WASHINGTON (AP) -- The Internal Revenue Service won approval from a
federal court to ask PayPal to turn over information about people who
might be evading taxes by hiding income in other countries, officials
said Tuesday.
A federal court in San Jose, California, gave the IRS permission to
ask PayPal Inc. -- a company that enables online money transfers --
for account information for American taxpayers who have bank
accounts, credit cards or debit cards issued by financial
institutions in more than 30 countries reputed to be tax havens.
PayPal spokeswoman Amanda Pires said the company just received the summons.
"We're still evaluating our options," she said. "The privacy of our
customers' information is something we take really seriously."
PayPal enables individuals and businesses around the globe to send
and receive money online. In 2005, users moved $27.5 billion through
the money transmitter. The company, owned by eBay Inc., has 100
million account holders globally.
The request for information is an outgrowth of an IRS effort, begun
several years ago, to trace money that American taxpayers hold
offshore to avoid paying taxes. The IRS said many of those taxpayers
access their money through credit and debit cards. The tax collectors
have already obtained information from some credit card companies,
merchants and payment processors.
"PayPal is another one of the mechanisms by which money stashed
overseas might be spent," Eileen O'Connor, assistant attorney general
for the Justice Department Tax Division, told reporters.
In some cases, the IRS obtained credit card numbers but could not
identify the cardholder. The IRS said PayPal might be able to lead
the tax agency to those individuals.
The IRS also hopes PayPal can help them identify currently unknown
taxpayers' and their payment cards, as well as offshore bank
accounts, that might be evidence of tax evasion.
The request covers transactions occurring from 1999 through 2004.
A 2003 amnesty program netted $170 million in taxes and penalties
from income hidden offshore. More than 1,300 taxpayers avoided
criminal prosecution by coming forward and revealing the person or
company that marketed the offshore arrangement.
Copyright 2006 The Associated Press.
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