Archive for Tuesday, October 31, 2000

IRS granted access to cards

Tax collectors to look into offshore accounts

October 31, 2000


— In a sweeping tax-evasion probe, the IRS was granted access Monday to thousands of MasterCard and American Express credit card accounts held by U.S. taxpayers in three offshore banking havens.

U.S. District Judge Adalberto Jordan agreed with the IRS that cardholders may have violated U.S. tax laws and that their identities are not readily available from other sources.

The court order allows the IRS to issue summonses for charge, debit and credit cards issued by banks in the Bahamas, the Cayman Islands and the country of Antigua and Barbuda in 1998 and 1999.

Investigators want to look at such transactions as car, boat and airline ticket purchases and hotel and car rentals to learn whether the account holders are living beyond their reported means.

The investigation is one of the largest targeting offshore accounts in the history of the Internal Revenue Service.

MasterCard International spokeswoman Sharon Gamsin said the company has "a long history of cooperating with governmental agencies." But she also said MasterCard keeps transaction records only by account number, with the bank keeping personal information.

Offshore accounts are legal for U.S. taxpayers, but they must file forms with the IRS about them and pay taxes on income earned in the United States.

The three nations targeted by the IRS long have been known as offshore tax havens and favorite spots for drug money launderers.

Promoters of offshore accounts boast that income can be sheltered because the U.S. government cannot penetrate some foreign banking secrecy laws.

But the IRS believed it could avoid those laws by getting records through the Miami headquarters of the companies' Caribbean operations.

The IRS does not know how many accounts created by U.S. citizens and residents are involved but believes the number to be in the thousands.

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