Dear International Friend,
I have repeatedly warned that no investor should use bank privacy to hide money. The message below shows why. I know that many banks and financial planners have long touted using non-resident credit cards for privacy. This is a good tactic if the privacy is not used to hide income to avoid paying tax! As you'll see in the message below from international eClub advisor Leslie Share.
This attack on the credit card companies could expose many tax avoiders. If you are not already caught and are hiding money. Take this as a warning. Plus if you don't live in the U.S. do not feel comfortable. If the IRS gets away with this Inland Revenue, Revenue Canada, etc. will soon follow.
I state again (for about the ten thousandth time), that the days of bank privacy are over. If you wish to use overseas financial centers for privacy, by all means do so, but do not, I repeat, do not fail to disclose the account and income received to your taxing authority.
The Miami Herald reports today that the IRS filed petitions on Wednesday in the Miami federal court, requesting to serve “John Doe” summonses on MasterCard International and American Express Travel Related Services to obtain information related to all U.S. taxpayers who held credit and debit cards issued by banks in the Bahamas, Cayman Islands, and Antigua and Barbuda during 1998 and 1999. This would include information on the banks that issued the cards, credit card applications, any account correspondence, security and credit checks on the card holders, and transactions regarding the purchase of airline tickets, cars, and other high-ticket items.
The information would then likely be used by the IRS to match the data obtained with the returns filed by the individuals in question to see if the funds were reported on Form TD 90-22.1 and the taxpayers' annual federal income tax returns.
The potential effect of these petitions (which must be approved by the court) remains to be seen.
Leslie A. Share, Esq.
Packman Neuwahl & Rosenberg