Opinion
Case No. C-1-02-738
December 10, 2002
ORDER GRANTING LEAVE TO SERVE JOHN DOE SUMMONSES
This matter is before the Court on the ex parte petition of the United States of America for leave to serve John Doe summonses pursuant to Sections 7402(a), 7609(f), and 7609(h) of the Internal Revenue Code (26 U.S.C.). (Doc. 1). The Internal Revenue Service (IRS) is investigating the correct federal income tax liabilities, for the years ended December 31, 1998 through 2001, of United States taxpayers who have signature authority over MasterCard payment cards issued by, through, or on behalf of banks or other financial institutions in Antigua and Barbuda, the Bahamas, and the Cayman Islands, or issued to persons or entities in Antigua and Barbuda, the Bahamas, and the Cayman Islands. In furtherance of this investigation, the IRS seeks to issue administrative "John Doe" summonses to Lenscrafters, Inc., Coachbuilt Motors, Ascent Solutions, Cornerstone Brands, Inc., and CompuServe Interactive Services, Inc. The records sought by the summonses will reveal the identities of persons known to have paid for transactions with these merchants using a MasterCard payment card issued by a bank in Antigua and Barbuda, the Bahamas, or the Cayman Islands.
A John Doe summons is "in essence, a direction to a third party to surrender information concerning taxpayers whose identity is currently unknown to the IRS." In Re John Does, 671 F.2d 977, 978 (6th Cir. 1982). "Section 7609(h) vests jurisdiction in the appropriate District Courts to entertain ex parte proceedings brought under subsection (f) and directs those courts to make their determinations on the basis of the Service's petition and supporting affidavits." Id.
Section 7609(f) provides:
(f) Additional requirement in the case of a John Doe Summons. — Any summons described in subsection (c) which does not identify the person with respect to whose liability the summons is issued may be served only after a court proceeding in which the Secretary establishes that — (1) the summons relates to the investigation of a particular person or ascertainable group or class of persons, (2) there is a reasonable basis for believing that such person or group or class of persons may fail or may have failed to comply with any provision of the Internal Revenue law, and (3) the information sought to be obtained from the examination of the records (and the identity of the person or persons with respect to whose liability the summons is issued) is not readily available from other sources.26 U.S.C. § 7609(f).
After consideration of the Declaration of Revenue Agent Joseph C. West, the attached exhibits, and the supporting memorandum of law filed by the United States through its attorneys, the Court finds that the United States has established that:
1. As required by 26 U.S.C. § 7609(f)(1), the summonses relate to the investigation of an ascertainable group or class of persons, that is, United States taxpayers who, during the years ended December 31, 1998 through 2001, had signature authority over MasterCard payment cards issued by, through, or on behalf of banks or other financial institutions in Antigua and Barbuda, the Bahamas, and the Cayman Islands, or issued to persons or entities in Antigua and Barbuda, the Bahamas, and the Cayman Islands.
2. As required by 26 U.S.C. § 7609(f)(2), there is a reasonable basis for believing that such group or class of persons may fail, or may have failed, to comply with various provisions of the internal revenue laws.
3. As required by 26 U.S.C. § 7609(f)(3), the information to be obtained from the examination of the records or testimony (and the identities of the persons with respect to whose tax liabilities the summonses have been issued) is not readily available from other sources.
IT IS THEREFORE ORDERED that the Internal Revenue Service, through Revenue Agent Joseph C. West or any other authorized officer or agent, may serve IRS John Doe summonses upon Lenscrafters, Inc., Coachbuilt Motors, Ascent Solutions, Cornerstone Brands, Inc., and CompuServe Interactive Services, Inc., in substantially the form of the summonses that are attached to the Declaration of Revenue Agent West at Tabs 2(a) through (e), respectively, and including the schedules setting forth the account numbers for the MasterCard payment cards used with each merchant.
IT IS FURTHER ORDERED that a copy of this Order shall be served on Lenscrafters, Inc., Coachbuilt Motors, Ascent Solutions, Cornerstone Brands, Inc., and CompuServe Interactive Services, Inc. with a copy of the summonses by the person serving the summonses.