U.S. Targets Tax Evaders Using Belize Accounts

By Laura Saunders

U.S. law-enforcement officials are targeting undeclared accounts in Belize-based banks in an expansion of their hunt for U.S. taxpayers who are hiding money abroad, the Justice Department said.

This week, Judge Ursula Ungaro of the U.S. District Court for the Southern District of Florida in Miami authorized the Internal Revenue Service to serve "John Doe" summonses on Bank of America NA and Citibank NA, seeking information about U.S. taxpayers with accounts at Belize Bank International Ltd., Belize Bank Ltd. or Belize Corporate Services.

According to the Justice Department statement, the three Belize entities are subsidiaries of BCB Holdings Ltd.

The Citigroup Inc. and Bank of America Corp. units aren't accused of wrongdoing. Federal authorities can use information from correspondent accounts that the U.S. banks maintained for the Belizean entities to trace people who may be evading U.S. taxes.

Representatives for the three Belize institutions didn't respond to requests for comment.

This is federal authorities' latest use of the John Doe summons. It is a special form of summons that allows the IRS to obtain information about all taxpayers in a certain group, even if the agency doesn't know their identities, if it has evidence that such a group could exist.

The IRS has used the special form of summons to look for tax evaders with offshore accounts at several other banks, including UBS AG and Zuercher Kantonalbank in Switzerland and FirstCaribbean International Bank and Bank of N.T. Butterfield and Son in the Caribbean.

Belize is known for having strong secrecy laws, said Bryan Skarlatos, an attorney with Kostelanetz & Fink in New York who has advised hundreds of U.S. taxpayers who, in special IRS limited-amnesty programs, have confessed to having secret offshore accounts. The new summons is a reminder that "U.S. taxpayers can't count on hiding money offshore just because a bank has no U.S. operations," he said.

The summons is further evidence that the IRS is mining the extensive data provided by more than 50,000 U.S. taxpayers who have confessed to having undeclared offshore accounts since 2009. To support its request for the John Doe summons, the IRS cited evidence gathered from five taxpayers who maintained undisclosed accounts through the Belizean entities who subsequently confessed to having the accounts to the IRS.

Write to Laura Saunders at laura.saunders@wsj.com

(END) Dow Jones Newswires

September 18, 2015 11:21 ET (15:21 GMT)

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