John Doe Summons – Introduction
In the past few weeks, two US federal courts authorized the IRS to issue John Doe summonses to third parties, targeting taxpayer information.
One of theses summonses addresses the gig economy, while the other one is in relation to offshore transactions.
What is a John Doe Summons?
A John Doe summons is a powerful investigative tool that allows the IRS to gather information about unidentified taxpayers suspected of non-compliance with tax laws.
The name reflects the anonymity of the taxpayers involved, as their identities are unknown to the IRS at the time of the summons.
For a federal district court to authorize such a summons, the IRS must meet strict criteria, demonstrating that:
- The summons targets a specific individual or group.
- There is a reasonable basis to believe this individual or group has failed to comply with tax laws.
- The requested information cannot be obtained from other sources.
- The scope of the summons is narrowly tailored to uncover evidence of non-compliance.
The Gig Economy Case: JustAnswer
On December 20, 2024, the U.S. District Court for the Central District of California authorized the IRS to issue a John Doe summons to JustAnswer LLC, a digital platform connecting users with professionals for answers to their questions.
The government had petitioned for records identifying experts paid $5,000 or more in any calendar year from 2017–2020.
JustAnswer operates by charging users fees to ask questions, which are answered by professionals such as doctors, lawyers, engineers, and tax advisers.
A portion of these fees is paid to the experts, with bonuses added as part of an incentive program.
The IRS investigation was triggered by instances where professionals paid by JustAnswer failed to report their earnings as income.
In its petition, the IRS referenced five taxpayers who had been paid through the platform but omitted this income on their tax returns.
The court found sufficient grounds to believe widespread non-compliance among JustAnswer experts and approved the summons.
Following the ruling, the Department of Justice Tax Division issued a statement underscoring its commitment to addressing tax compliance in the gig economy.
Offshore Transactions: Trident Trust Group
On December 23, 2024, the U.S. District Court for the Southern District of New York authorized the IRS to issue John Doe summonses aimed at uncovering U.S. taxpayers who may have used Trident Trust Group or its affiliates to conceal assets or income overseas.
The summonses target financial institutions, clearinghouses, and other entities connected to Trident, including its US affiliate, Nevis Services Limited.
The IRS is seeking records from 2013 onward related to taxpayers who used Trident’s services to establish or manage:
- Foreign financial accounts or assets,
- Offshore corporations, trusts, or other entities,
- Assets held under the names of these entities.
The government’s petition highlighted cases of non-compliance disclosed through the IRS’s Offshore Voluntary Disclosure Program, including nine taxpayers who utilized Trident’s services to hide income or assets.
The court agreed there was a reasonable basis to believe these activities were part of a broader pattern of tax evasion.
John Doe Summons – Conclusion
While changes in political leadership often signal shifts in enforcement priorities, these recent actions make it clear that the IRS is leveraging its existing tools to tackle tax compliance issues aggressively.
Whether targeting gig economy workers or offshore account holders, the agency is sending a strong message: all income, regardless of source, must be reported and taxed appropriately.
Final Thoughts
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