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Published: Tuesday, 4/2/2002

No place to hide

Eluding the tax man has long been a popular, if illegal, pursuit in this country. Finding ways to avoid coughing up for the Internal Revenue Service is even considered by some to be a victimless crime, a rationale that ignores the fact that tax evasion puts a heavier burden on those who faithfully pay their share.

Now, propelled by the Sept. 11 terrorist attacks, the IRS has extended its reach into the credit card accounts of Americans who may be using offshore banks to hide assets.

This should be an effective tactic, since it is estimated that up to 2 million Americans may be using credit or debit cards issued by banks in such Caribbean nations as the Bahamas, Antigua and Barbuda, and the Cayman Islands. A good many of the cardholders are using them to pay personal expenses.

As the Miami Herald reported, it's not illegal to hold such a credit card or to set up an offshore bank account or corporation, but you've still got to pay taxes on any income.

MasterCard recently turned over to the IRS an electronic database of 1.7 million credit transactions involving 230,000 accounts. The IRS is negotiating for thousands more records from VISA and American Express, not only in the Caribbean but also in tax havens in Europe, Asia, and the Pacific.

Federal agents already are cross-checking the records to identify people who failed to file tax returns or disclose, as the law requires, when they have more than $10,000 in an offshore account.

The IRS started its crackdown in October, 2000, but the effort took on greater urgency when it was revealed that terrorists groups used the multibillion-dollar offshore financial services system to launder some of the money used in the Sept. 11 attacks.

What once appeared to be the long arm of the law getting uncomfortably longer now seems more reasonable to Americans, even if they aren't always wild about paying the IRS bill each April 15. But beware: The terrorist net has been cast and it is bound to dredge up some tax cheats in the process.



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