PayPal – the online payment arm of eBay – allows users
to send and receive money using a global network of more than 55
countries. The Justice Department and Inland Revenue Service are
carrying out a joint investigation into the use of credit cards
issued by offshore banks as a means for US citizens to evade US
taxes. This summons seeks to expand that investigation to cover the
use of PayPal.
The summons was issued by a California district court. Known as
a 'John Doe' summons, because it asks for information about
unspecified individuals, the summons will allow the investigators
to analyse the data in order to pinpoint possible fraud.
The summons reportedly requires PayPal to provide account and
transaction records relating to US taxpayers with MasterCard, Visa
and American Express cards issued by banks in tax-haven countries.
According to the summons, bank-secrecy laws in a number of these
countries means that the Justice Department has to look elsewhere
for evidence of tax fraud.
PayPal spokeswomen Amanda Pires told the Associated Press that
PayPal has only just received the summons and has yet to decide how
to proceed. "The privacy of our customers information is something
we take really seriously", Ms Pires explained, "We're still
evaluating our options".
Google recently sought to refuse a Justice Department subpoena
to disclose data about keyword searches on the basis that to comply
would violate it's customers' privacy rights. The decision in that
case is still awaited, but the judge hinted that he would be
inclined to rule against Google.
PayPal's privacy policy allows them to disclose information
without breaching the terms of the policy if it has to do so "in
response to a subpoena, warrant, court order, levy, attachment,
order of a court-appointed receiver or other comparable legal
process".
Since 2001, the US Government has successfully prosecuted
hundreds of tax cheats and promoters of abusive tax schemes.
“The Department of Justice is committed to using all available
law enforcement tools to recover tax revenue, punish tax offenders,
and to prevent future misconduct,” said Eileen O’Connor, Assistant
Attorney General for the Tax Division. “People who promote,
facilitate, or engage in plans or schemes to avoid reporting their
income or another person’s income are risking penalties and, where
appropriate, criminal prosecution.”
