A California federal court recently authorized the Internal Revenue Service (IRS) to serve a digital platform with a “John Doe” summons. Although it sounds anonymous—it is not.
In late December 2024, the IRS obtained an order to serve the digital platform JustAnswer with a John Doe summons. JustAnswer is a membership-based platform that offers 24/7 professional advice from a wide variety of “experts.” The platform connects individuals with people who can answer questions, and experts earn fees when they answer online queries.
According to the news release, the IRS is not investigating JustAnswer, but the agency has concerns about whether experts on the platform are accurately reporting their income. As noted by the IRS, the gig economy provides sideline (and sometimes full-time) work for many people throughout the economy.
A John Doe Summons is different than a targeted subpoena. Instead, the IRS uses a John Doe summons to identify potential tax code violations when the name of an individual is not known. As noted by the IRS, the summons “allows the IRS to obtain the names, requested information and documents concerning all taxpayers in a certain group. A John Doe summons can be a useful tool when trying to obtain information like a list of investors in a certain tax shelter, owners of tax-exempt bonds, or account holders at a financial institution.”
To obtain court approval, a John Doe summons must request information that cannot be obtained through other means, relates to a class or group of individuals, and for which the IRS has reason to believe a tax code violation has occurred.
Remarked an Assistant Attorney General with the Department of Justice, “The gig economy has grown in recent years, and with it, the concern for tax compliance issues has increased. This John Doe summons demonstrates that working with the IRS we will use all the tools available to us to ensure that no matter how U.S. taxpayers earn income, they are properly reporting it and paying their taxes. Those who choose to be on the forefront of the gig economy must be aware of, and abide by, all their tax obligations.”
IRS interest in income earned online is a growth industry as the agency works to identify unreported taxpayer income and the false income tax returns that follow. Word of advice? If you have income from JustAnswer, you might want to be sure your tax returns reflect your earnings.
Business compliance problems? Speak with our experienced tax lawyers today
If you are looking at an audit letter from the IRS or are concerned about the IRS collection process, we can help. With years of successful experience representing clients in IRS matters, our tax group delivers aggressive criminal tax defense and strategic advice for nurturing and protecting your financial portfolio. Call us at 440-250-9709 or contact us online.
