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IRS Seeks Records of Offshore Credit Card Account Holders


MIAMI — 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," said John Buchanan, manager of the IRS trust program.

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

Promoters of offshore accounts advertise them with the message that income can be sheltered because the U.S. government can't penetrate some foreign banking secrecy laws. But because the headquarters for the Caribbean operations of the two financial service firms are in the Miami area, IRS lawyers believe their records are legally accessible.

The court did not immediately say when it would rule.

The investigation, underway for two years, targets tax evaders and non-filers.

"The countries . . . were selected because they are representative of the problem," Buchanan said. "We know they have a high U.S. presence there."

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 firm has cooperated with previous federal investigations but added, "We are mindful of our cardholders' privacy concerns and maintain minimal, if any, personally identifiable information regarding MasterCard transactions."

American Express spokeswoman Judy Tenzer said it was too early to comment.

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. taxpayers are involved but believes the number to be in the thousands.

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

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