuance showing to a federal district judge that many of the participants whose names will be obtained may not be properly executing their federal tax obligations. If he or she is satisfied, the judge then issues an order permitting the issuance of a John Doe summons.
Ok...I realize the courts will probably agree to the summons that doesn't make it right. It doesn’t make it right when a judge lets child molesters get off with 2 and 3 year sentences either. There is a serious problem when the courts get to decide when and where it's ok to violate the constitution. Judges are not endowed with some supernatural ability…they are simply men or woman like every other human. When you remove the limits (written law) and let them decide matters based on personal opinion you have basically ok’ed a single person’s opinion to dictate the guranteed constitutional rights of all Americans, in other words it’s called an oligarchy.
Btw, how do you think the government is going to show that many of the people using paypal with offshore accounts are committing crime if the government needs to get the summons to find out who is committing the crime through paypal? Again, it's an assumption. What constitutes "many" 1% or 60%? Who gets to determine when there is enough to say "many"? A single man in a black robe who is not basing his decision on law because there is no law defining what "many" is, but his own personal opinion of what constitutes enough to ok a summons that clearly violates the constitution. The constitution leaves no doubt about seeking information, the government is to identify the "persons", no one in their right mind would interpret that in such as way so that "anyone" is a proper description of persons. If such a thing was intended then there was no sense in placing that qualifier in the clause to begin with.
Maybe in the near future it will be ok to let the government monitor all transactions, it's clear "many" people are committing crime via electronic transactions.. thus there is probable cause to search them all....rarely if ever does the government lose power, to the contrary it's always increasing. You let them have an inch and there is no doubt they will end up having a mile.
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Sometimes it's really hard to keep this big conspiracy going. - TaxMan
Posted: Sun Nov 20, 2005 10:06 pm Post subject:
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Quote:
rarely if ever does the government lose power, to the contrary it's always increasing
steve, when you took criminal procedure, what did your professor say about the government and its powers over the course of the last 50 years?
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"Again, I ask you does Quatloos plant bombs?"
-Stevesy
"To have probable cause you would have to conclude that an assumption equates to probable cause."
-Stevesy, from his treatise on the 4th Amendment and Search and Seizure
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jg
FULL PIRATE
Joined: 25 Feb 2004
Posts: 957
Posted: Sun Nov 20, 2005 11:08 pm Post subject:
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SteveSy wrote:
Notice this very important wording "the place to be searched, and the persons or things to be seized". Do you really think the word "persons" was meant to be described as "anyone"? You probably do....you're so open minded your brains fell out.
SteveSy wrote:
The constitution leaves no doubt about seeking information, the government is to identify the "persons", no one in their right mind would interpret that in such as way so that "anyone" is a proper description of persons. If such a thing was intended then there was no sense in placing that qualifier in the clause to begin with.
Note it says that the persons that must be identified are the persons to be seized. If no persons are to be seized, no one needs to be identified. That is what the amendment says in the quote you provided.
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SteveSy
Resilient Keeper of the True 861 Truth
Joined: 07 Nov 2003
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Posted: Sun Nov 20, 2005 11:50 pm Post subject:
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jg wrote:
SteveSy wrote:
Notice this very important wording "the place to be searched, and the persons or things to be seized". Do you really think the word "persons" was meant to be described as "anyone"? You probably do....you're so open minded your brains fell out.
SteveSy wrote:
The constitution leaves no doubt about seeking information, the government is to identify the "persons", no one in their right mind would interpret that in such as way so that "anyone" is a proper description of persons. If such a thing was intended then there was no sense in placing that qualifier in the clause to begin with.
Note it says that the persons that must be identified are the persons to be seized. If no persons are to be seized, no one needs to be identified. That is what the amendment says in the quote you provided.
Ok....
I really hope you're kidding....
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SteveSy
Resilient Keeper of the True 861 Truth
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Posted: Sun Nov 20, 2005 11:58 pm Post subject:
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Tax Man wrote:
Quote:
rarely if ever does the government lose power, to the contrary it's always increasing
steve, when you took criminal procedure, what did your professor say about the government and its powers over the course of the last 50 years?
I never took "criminal procedure" but then it doesn’t take someone else to tell me what powers the government has acquired over the last 50 or 100 years either. For some strange reason it appears I'm one of those exceptions to the general automaton rule (at least here).
The SS number alone is proof of the acquired power of the federal government. When SS was first purposed many people were very opposed to identifying everyone with a number. Of course as always they lied and claimed it would never be used for general identification.....it was clearly the lie of the century. The SS number alone has allowed the federal government to gain more power over the people than any event or thing imaginable.
