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February 10, 2010

  • IRS Investigates Offshore CC Payments, Pt.2
      Tight lips won't reveal details.


    The IRS launched an investigation into the offshore card payment controversy a few years ago which continues to be active, however, uneventful for most of the past year. A major target of the investigation is the giant credit card processing company, First Data. First Data is a debit and credit card payment processor that helps companies route card revenue to offshore bank accounts. In April 2009, the IRS subpoenaed First Data requesting the names of any U.S. businesses that use the company to deposit debit and credit card receipts into foreign banks. Although the IRS will not release any details of their investigation, they do make note that First Data is not the subject of their investigation.

    First Data is a global company and processes debit and credit card payments across the globe. The company has made it clear that it does not approve nor does it support any activity that would facilitate tax evasion or violate U.S. law. To date, none of First Data's clients have been accused of any illegal activity in regards to money laundering of debit and credit card receipts. However, there have been some advertising by few of First Data's partners that insinuate this activity exists. An example is CardService International. The company offers a split-jurisdictional settlement whereby they deposit a portion of the card proceeds into a U.S. bank and the rest into a foreign bank.

    In the past, First Data has said that it helps U.S. businesses process domestic credit card transactions in the U.S. and left Visa and MasterCard handle payment to international jurisdictions. It appears First Data has changed their philosophy in view of the fact that more recent advertising campaigns have not included any such activity. Furthermore, according to a First Data spokesperson, any individual involved with those promotions, are no longer a part of First Data. To the company's credit, two lawsuits claiming the First Data directed card payments offshore to avoid heavy U.S. taxes, were dismissed.

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