A federal judge on October 30 granted the Internal Revenue Service (IRS) access to thousands of MasterCard and American Express credit card accounts held by U.S. taxpayers in several offshore banking havens. U.S. District Judge Adalberto Jordan's order allows the IRS to issue summonses for information concerning charge, debit and credit cards issued by banks in the Cayman Islands, Bahamas and Antigua and Barbuda in 1998 and 1999. Banks in the targeted jurisdictions require customers to open bank accounts before obtaining credit cards, so obtaining the names of cardholders produces the names of bank account holders as well.
IRS investigators are reportedly interested in reviewing things like car, boat and airline ticket purchases and hotel and car rentals to determine whether credit card account holders are living beyond their reported means. Offshore credit accounts are legal for U.S. taxpayers, but they are required to file forms with the IRS disclosing them. The three nations targeted by the IRS have long been identified by U.S. authorities as offshore tax havens and centers of money laundering. An affidavit filed by the IRS with the summons request claimed the U.S. Treasury loses an estimated $70 billion yearly from individual taxpayers who use offshore accounts to evade taxes.
Promoters of offshore accounts often claim that they can be used to shelter income 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, an approach that Judge Jordan accepted.
MasterCard International issued a brief statement saying it has "always cooperated with, and will continue to cooperate with, investigations by governmental agencies." The company added that it is "mindful of customers' privacy concerns."
EPIC Alert -- Volume 7.20 -- November 14, 2000 http://www.epic.org/alert/EPIC_Alert_7.20.html
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[posted 11/14/00]
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