(October 20) – “The Internal Revenue Service, struggling against Caribbean havens it suspects of draining away at least $70 billion a year in personal income tax revenue, has set its sights on a new target — the credit card slips of suspected tax evaders,” writes David Cay Johnston in today’s New York Times.

“The agency has asked a federal judge in Miami to issue summonses for two years’ worth of records of MasterCard and American Express card transactions in the United States that were billed to bank accounts in Antigua and Barbuda, the Bahamas and the Cayman Islands.

“Using the Internet and other outlets, banks in those nations openly solicit tax evasion in ways that the I.R.S. says have proved attractive to corporate executives, business owners, doctors and other wealthy people in the United States.

“Americans can legally move their assets offshore but are required to notify the I.R.S. of those transactions and to pay taxes on their income worldwide. Some Caribbean countries offer an alluring tax haven, however, because they impose no income tax and do not generally cooperate with I.R.S. efforts to track down incomes.

“But Americans who shelter income offshore face the problem of putting their money to use. That is where a credit card or charge card billed to an account at a Caribbean bank comes in handy, investigators say.

“Banks in tax refuges issue MasterCards and Visa cards, which can be used anywhere to draw cash and to pay expenses. The bill is then paid automatically from the bank in the tax-haven country, leaving no record of income or spending except for the transaction reports from the networks that MasterCard, Visa and American Express operate.

“Credit cards with $1 million monthly charge limits are being offered by some of these banks, according to documents filed by the I.R.S. in United States District Court in Miami. A federal judge there is expected within days to decide whether to issue the summonses requested by the I.R.S.

“MasterCard International, which like Visa licenses banks to issue credit cards, said yesterday that it would try to cooperate with the government, but might not have the records the I.R.S. seeks. A spokeswoman, Sharon Gamsin, said MasterCard would also weigh the privacy interests of customers in deciding whether to fight a summons, if it is issued.