Increasingly, one important technique is the John Doe summons. It blew the lid off the hushed world of Swiss banking in 2008 when a judge allowed the IRS to issue a John Doe summons to UBS for information about U.S. taxpayers using Swiss accounts.
Swiss law prohibits banks from revealing the identity of account holders, but the rest is history.
With a normal summons, the IRS seeks information about a specific taxpayer whose identity it knows. A John Doe summons allows the IRS to get the names of all taxpayers in a certain group. The IRS needs a judge to approve it, but recent IRS success may to lead to more.
A John Doe Summons is ideal for pursuing investors in tax shelters, account holders at financial institutions, attendees at an event, donors of real estate, etc.
After sniffing out American taxpayers with UBS accounts, the IRS did the same with HSBC in India. But the IRS tells its own examiners to use a John Doe Summons only after trying other routes. The IRS Manual says it may be possible to obtain taxpayer identities without issuing a John Doe summons.
Read more at: Tax Times blog