What's sad is you think you're accepting that the government is going to get the bad guys by using this type of general search. The truth is someday in the near future something bad is going to happen like a dirty bomb or small nuclear device and instead of getting the terrorist they'll use it as an excuse to monitor everything you do and everything you say and they will have established precedent for doing so. They're already doing it with drug dealers and the patriot act.
They're really not interested in catching the bad guys they're interested in making everyone compliant with whatever they think people should be compliant with. What you might think is over the line today will be acceptable tomorrow because YOU allowed the line to be moved passed what was once not acceptable. It’s much easier to accept small changes, unfortunately people like you fail to realize that all those small changes equated to a huge change.
There is a point where people will not be able to stand up and stop or expose a real tyrannical government; it will be just like it was in Germany in the early 30’s. You scoff at assertions such as that but what are you doing to help prevent it from happening again. You're simply doing what the people back then did and assume they'll never do such a thing because we have courts and checks and balances. They had those things back then too, they had a democracy with an elected government and courts. Mass searches based on nothing but a "maybe" should never be allowed in a free country....
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Joey Smith
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Posted: Mon Nov 21, 2005 12:58 am Post subject:
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This discussion has now eclipsed "Tax Policy and Practice" and now gone into the political. Please take it to Ranting & Raving.
Although I am not a tax practitioner, I am aware that the pendulum of tax enforcement swings back-and-forth from lax enforcement to heavy handed, and back again. Most of the recent IRS actions are in direct response to prior lax enforcement which encouraged people to use undisclosed offshore accounts that were accessible by offshore debit and credit cards, and PayPal and similar accounts.
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SteveSy
Resilient Keeper of the True 861 Truth
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Posted: Mon Nov 21, 2005 4:07 am Post subject:
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Joey Smith wrote:
This discussion has now eclipsed "Tax Policy and Practice" and now gone into the political. Please take it to Ranting & Raving.
Although I am not a tax practitioner, I am aware that the pendulum of tax enforcement swings back-and-forth from lax enforcement to heavy handed, and back again. Most of the recent IRS actions are in direct response to prior lax enforcement which encouraged people to use undisclosed offshore accounts that were accessible by offshore debit and credit cards, and PayPal and similar accounts.
Ok...I'll keep on topic....I think mass searches are wrong and can only lead to a bad result.
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Joey Smith
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Posted: Mon Nov 21, 2005 4:23 am Post subject:
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SteveSy wrote:
Joey Smith wrote:
This discussion has now eclipsed "Tax Policy and Practice" and now gone into the political. Please take it to Ranting & Raving.
Although I am not a tax practitioner, I am aware that the pendulum of tax enforcement swings back-and-forth from lax enforcement to heavy handed, and back again. Most of the recent IRS actions are in direct response to prior lax enforcement which encouraged people to use undisclosed offshore accounts that were accessible by offshore debit and credit cards, and PayPal and similar accounts.
Ok...I'll keep on topic....I think mass searches are wrong and can only lead to a bad result.
I don't disagree with you. But I'm not sure the Service is actually doing much with their search results, and instead are simply trying to scare a number of those who weren't reporting into voluntarily doing so. As John Colvin points out, the IRS's offshore credit card campaign was not particularly successful and did not result in any large number of prosecutions, although apparently it did highlight a few promoters and thus lead to their clients.
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
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Posted: Mon Nov 21, 2005 5:35 am Post subject:
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Background on the OCCP and OVCI:
In the late 1990s, the IRS became aware that there were many American using credit and debit cards to access funds on deposit in offshore banks. In particular, one individual brought substantial information to the IRS regarding U.S. depositors in one Caribbean bank. In 2000, the IRS and DOJ began a campaign to obtain information regarding accounts issued by banks in tax-haven jurisdictions. The IRS and DOJ were successful in obtaining court orders issuing John Doe summonses on the international affiliates of MasterCard, Visa, and American Express with respect to accounts held by taxpayers in various jurisdictions.
As many of the accounts were held in corporate names, or could not otherwise be associated with U.S. persons, the IRS followed this effort up with John Doe summonses on retailers to determine if a US person received the economic benefit of transactions paid for by the cards. For example, the IRS obtained a John Doe summons on Amazon.com to determine who received the merchandise purchased with the offshore cards, and a John Doe summons on Southwest Airlines to determine whose travel was purchased with the offshore cards. Most recently, the IRS has obtained court approval to serve John Doe summonses on two or three large processors of credit card information. With this information in hand, the IRS began to identify and aggressively audit the taxpayers.
