John Doe Summons Issued on Suspected California Tax Evaders


A federal court judge has granted permission for a John Doe summons requested by the IRS to be served on California’s Department of Equalization (DOE) seeking information on taxpayers who allegedly tried to evade taxes when transferring property to other family members without paying (or not paying enough) taxes between 2005 and 2010. Under the tax code, a person is allowed to transfer up to $5 million (previously $1 million) worth of assets over a lifetime to another family member without paying taxes. Any amount above the $5 million ceiling is subject to tax. Furthermore, a taxpayer is allowed to transfer up to $13,000 worth of assets to another person per year without having this amount counted towards the $5 million. Anything above $13,000 a year is counted towards the $5 million.

In order for the IRS to keep track of these transfers, taxpayers must fill up Form 709 United States Gift (and Generation-skipping transfer) Tax Return.

So far, the IRS has received data on these transfers from county or state officials in Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington state and Wisconsin. However, California’s BOE declined to submit data from their state because California State law does not allow the disclosure of such information without a court approved summons.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Darrin Mish, Tampa Tax Attorney, The Law Offices of Darrin Mish, P.A. | Attorney Advertising

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