IRS Nears Deal With Credit Card Companies Over Tax Evasion

by Leroy Baker, Tax-News.com, New York

11 March 2002

It emerged on Friday that the US Internal Revenue Service is nearing a deal with credit card companies American Express and MasterCard International over access to the credit card records of US citizens with bank accounts in offshore jurisdictions.

The Government has been in talks with the companies since October 2000 over access to credit card details for customers with bank accounts in Antigua and Barbuda, the Bahamas, and the Cayman Islands. The drain on federal revenue caused by US taxpayers spiriting portions of their assets offshore in order to avoid paying taxes on them has been estimated at around $70 billion a year.

Previously, banking secrecy laws in the jurisdictions in question made the investigation impossible to pursue, as the banks would not share financial data with the US. However, according to a Wall Street Journal report, information exchange agreements signed in the wake of September 11 by several of the jurisdictions in question have meant that an IRS 'fishing trip' could very soon be on the cards. This news will disappoint those who had hoped that the issue would fade away in favour of more pressing concerns such as terrorist financing and money laundering.

The newspaper revealed that the US tax authorities had hinted at progress in the discussions earlier this year, during an international tax conference in Miami. Robert Panoff, a tax lawyer who moderated the discussion at the meeting observed wryly in a WSJ interview that:

'If people think it's going to fade into the woodwork for lack of attention by the bureaucrats, they're sadly mistaken. The IRS is like an elephant: It walks real slow, but if you're in its way when it gets to you it'll squash you.'

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