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.'"

Comments

Hmm

[voice_of_all_reason]

I thought "fishing expeditions" were clearly a violation of unreasonable search and siezure.

Oh, wait. What's that you say? They might catch terrorists? Why, in that case, citizen #83264967 stands ready for duty! Just let me chug some victory gin before we get those bastards.

//yeah, I should probably be less cranky given that my work weed ends in 1h2m :)

Re:First read

[Alex P Keaton in da]

I get a bunch of 1099s every year from my investment income- and the IRS gets copies... How is that much different?
If PayPal wants to act like a bank, they should, well, act like a bank.
I am all for a simpler tax code, and lower taxes. But until that happens, why should we all be bled dry by the IRS while people with accounts in tax havens get the advantages?
In all seriousness, how many good reasons could there be for a US citizen to have an account in a tax haven?

Re:Aww, poor tax evaders!

[DrEldarion]

Here's the problem with your argument: The government is spending this money. They're most likely going to spend this money whether we like it or not. Yes, they should spend less. Yes, they are screwing me out of money.

However.

People who don't pay what they owe are ALSO screwing me out of money. Whether they like it or not, they have a tax responsibility. If they do not pay their share, then that share must be made up by the other taxpayers. Whether the total amount of taxes collected is $400 thousand or $400 trillion, people who don't pay their share are still screwing me out of money.

The solution is BOTH to cut spending AND for people to step up to their responsibilities. Even if the government did cut spending, tax evaders would STILL be screwing me out of my money, just not to the same degree as they are now.

Not an IRS issue

[RagingChipmunk]

Many posters point out that the sales tax due on the sale of items is subject to State level taxation, not federal, so the IRS really isnt interested in knowing if you sold BeanieBabies without declaring it as income. I've often thought about sheltering pre-tax corporate revenue into a foreign (personal) account via paypal. The idea seemed too simple so I hesitated to pursue it (doh!).

Despite this being a 'federal' issue, the issue is scary in that it will set a precedent for state govts to force similar handovers of sales data. Since its clearly demonstratable that eBay/PayPal has detailed records of sales transactions, and that eBay/PayPal has reasonable knowledge of the locale of the Seller, Buyer, and ShipTo, that proper sales tax can/should be collected, as would any other retailer. Yes, its the responsibility of the seller to know/resolve the sales tax collection issue, but, its not a stretch to say that eBay/Paypal is 'sheltering' non-payers, and so be compelled to hand over records.

Let's start with the corporations

[SuperBanana]

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.

I couldn't agree more. Corporations used to foot about 50% of the nation's tax bill. Want to guess where it is now? Hint: it's only one digit. The reason your taxes are "so high" is because your employer isn't paying any, if their accountant is worth their salt.

How do corporations avoid paying taxes?

• Corruption. Let's not beat around the Bush here. Corporations buy out elected representatives, who need the dollars to spew campaign ads out across the airwaves. Tax "incentive" after "incentive" snuck into bills completely unrelated.
• Job extortion. "If you don't give us a tax break, we'll take our X number of jobs elsewhere." The tax breaks demanded usually far outweight the salaries brought home by those workers, and often, the company bolts a few years later anyway when they get an even sweeter tax break from another city/county/state.
• Book cooking. Suddenly, gosh golly gee, the company just isn't making much money. Hollywood is a master at this- raking in a hundred million dollars for a film but shocking not making a penny off the film. Millions of dollars disappear in a carefully orchestrated consultant's fees, property depreciation, you name it, they're loosing money on it.
• "Independent contractors" whereever possible. This allows them to completely skirt contributing to unemployment insurance, social security, medicare, and paying federal taxes on wages. Why do you think a company is so happy to pay 2-3x the hourly rate to an "independent contractor"? Because they still make out like filthy bandits.
• Off-shore incorporation/reincorporation. Lot of US companies aren't actually US companies. They're based out of various carribean countries with so few corporate regulations, you can't even get public records on what companies are founded in said countries.

That's just a small sampling.

And you know what -really- steams me? The small business owners that use their companies as tax shelters. They happily barter for the majority of the services they need, they happily take cash under the table, employ illegal immigrants (woe is them, US citizens are just SO expensive. Then why is 4% of the country unemployed?), register their cars and trucks with commercial plates so they pay less insurance and dramatically less taxes, write off all their mileage as business expenses...the list goes on.

Ever wonder why Bubba the Landscaper has a brand new truck every single year, a huge house, 3-4 kids, a big powerboat and a summer place on the shore? It isn't because he's an investment genius. It's because he's NOT PAYING TAXES ON MOST OF HIS INCOME.

This is bigger news than just paypal

[moochfish]

While I love seeing Paypal not getting their way, this ruling has much broader implications. All payment gateways and micropayment systems in the future (such as Google, I imagine) now have a legal precident that says they may need to turn over customer data to the IRS.

Also, does this issue already hold true for real-life equivalents such as credit cards and banks?

Re:Aww, poor tax evaders!

[Anonymous Coward]

If they want to cut funding they should cut funding to the pointless

social programs paying people to sit around all day.

Isn't this what we pay our military for most of the time?

Re:Aww, poor tax evaders!

[Deagol]

A lot of people in this country refuse to find jobs because...why should they when the gov't sends them money for no reason.

I agree. But ever wonder why so many people try to scam the system like this?

Um, I dunno... maybe a feeling of disenfranchisement? The thought that they've been fleeced their entire lives by excess taxes to fund worthless pork?

Yeah, I know. The US dosn't have the most-taxed population in the world, but that still doesn't make it any more correct.

One year I got very bored and very curious, and for 6 months, I tracked every single cent that I spent, and all forms of taxes extracted from it. That included breaking out the state/federal taxes for every gallon of gas, sales taxes, income taxes withheld from my paychecks, vehicle registration/taxes, property taxes, and all those damned taxes and "fees" on utility and telecom bills. The grand total was about 50% of my gross pay -- and I was making just over $50k/yr at that time. Given how regressive (I think I have that right), lower income working would get shafted a lot harder. WTF?

So in some sense, I can't blame some people for trying to fleece a system that has fleeced them for so long.

I just changed jobs -- cut my salary to about 1/3 of what I was making. This was intentional. It so happens that my new annual earnings will be just a hair over the yearly income for a family of 4 to receive the maximum of the earned income credit, which is about $4400. See IRS Publication 596" for details, including the income/benefit tables.

Our family's self-imposed low cost of living will result in the gub'ment giving us a $4k gift next year, and our standard of living is pretty comfortable as it is. Is this playing the system? Perhaps. But as Lazlo once said, "Well they set up the rules. Lately I've come to realize that I have certain materialistic needs."

You wanna cut EIC? Go ahead -- so long as you cut industry subsidies (farm, energy, etc.) and corporate welfare (tax-paid sports venues, no-bid contracts, etc.). I'm very libertarian, but I'll take any breaks within this corrupt tax structure that we have.