Tuesday, June 30, 2009 - Ebay - Tax Fraud and Swiss Bank Accounts: Part 06
-http://news.com.com/IRS+to+search+PayPal+records+for+tax+evaders/2100-1030_3-6060920.html
A federal court has granted the Internal Revenue Service permission to search PayPal members' offshore bank accounts and credit card records to identify possible tax evaders.
Under the order, issued by a U.S. District Court judge in San Jose, Calif., the IRS can view those records under certain conditions, the Justice Department announced this week. The IRS is seeking the access as part of its larger Offshore Credit Card Program, which aims to crack down on U.S. taxpayers who hold money offshore to avoid paying taxes.
The IRS is seeking information on U.S. taxpayers who have signature authority over bank and credit card accounts issued by, or through, financial institutions in more than 30 countries. The foreign countries, which range from Bermuda to Costa Rica to Singapore, have bank secrecy laws that allow account holders to refrain from disclosing income and assets that are subject to federal income taxes in the U.S.
PayPal currently operates in 10 of those countries, including Costa Rica, Singapore, Hong Kong, Switzerland, Malta and Luxemburg.
According to the order, the IRS can review the bank and credit card accounts of PayPal members, providing they meet three stipulations.
One is that a "reasonable basis" exists for believing a person may have failed to comply with IRS laws. A second requirement is the investigation relates to a particular person. Furthermore, the information being sought must not be easily obtained through other sources.
The Justice Department, on behalf of the IRS, filed its petition with the court in October. The court issued its order in February. A department representative said the law enforcement agency did not choose to disclose the court's actions until this week during a press briefing.
Online payment service PayPal, which is owned by eBay, has since received a summons order from the IRS and is reviewing its options, said Amanda Pires, a PayPal spokeswoman.
PayPal, which received the summons roughly two weeks ago, is reviewing whether to provide the information, appeal the court order, or take some other action, Pires said.
She noted the online payment service has had a long working relationship with regulators and that its privacy policy states it may release members' information if required by law.
The company, however, takes a strong view on protecting users' information, she added.
Over the past several years, the IRS has been turning to the Internet to crack down on tax evaders. In 2002, the IRS sought ways to track potential tax evaders by reviewing keywords in their search results.
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-http://www.vendio.com/mesg/read.html?num=2&thread=637096
The Justice Department has asked PayPal Inc., the online-payment-processing unit of Internet auctioneer eBay Inc., to turn over some customer records as part of a tax-evasion probe, a top tax official said.
U.S. District Judge James Ware in the U.S. District Court for the Northern District of California in February issued a "John Doe" summons to PayPal, of San Jose, Calif., for the records.
Eileen J. O'Connor, assistant attorney general for the Tax Division, mentioned the summons to reporters during a news conference on tax-enforcement trends. A "John Doe" summons permits the Internal Revenue Service to obtain information about possible tax fraud by people whose identities are unknown.
Ms. O'Connor said the request is part of a Justice Department and IRS investigation of possible tax evasion by U.S. taxpayers using credit cards issued by offshore banks. An estimated $40 billion dollars ( Anm.: 40 Milliarden USD) in federal tax revenue is lost every year because of the use of credit cards linked to accounts held in foreign tax havens, according to the Treasury Inspector General for Tax Administration.
The government made similar requests of MasterCard International Inc., Visa International and American Express Co. in 2000 and 2001. It has sought payment information from 141 merchants. "This is just fact-finding by the IRS," Ms. O'Connor said. "PayPal is one of the mechanisms by which money stashed overseas might be spent."
The summons requires PayPal to provide account and transaction records relating to U.S. taxpayers with MasterCard, Visa and American Express cards issued by banks based in tax-haven countries. The request covers Dec. 31, 1999, through Dec. 31, 2004. PayPal spokeswoman Amanda Pires said the company is evaluating its options. She said the request covers banks based in 35 countries, yet PayPal is available in only 10 of those countries.
In a court filing, the Justice Department said foreign countries such as Antigua, Luxembourg, Panama and Switzerland have bank-secrecy laws that compel U.S. investigators to seek records from other sources, such as credit-card issuers.
The IRS and the Justice Department contend about 72% of taxpayers reviewed through its "Offshore Credit Card Project" examinations in 2005 had underpaid their taxes by using offshore payment cards and bank accounts.
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