In a recent interview for this column,1 Caroline D. Ciraolo, the Acting Assistant Attorney General for the Tax Division of the Department of Justice, described the division’s continuing pursuit of individuals believed to have evaded their U.S. tax obligations through offshore accounts. Among other things, Ciraolo noted that, in the wake of the Justice Department’s Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks, the Tax Division’s civil trial attorneys were seeking to enforce Bank of Nova Scotia summonses to obtain information regarding previously undisclosed offshore assets.
Through Bank of Nova Scotia summonses, the Internal Revenue Service (IRS) seeks to compel U.S. branches of foreign banks to produce records held by their overseas branches, even when production would otherwise be proscribed by foreign bank secrecy laws. While this law enforcement tool has been available since the early 1980s, it appears to have been used rarely over the past three decades. In today’s regulatory climate, however, practitioners representing taxpayers need to be aware of the availability of Bank of Nova Scotia summonses to expand the government’s jurisdictional reach, as well as potential limitations on the use of such summonses.
Bank of Nova Scotia Case
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