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Corporations - Offshore Accounts - Offshore Debit Cards, Offshore
Why You Don't Want
an Offshore Debit/Credit Card
Many asset protection companies brag that they can get you
an offshore debit/credit card. The following article
shows in chilling detail why such cards are a very bad idea.
We offer you a much safer, and equally as quick and convenient
way to access your offshore money. We do NOT in any way
advocate or advise tax evasion. We DO provide a safe, easy,
legal, convenient and completely anonymous way to have and
use an offshore account while maintaining your privacy and
BY Curt Anderson of ASSOCIATED PRESS
Stepping up the campaign against tax evasion, federal
authorities on Thursday took court action for the first
time against taxpayers suspected of using offshore credit
and debit cards to hid income.
The Justice Department and Internal Revenue Service filed
petitions in seven federal courts seeking records from Mastercard
and Visa accounts at various offshore banks. Officials say
several individuals refused to produce the records, which
IRS officials think would prove they are concealing income.
Investigators have spent months tracing the identities of
people who hold thousands of Visa, MasterCard and American
Express cards issued by banks in offshore tax havens. The
records were obtained through previous court orders in an
attempt to pierce secrecy laws that protect these bank accounts.
The 2-year old campaign has produced numerous IRS tax audits
and several dozen potential criminal prosecutions. But this
move was the first time the government has turned to court
action to target individual Americans.
"From coast to coast, we are taking a close, careful
look at those who may be involved in offshore tax cheating,"
said acting IRS Commissioner Bob Wenzel." We will continue
to aggressively pursue those who aren't paying their fair
Offshore debit and credit cards are not illegal but it is
a violation of tax laws to use them to hide income...
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March 26, 2002
New York Times
By DAVID CAY JOHNSTON
The I.R.S. said yesterday that Americans in far greater
numbers than it had once thought were evading taxes by secretly
depositing money in tax havens like the Cayman Islands and withdrawing
it using American Express (news/quote), MasterCard and Visa
The I.R.S. said its estimate that one million to two million
Americans might be using such accounts was based on records
that it had obtained by summons from MasterCard of 230,000 bank
accounts in three tax-haven countries.
A prominent criminal tax lawyer, Elliott H. Kajan of Beverly
Hills, Calif., said, however, that the estimate was so out of
proportion that he doubted it would hold up.
But the Internal Revenue Service said that from records of purchases,
it had already identified hundreds of income tax cheats, including
executives of publicly traded companies, business owners, doctors,
lawyers and investment professionals. These people - most believed
to have incomes that would put them among the top 1 percent
of taxpayers - "are using offshore cards to pay for living
expenses," the I.R.S. said, from groceries to cars to college
tuition for their children. Offshore accounts would be of little
use to people whose wages are reported to the I.R.S. by their
employers. But entertainers, business owners, investors and
others who control what is reported to the I.R.S. can use offshore
accounts to hide fees, profits, dividends, interest and capital
Setting up such accounts has become a popular practice among
a number of financial institutions that provide services to
affluent individuals. Joseph C. West, the revenue agent running
the investigation, said in an affidavit that he had found dozens
of companies using the Internet to solicit people who want to
hide money. Among companies the I.R.S. identified in court papers
as advertising offshore banking secrecy were KPMG, the big accounting
firm, and three big banking companies - Barclays, HSBC and Royal
Bank of Canada (news/quote).
Officials at KPMG and HSBC did not return calls last night.
Representatives of Barclays and the Royal Bank said they could
not locate someone knowledgeable on the issue.
A senior I.R.S. official said many of those with the offshore
accounts may have been seeking to hide income and assets from
a spouse, especially in divorce, or from creditors, including
plaintiffs in lawsuits. Tax evasion, she said, was an unavoidable
byproduct of these strategies.
