AmEx Second Credit Card Company To Buckle In IRS Offshore Probe

by Philip Morton, Investors Offshore.com

28 March 2002

It was revealed this week that US credit card company, American Express has followed MasterCard International's lead, and reached an agreement with the IRS over access to offshore credit card records.

The Internal Revenue Service is pursuing US taxpayers who hide an undeclared portion of their income offshore in order to avoid taxes, but continue to access the money via offshore credit and debit cards. Although the investigation into this type of activity has been underway since October 2000, recent international events and changes in banking secrecy and information exchange laws in several offshore jurisdictions have facilitated the IRS probe over the last few months.

Offshore observers predicted that MasterCard's disclosure of around 1.7 million credit card records from account holders in Antigua and Barbuda, the Cayman Islands, and the Bahamas, represented the thin end of the wedge, and they were right.

Bolstered by the impressive haul (the MasterCard records alone turned up around 230,000 accounts held by US citizens), the IRS then asked a federal court in San Francisco to force Visa International to hand over similar records. However, the request made with regard to Visa records is likely to have far greater impact, as the number of jurisdictions and years for which the tax department has requested information have been greatly extended.

Speaking earlier this week, an American Express spokeswoman told reporters that the company will notify affected cardholders in writing, and will provide the information within thirty days of the order.

Questioned by the Bloomberg news service, however, Visa spokeswoman Cheryl Heinonen said that the credit card company had not received any information requests from the IRS as yet.

Recommended