The IRS made this program a high priority because preliminary estimates indicated that perhaps as many as 1 to 2 million Americans may have had offshore accounts. However, the results of this program have been somewhat mixed, and the original estimates probably a large exageration. In a July 21, 2004, statement to the Senate Finance Committee prepared for hearing addressing the so-called “tax gap,” the Acting Inspector General of TIGTA (Pamela Gardiner) provided the following assessment of the offshore credit card program:
"The IRS has begun addressing taxpayers’ attempts to avoid taxes through the use of offshore techniques. Congressional witnesses have estimated that 1 to 2 million taxpayers avoid $40 to $70 billion in taxes annually using offshore bank accounts. The IRS developed the Offshore Credit Card Project (OCCP) to address this problem and made it a strategic priority for FYs 2003-2004. The OCCP uses information from the transactions of credit cards issued from offshore banks to identify taxpayers evading taxes and the promoters of this type of scheme.
"IRS results as of March 31, 2004, for this Project have been mixed. Although nearly $5 million in additional assessments have been made on approximately 300 cases, the direct examiner cost associated with these cases is almost $1.5 million. This cost does not include the intensive labor costs associated with initiating these cases. In addition, the vast majority of the more than 3,000 completed cases have been closed without an assessment of any additional taxes."
In early 2003, the IRS announced a limited amnesty, providing that individuals who had participated in offshore financial arrangements that were not properly reflected on their tax returns could come forward and disclose this information to the IRS through April 15, 2003. The IRS in return would agree to limit the potential penalty exposure to only the accuracy and delinquency penalties (foregoing fraud). This program was known as the Offshore Voluntary Compliance Initiative (OVCI).
The OVCI program was far more successful than the credit card program had been on a costs and results basis, as Acting Inspector General Gardiner indicated in her July 21, 2004 statement:
"Another IRS Project, called the Offshore Voluntary Compliance Initiative (OVCI), grew out of the OCCP and provided an opportunity for users of offshore accounts to come forward and pay back taxes, interest, and certain penalties but avoid fraud penalties or criminal prosecution. This initiative ran from January 14 to April 15, 2003. The OVCI reflected attempts to bring taxpayers back into compliance quickly while simultaneously gathering more information about the promoters of these offshore schemes. As part of the request to participate in the OVCI, applicants were required to provide full details on those who promoted or solicited the offshore financial arrangement. "
IRS results for the OVCI were more encouraging than those from the OCCP. In February 2004, the IRS reported this initiative had yielded over $170 million in taxes, interest, and penalties to the United States Treasury. The data the Treasury Inspector General for Tax Administration (TIGTA) reviewed indicated that the direct examiner costs associated with this project were only around $220,000. However, the data showed that even though the applicants voluntarily provided the tax information, over half of the completed cases had been closed without additional assessments.
On another level, it was more successful. Shortly after the OVCI closed, in June of 2003, Kevin Brown (Chief of Staff to Commissioner Everson) provided some information about the number of promoters identified at the Virginia Conference on Federal Taxation. Mr. Brown indicated that the IRS had received 1,253 applications to participate in the OVCI program. He also indicated that, thanks in part to the effectiveness of the OVCI program, the number of promoters of Abusive Tax Avoidance Transaction (ATAT) in agency databases had soared from 25 in 2001 to 888 in June of 2003, providing substantial assistance to the IRS’s efforts to track down promoters.
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Kimokeo
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Posted: Fri Nov 25, 2005 5:54 pm Post subject:
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Steve, you mentioned that the judges may make a mistake in how they rule on a summons. If the judge agrees with the IRS and allows the summons, does Paypal have the right to appeal the judge's decision?
check and balances...I'm curious if there's an appeal available.
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AndyK
Ye Olde Pirate of the Fiscal Quatloosian
Joined: 04 May 2004
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Posted: Fri Nov 25, 2005 6:00 pm Post subject:
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Kimokeo wrote:
Steve, you mentioned that the judges may make a mistake in how they rule on a summons. If the judge agrees with the IRS and allows the summons, does Paypal have the right to appeal the judge's decision?
check and balances...I'm curious if there's an appeal available.
All the way up to SCOTUS.
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jcolvin2
Grand Master Consul of Quatloosia
Joined: 01 Jul 2003
Posts: 364
Location: Seattle
Posted: Fri Nov 25, 2005 11:34 pm Post subject:
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Kimokeo wrote:Quote:
Steve, you mentioned that the judges may make a mistake in how they rule on a summons. If the judge agrees with the IRS and allows the summons, does Paypal have the right to appeal the judge's decision?
I think that the judge already ordered that the John Doe summons be issued to PayPal. I don't think that PayPal can directly appeal the ex parte order. Having received prior court approval, the summons will now be served on PayPal. PayPal can refuse to comply, and then litigate the merits in a summons enforcement action. This is what Jenkens & Gilchrist did with respect to a John Doe summons issued on that law firm with respect to noticed transactions which they allegedly structured for clients.
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