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...

Camp Hopes Estate Tax Will Be on Its Way OutAn article in Bloomberg said that Republicans are considering voting this year to repeal the U.S. estate tax, according to House Ways and Means Chairman Dave Camp (R.-Mich.). He...
Senate Takes Different Approach from House for Highway and Bridge FundEarlier this week, according to a New York Times article, the Senate agreed to fill the coffers of the fund that pays for highway and bridge repairs with...
There it stands, your client's 100-year-old, rickety, vermin-infested barn or former hotel or whatever the darn thing once was. And she's considering what to do with it. There are two words that can help her decide...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.