NoSSN - IRS Seeks Offshore Bank Records

IRS Seeks Offshore Bank Records
October 20, 2000

This article is reprinted without permission. (sorry)

IRS Seeks Offshore Bank Records
By CATHERINE WILSON
AP Business Writer

MIAMI (AP) _ In a sweeping tax-evasion probe that could affect thousands
of people, the Internal Revenue Service went to court to seek records on
U.S. taxpayers with credit card accounts in three offshore banking havens.

Credit, debit and charge cards at banks in the Bahamas, Cayman Islands and
the country of Antigua and Barbuda are covered by federal court petitions
filed Wednesday against American Express Travel Related Services Co. and
MasterCard International.

``We want to get the message across that all income to U.S. citizens is
taxable,'' John Buchanan, manager of the IRS trust program, said Thursday.

The investigation is one of most extensive IRS probes targeting offshore
tax havens in history.

Promoters of offshore accounts advertise everywhere from the Internet to
airline magazines with the message that income can be sheltered because
the U.S. government cannot penetrate some foreign banking secrecy laws.

But the headquarters for the Caribbean operations of the two financial
service companies are in the Miami area, and IRS lawyers believe their
records are legally accessible.

The court did not immediately indicate when it would rule on the question.

The investigation, already under way for two years, targets tax evaders
and non-filers.

The targeted countries have been known in international circles for years
as favorite spots for drug money launderers. The IRS probe is searching
for both legally and illegally obtained assets.

``The countries that were selected were selected because they are
representative of the problem,'' Buchanan said. ``We know they have a high
U.S. presence there so the numbers could get very high.''

Offshore accounts are legal for U.S. taxpayers, but they must file
additional forms with the IRS about them and pay taxes on income earned in
the United States.

MasterCard spokeswoman Sharon Gamsin said the company has cooperated with
past federal investigations but added, ``We are mindful of our
cardholders' privacy concerns and maintain minimal if any personally
identifiable information regarding MasterCard transactions.''

A call to American Express was not immediately returned.

Investigators want identifying information, such as passport and driver's
license numbers, for cards issued on the islands and information on
transactions from 1998 and 1999, including car, boat and airline ticket
purchases and hotel and car rentals in the United States.

The IRS doesn't know how many accounts created by U.S. citizens and
residents are involved but believes the number to be in the thousands.

If the records are produced soon, the IRS expects that tax examinations by
400 newly trained agents could begin next year.

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.

In past investigations of offshore banks, as many as 95 percent of
depositors have been U.S. citizens, according to IRS agent Joseph West,
who filed background information in support of the summonses.

In a typical plan for an offshore tax shelter, a foreign banker will
create a company with employees of a foreign law firm as nominal owners
and a U.S. customer as a hidden owner. Credit cards opened on the accounts
would be secured by bank account balances at least equal to the charges.
Billing and payment arrangements would be beyond sight of U.S.
investigators.

AP-NY-10-19-00 1601EDT

Follow these three "Maxims" for Tax Freedom!

Rule 1. Protect Property and Earnings!
Rule 2. Get Educated!
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?* You should not attempt rule number 3 until you have successfully
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Protecting property and income includes:
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For more information on this topic send an email to
protection@taxfreedom101.com

"The Constitution prohibits any direct tax, unless in proportion to numbers as ascertained by the census ... [and] ... prohibits Congress from laying
a direct tax on the revenue from property of the citizen without regard to state lines ...." -- United States Supreme Court in Pollack v. Farmers' Loan & Trust Company (1895)

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