Feds Order Credit Card Company Cooperation to Curb Tax Evasion

Offshore tax havens have always been a sanctuary for those wishing to take advantage of favorable banking secrecy laws.

But now, the Internal Revenue Service is teaming up with the heavy hand of the judicial system to order Visa International, MasterCard and American Express to turn over private records on hundreds of thousands of offshore accounts, in hopes of finding possible tax evaders and bringing them to justice.

A federal judge ordered Visa International to turn over records linked to offshore accounts in more than 30 countries. American Express has also been asked to provide passport numbers and drivers license information for US customers holding cards from banks in popular havens like the Cayman Islands, Antigua and Barbuda. And Mastercard has already turned over millions of records in response to a court summons.

The theory is that those who are looking to evade taxes may deposit unreported income in an offshore bank and then set up a credit card account from those banks to pay for goods and draw off the funds while living in the U.S. Credit card holders issued by offshore banks are required to report them, but the IRS estimates that fewer than 10% do.

"Simply put, the guarantee of secrecy associated with offshore banking is evaporating," said IRS commissioner Charles Rossotti. "If people use these illegal offshore methods to hide their income, we will find out who they are," he said.

You may like these other stories...

Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.