A court order will allow the agency to issue summonses for charge, debit and credit cards issued by banks in the Bahamas, the Cayman Islands, Antigua and Barbuda in 1998 and 1999, according to a report by the Associated Press.

U.S. District Judge Adalberto Jordan agreed with the IRS that cardholders may have violated U.S. tax laws and that their identities aren't readily available from other sources, AP said.

Investigators want to examine car, boat and airline ticket purchases and hotel and car rentals to learn whether the account holders are living beyond their reported means.

Sharon Gamsin, spokeswoman for MasterCard International, reportedly said that the company has "a long history of cooperating with governmental agencies," but added the company keeps transaction records only by account number, with the bank keeping personal information.

A spokeswoman for American Express Travel Related Services Co. reportedly told AP that the firm is speaking to the IRS to get a better idea of what they're looking at.

The number of accounts created by U.S. citizens and residents involved is believed to be in the thousands. Since banks in the targeted islands require customers to open bank accounts before obtaining credit cards, obtaining the names of the cardholders produces the names of the bank account holders as well, the report said.

Fifteen countries and territories, including the Bahamas and Cayman Islands, have been blacklisted by a 29-nation task force for failing to cooperate in the fight against money laundering. Officials in the Cayman Islands promised in June to end tax-haven practices within five years, AP stated.

According to the report, at least one tax expert is worried that the IRS's blanket record request would affect financial privacy.

"We should not be trying to enforce a worldwide tax regime," Daniel Mitchell, a tax expert at the Heritage Foundation, reportedly told AP. "It tends to lead to cartel-like behavior, OPEC for politicians, for lack of a better phrase."

-- SmartPros News Staff

Send comments to information@smartpros.com

Back to NewsLine