(COMTEX) IRS Can Access Credit Card Records
MIAMI, Oct 30, 2000 (AP Online via COMTEX) -- 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 or paid 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 things as car, boat and airline ticket
purchases and hotel and car rentals.
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."
Judy Tenzer, a spokeswoman for American Express Travel Related Services Co.,
said "we are now speaking to the IRS to get a better idea of what they're
looking at."
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 have long 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.
Banks in the targeted islands require customers to open bank accounts before
obtaining credit cards. So obtaining the names of the cardholders produces the
names of the bank account holders as well.
Fifteen countries and territories have been blacklisted by a 29-nation task
force for failing to cooperate in the fight against money laundering. The
Bahamas and Cayman Islands are among them, but officials in the Cayman Islands
promised in June to end tax-haven practices within five years.
Daniel Mitchell, a tax expert at the conservative Heritage Foundation, worried
that the IRS's blanket record request would affect financial privacy.
"We should not be trying to enforce a worldwide tax regime," he said. "It tends
to lead to cartel-like behavior, OPEC for politicians, for lack of a better
phrase."
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On the Net: irs.gov
By CATHERINE WILSON
AP Business Writer
Copyright 2000 Associated Press, All rights reserved
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KEYWORD: MIAMI
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