IRS seeks PayPal data to catch tax evanders

Apparently, PayPal has been a pretty good way to send money offshore as a tax dodge. Now, the jig is up. A federal judge has ordered PayPal to cough up names and numbers of users who deposited PayPal bucks in some 30 countries known as tax havens.

Apparently, PayPal has been a pretty good way to send money offshore as a tax dodge. Now, the jig is up. A federal judge has ordered PayPal to cough up names and numbers of users who deposited PayPal bucks in some 30 countries known as tax havens, the San Francisco Chronicle reports.

The Internal Revenue Service's interest in PayPal customers is part of a broad, yearlong initiative to crack down on tax dodgers who hide money outside the United States. The problem costs the U.S. government millions of dollars annually in tax revenue.

Users of PayPal transmitted nearly $27.5 billion in 2005. The service has nearly 100 million customer accounts. Federal authorities hope to identify PayPal users who sent money to banks or credit card accounts in any of the more than 30 nations, many of them known as tax havens. Belize, the Cayman Islands, Latvia, Panama and Switzerland were among them.

PayPal was unenthusiastic about customers' reactions to having their data turned over to the IRS. "The privacy of our customers' information is something that we take very seriously," spokeswoman Amanda Pires said, nothing that transactions max out at $2K per transaction or $10K total.

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