A federal court in San Jose, California, gave the IRS permission to ask PayPal Inc. for account information for American taxpayers who have bank accounts, credit cards or debit cards issued by financial institutions over the last ten years in more than 30 countries reputed to be tax havens. This is similar to a summons issues to various credit card companies in past years as the Service is cracking down on Americans committing tax fraud by transferring funds out of the country in order to avoid reporting income.
American taxpayers are required to report their worldwide income on their federal income tax returns, regardless of the source. The IRS has actively targeted taxpayers who are seeking to hide income offshore for a number of years now. A 2003 amnesty program for credit and debit card holders offered taxpayers the opportunity to avoid criminal prosecution by voluntarily providing information to the IRS; the program resulted in collections of more $170 million in taxes and penalties.
PayPal, which is owned by eBay, Inc., has not yet officially answered the summons, citing customer privacy issues as a concern.
