IRS Compels PayPal to Release Info

An anonymous reader writes "Just in time for the tax season, the IRS won a federal court ruling, allowing them to force PayPal to turn over records of American taxpayers who have certain foreign accounts. It's all part of an ongoing effort to track down money held in offshore accounts by would-be taxpayers. A spokesperson for PayPal acknowledged receiving the summons (PDF) and said 'We're still evaluating our options [...] The privacy of our customers' information is something we take really seriously.'"

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Awesome

[Gay for Linux]

Paypal is such a jerk of a company, I'm glad the IRS is taking them to task. The only reason they're so concerned about privacy is because if the customers saw what a horrible job they're doing and all the money they "freeze" and keep for themselves, even ebay couldn't save them.

Ebay sales

[Solkre]

Are they going to start tracking down everything you sell on Ebay to make sure you pay tax on it?

Re:Aww, poor tax evaders!

[Billosaur]

Sorry, but I have to side with the IRS here. Everyone who isn't paying the taxes they're supposed to be deserves to be found out. People who cheat on their taxes just make the rest of us pay more.

From CNN: The request for information is an outgrowth of an IRS effort, begun several years ago, to trace money that American taxpayers hold offshore to avoid paying taxes. The IRS said many of those taxpayers access their money through credit and debit cards. The tax collectors have already obtained information from some credit card companies, merchants and payment processors.

"PayPal is another one of the mechanisms by which money stashed overseas might be spent," Eileen O'Connor, assistant attorney general for the Justice Department Tax Division, told reporters.

Mind you, while I applaud the IRS's efforts (something I never thought I'd hear myself say), I'd like to know when they plan on applying the same hammer to US corporations and businesses that do the same thing. Hey, if the average dishonest American citizen is going to be made to pay up, let's have some of that dirty money that fatcat CEOs are squirreling away too. I don't like taxes, taxation, and the IRS any more than anyone else, but as long as we're going to have the current system of taxation, then everyone needs to play fair and pay up. If you're an honest citizen, you don't have much to worry about.

Re:Aww, poor tax evaders!

[Dan Ost]

It's not theft, it's a trade.

You gain benefit from the actions of the government, and in return, if you are able, you pay
taxes.

Just because you didn't ask the govenment to do these things for you does not release you
from this arrangement.

If you would like to suggest improvements to this arrangement, please, be bold and post them
here. We'd love to hear from you.

Re:Aww, poor tax evaders!

[Anonymous Coward]

Or you could look at it like they're just better at playing the money game than you are because it is just a game, afterall. At least that's how both the corporations (and the corporations are screwing you a lot harder than any individuals) and the government apparently see it... survival of the fittest, screw your neighbor and all that. Hey, we'd all like it to be a fair world, but it just ain't.

Re:Aww, poor tax evaders!

[Khammurabi]

I thought they would have aimed at corporations and businesses first as I assumed there would me more fiscal reward to be hard there.

Ahh, but corporations are better at hiding their money overseas (and have more legal loopholes to do so) than a regular plebian. The IRS is basically going for the easy wins. Why target a single corporation, when you can pick off 1000+ individuals? Since it's a less complex evasion scheme, it's that much easier to prove and prosecute.

It's kind of the same logic as why bankrobbers have the highest prosecution success rate, but why corporate crimes go relatively unpunished. Most individuals have very little clout and/or money to defend themselves, while corporations are basically big sacks of money with teeth.

I think any competent lawyer would be able to force the IRS to narrow their request to users who exhibit "suspicious behavior" as defined by some defensible argument. (Although IANAL and then again Paypal could pull a Yahoo and just cave in.)

Re:Aww, poor tax evaders!

[wile_e_wonka]

I'd like to know when they plan on applying the same hammer to US corporations and businesses that do the same thing. Hey, if the average dishonest American citizen is going to be made to pay up, let's have some of that dirty money that fatcat CEOs are squirreling away too.

When the IRS says "taxpayer," the term includes corporations within it by definition. So, they aren't necessarily going for individual citizens here. Really I think this is getting at those internet businesses that sell stuff on ebay (or wherever) and has PayPal transfer the funds to an offshore account. I think this is a much more likely scenario than some grandma with a Bermudan anonymous bank account.

At the same time, however, there are other problems that the IRS needs to go after, like this CEO thing you mentioned. Truthfully though, I don't think that's as big of a deal. Most of our tax income comes from small businesses, so that's the more important segment to keep honest. (I know, you're thinking, sure "most of the tax income comes from small businesses," that's because the big ones are evading! But really, there are a ton of small businesses out there. And also more and more businesses of many sizes are taking PayPal).

Also I think there's one other reason to put off going after the big businesses--they are very sophisticated. It's very expensive to show in court that a big business is cheating because they are so darn good at it. There's just no way to close all the loopholes; the businesses evolve in response to the way the government taxes them. I think the government realizes this, and says "hey, they're employing our citizens."

But who knows....

Re:Aww, poor tax evaders!

[Ohreally_factor]

I think you are under the mistaken notion that your taxes are raised to cover both the increased spending of a GOP controlled Congress(!) and the decrease in tax revenues from tax chorts. The truth is that it's not you who will be penalized or burdened by the tax chorts or the profligate spending of Republican politicians, but those who come after us.

(Disclaimer: I'm a registered Republican that is more than just a little dismayed at the course the GOP has taken in the last decade.)

Re:Aww, poor tax evaders!

[JesseMcDonald]

Trade requires that both parties agree to the exchange. If one party compels the other to comply (as in the case of taxes), then the term "trade" does not apply, even if the coerced party receives something in return.

