CDR: IRS Tentacles grow

[anonymous at openpgp.net]

 IRS Can Access Offshore Credit Info

               By Catherine Wilson
               AP Business Writer
               Tuesday, Oct. 31, 2000 7:38 a.m. EST

               MIAMI  In a sweeping tax-evasion probe, the IRS has
               been granted access 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 on Monday 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 things 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
               in a statement that 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. 

               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 theyre looking at." 

               Neither spokeswoman would answer questions. 

               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 IRSs 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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