IRS Seeks To Discover Card Transaction Data Of Offshore E-commerce Companies

by Mike Godfrey, Tax-News.com, Washington

22 April 2009

The US Justice Department has sought consent from the District Court in Denver to order card transaction processor, First Data Corporation, to identify clients whose transactions may have involved unreported offshore income, improper deductions or credits, or failing to withhold tax on payments on transactions dating back as far as 2002.

In court papers, the Internal Revenue Service alleged that e-commerce merchants had opened bank accounts in offshore jurisdictions and directed First Data to deposit the proceeds from their debit or credit card transactions directly into these accounts. It also alleged that First Data actively promoted offshore services to US investment and e-commerce advisors, who in turn used the service to aid clients' tax evasion.

A First Data spokesperson said: “It is our understanding that the Internal Revenue Service is seeking information from First Data only in its capacity as a holder of third parties’ records. First Data does not approve or support any practice whose purpose is unlawful tax avoidance and has an excellent track record of cooperating with all government agencies. First Data will continue its practice of complying with all lawful requests for information with due regard for the confidentiality of customer data.”

First Data also included the statement that the Justice Department in the past has served similar summons on such major payments companies as MasterCard Inc., Visa Inc., eBay Inc.’s PayPal payment service, and sought payment records on cards issued by banks in Panama, Hong Kong, Singapore, Gibraltar, Malta, Latvia, Luxembourg and the Isle of Man and Jersey.

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