Think of it this way: Without any prior, voluntary agreement, I go over to your house and do something for you while you're gone (mow your lawn, or wash your car, for example). You may think I did a terrible job of it, or you might think I did a great job. Either way, how much do you owe me for my work? Whatever price I happen to ask for? Of course not. An amount equal to my costs (assuming you can determine what my costs were)? No, because you have no control over those costs; I may have spent more than you would be willing to pay. The right answer is absolutely nothing. You never agreed to pay me, and as a result I cannot legally require payment. The work performed is irrelevant in this case, as is your benefit (or lack thereof). There is no contract between us, express or implied, that would give me any right to your property, and there the matter ends. Similarly, there is no contract (express or implied) that gives any member of the goverment any right to my property. They perform their services without any voluntary contract, and then employ theft to recover their costs. If they did not do so, they would by definition be members of private organizations and not the government. The simple fact that governments can legally employ coercion prevents them from engaging in free trade in the first place, since they can always use force to get what they want.

P.S. In case anyone from the IRS is reading this: I am not a so-called "tax evader." I believe taxes are theft, and therefore wrong, but it's a case of spending some money to protect the rest -- as would be the case with any other thief.

Re:Aww, poor tax evaders!

[BigJake4589]

As a small business owner I realize that this problem could be solved by becoming a total cashless society. The problem is the politicians are the largest tax evaders not the people. They would never pass a bill that would create a cashless society.

Civil contempt can mean serious jail time.

[QuessFan]

If the assest protection depends on hiding assests, than it's not an legit asset protection.

A lot of what you said is just asset hiding, which you don't need to go off-shore tax heaven. It's just much harder to discover. Once there is a civil money judgement against your, the plantiff attorneys will surely file discovery request on your assets. You can try to hide, but have fun with jail times for cotempt or prejury if discovered.

And unless you fled with your money. The court still have power over you. You can build "anti-duress" provision into your off-shore asset protection trust. But if judge jail you for civil contempt, what are you going to do?

Don't believe me, search for "H Beatty Chdwick" for someone who hides 2.5 millions in oversea account and jailed over a decade for it.

For more recent case(Maybe too recent), searh for John Kontrabecki.

Re:Let's start with the corporations.. "Don't stay

[davidsyes]

there in one place too long... They're comin' to get you..." (especially hollywierd... I read about them, how they shuffle millions of dollars around between investors, producers and more, and then the taxable money or profits just go "poof", vanish, vaporized...)

heheh...

Seriously, I kind of HOPE they IRS and state tax organs would just have DIRECT access to payroll information. I'm fucking TIRED of filling out forms for shit they already know.

I realize that by filing and signing, I'm "participating" in an honesty/honor system that purportedly wants to "respect" tax payers. But, the retired IRS types probably are the ones delaying the direct filings that would SAVE US money and COST THEM money their cronies let them earn.

Why the hell is it that so many things are difficult to file? I could file in the IRS office for two non consecutive years, but not the intervening year because I had dividends or stocks back then. Hell, it was a late filing, and nobody came after me, and I got my two checks from before and after, so if no red flags were attached to my name, and it was a late filing with no IRS penalties associated, then WHY not go ahead and process that one, too, with the caveat that there better be no surprises?

But, most 'merkuns would go ballistic if they sensed the government prying into their personal matters. Hell, the government knows A LOT, they just don't have the human labor to knock on every door, assess or inspect every home, and determine if the amenities and furniture and junk in them exceed the mapped level of income filed from previous years.

In some ways, earning LESS money, and having NOT stocks, 401k, IRA, etc, makes things EASIER. I HATE paperwork, unless **I'M** generating drawings or notes I can manage.

I'm STILL waiting for the government to allow Linux-users to file directly online WITHOUT using special technology other than a secure browser (or has that been made possible yet?).

I'm STILL waiting for the government to allow and encourage automated filing. Every pay stub, you'd get a little snipped or a login code to look up the period's or quarter's deductions against your projected dues and if all stays on track, you WON'T have to file... OR sign on any dotted line. That could eliminate a LOT of under the table payments, particularly since states (most? all?) require employers to report new hires, terms, layoffs, furloughs, injuries, and all related payments and claims in x number of days.

Between states and IRS, they know there is a FUCKLOAD of underreporting, erroneous filings, self-prejudicial/harming filings, and more.

BUT, if the government would take a smaller cut and try to live within reasonable means instead of treating the tax-paying public (the honest payers who carry the dishonest ones and the wealthy ones who play games) as an endless pool of revenues, there MIGHT be less cheating.

Sometimes I feel they government ought to quit the charade: Counterfeit money is not much different than government-approved paper. The difference is that we place implicit TRUST in the paper. The government prints ALL kinds of currency and ships it overseas, buries some in safes and bunkers, and spends like there's no tomorrow and manages a mind-boggling array of stats and uses mechanisms to play near-god with the cash flow, yet it STILL forces US, the EARNER to play party with this nutty system that punishes us for not working or not earning a lot, punishes us for earning too much (whether or NOT we pay the right taxes), and lets the crafty play games with the system.

It would be NICE if it were ok to TWICE in your lifetime print your OWN (traceable) emergency money without having to go to a fucking heartless bank that wants your mortgage in exchange for ripoff loans. (When you NEED the money, it's HARD to get; when you DON'T need it, and your credit is A+, it's "Oh, how much do you want/need? Just sign here? See you and Santorini's for a martini?"

Anyway, as long as the money is trackable, the government cou