IRS Offshore Credit Card Tax Evasion Investigation Extended

by Mike Godfrey, Tax-News.com, Washington

27 March 2002

The US Internal Revenue Service announced on Monday that it is expanding its search for US citizens evading taxes by using offshore credit cards to encompass Visa records.

The tax department also announced that, after almost two years of negotiations, MasterCard has turned over 1.7 million credit card records for accounts based in the Bahamas, the Cayman Islands, and Antigua and Barbuda.

In an affidavit supporting the IRS's request for legal support over the issuance of a similar summons for Visa records, IRS agent Joseph C. West revealed that MasterCard's disclosures for 1998 and 1999 had turned up over 230,000 US citizens with offshore credit cards, many of whom had failed to declare the money lodged abroad.

'These actions should send a clear message to tax evaders,' IRS Commissioner Charles Rossotti observed earlier this week. 'If people use illegal offshore methods to hide their income, we will find out who they are.' Rossotti went on to warn those US citizens whose hidden assets remain undiscovered as yet that: 'the guarantee of secrecy associated with offshore banking is evaporating.'

Although the MasterCard disclosure is a significant milestone for the IRS, many feel that it represents the thin end of the wedge. The results of the Visa summons are likely to prove even more significant, as the scope of the search has been greatly expanded.

According to reports, the IRS is now seeking information from the nation's largest issuer of credit cards on banks in Switzerland, Latvia, Luxembourg, Hong Kong, Bermuda, Panama, Singapore, and several Caribbean jurisdictions, for the years between 1999 and 2001.

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