The commissioner of internal revenue, Charles O. Rossotti, >
said the I.R.S. was determined to be more aggressive going after
Americans who use such accounts to avoid taxes.
years people assumed we wouldn't be able to find them,"
Mr. Rossotti said. "Simply put, the guarantee of secrecy
associated with offshore banking is evaporating."
In December 2000, the I.R.S. sought credit card records of accounts
of MasterCard and American Express in Caribbean tax havens that
routinely showed charges in the United States. At the time,
prominent tax experts said they assumed that at most tens of
thousands of Americans had
The I.R.S. made its estimate based on the market share of MasterCard,
which is much smaller than Visa in the international credit
card business, and the estimated volume of business done in
three dozen tax-haven countries.
Several lawyers said yesterday that they were astounded by the
new I.R.S. estimate of the extent of the conduct, which was
included in papers filed in federal court in San Francisco.
Katherine Kneally, a criminal tax lawyer in New York who heads
an American Bar Association committee on tax penalties, said
the estimate of such widespread cheating sent a dark message
about the income tax system, which depends on individuals' voluntarily
determining how much they owe and filing honest tax returns.
"It says that the I.R.S. has drifted from its mission,"
Ms. Kneally said. "It says that the message of deterrence
is not out there."
The I.R.S. audits only about one in 160 income tax returns.
It devotes few resources to identifying those who do not file
tax returns: of several dozen individuals and businesses named
in The New York Times in recent years as not filing tax returns,
only two said that they had been audited.
Many of the offshore account holders identified by the I.R.S.
did not file income tax returns, the agency said, while others
filed, but failed to report their offshore account.
It is legal to have an offshore account, provided it is reported
and any taxes are paid. Failure to disclose such holdings is
a felony punishable by up to five years in prison.
In 1999, the I.R.S. said, 117,000 Americans checked the box
on their income tax return disclosing an offshore account, far
fewer than the number of MasterCard accounts the agency found
in just Antigua and Barbuda, the Bahamas, and the Cayman Islands.
Because of secrecy laws in the tax-haven nations, the charge
records reveal only account numbers - not names. So investigators,
in a laborious process, must turn to merchants to obtain the
names of the individuals through their credit card receipts.
Investigators will have an easier time finding tax evasion by
customers of American Express, which agreed to turn over some
records after giving the customers warning. But the agreement
is limited to those accounts, billed to addresses in the three
tax havens, that incurred at least five charges in the United
States in 1998 and 1999 and in which at least one was for at
least $2,500 on certain types of purchases, including automobiles,
jewelry and yachts.
Unlike MasterCard and Visa, which as networks do not know the
names of customers, American Express knows its cardholders.
A senior I.R.S. official acknowledged yesterday that the agency
lacked the resources to prosecute most of the offshore tax evaders
or even to pursue civil penalties against more than a fraction.
"We have lots of indications of tax evasion here,"
said Dale Hart, an I.R.S. deputy commissioner, "and we
are going to be using the resources we do have to work those
cases to the best of our ability."
But, she noted, "every day, several times a day, we make
decisions about which cases we will work and which we will not."
Congress has sharply reduced the agency's budget for tax enforcement.
Today, just 23 tax auditors remain on the payroll in Manhattan,
the richest tax district in the country, down from 150 several
When the I.R.S. obtained records of one bank in the Cayman Islands,
it said it found 1,500 cases worth prosecuting.
many have they brought?" asked Larry Campagna, a criminal
tax lawyer in Houston. "Maybe 10?"
Mr. Campagna said that when the investigation was completed
many of the credit cards would be found to have innocent explanations
and not involve tax crimes. Ms. Kneally and Mr. Kagan expressed
But Ms. Hart said she was confident from the data analyzed so
far that the I.R.S. had found many deliberate tax evaders and
not innocents caught up in a fishing expedition.
The I.R.S. disclosed its estimates in seeking records of Visa
cards issued in 33 nations that have been used in the United
States. "If the MasterCard information is representative
of the industry," it said, "there could be one to
two million U.S. citizens with debit-credit cards issued by