The US Justice Department has obtained a court summons ordering PayPal to disclose customer records as part of an on-going investigation into tax evasion, according to reports. The target will be US taxpayers with credit cards issued by offshore banks.
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.”
