The DoJ in Search of PayPal Names

The Department of Justice (DoJ) filed a “John Doe” summons
to eBay subsidiary PayPal, asking it to turn over account data.

In seeking the summons, which the agency filed on Feb. 24, the DoJ is attempting to show
that there is a reasonable basis for believing that the information it wants will help identify U.S. taxpayers who may have failed to comply
with one or more provisions of international revenue laws.

“The IRS is just trying to address fraud and determine those individuals who may need to be audited,” DoJ spokesperson Cynthia Magnuson told internetnews.com. She said the summons is not an indictment of any kind.

U.S. taxpayers sometimes try to avoid paying taxes by setting up an
offshore business and then transferring ownership to a foreign banker.
That foreign banker then names the taxpayer as a beneficiary and
acts in their interest while evading U.S. tax payments.

U.S. taxpayers then access those funds using credit or debit cards.

The foreign banks are not required by their governments to disclose
beneficiary information. But from an ongoing investigation called
the Offshore Credit Card Project, the IRS has a list of credit and
debit cards tied to suspicious offshore bank accounts.

Now, the DoJ wants to see if any of those credit and debit cards ever funded any PayPal accounts.

“PayPal can help identify these persons,” Barbara Kallenberg of the
DoJ said in a legal declaration.

PayPal only received the summons yesterday and is still evaluating its
options, spokesperson Amanda Pires told internetnews.com.

Like Google in its recent court battles with the DoJ over customer data, Pires insisted that her company values customer privacy.

“We take our customers’ privacy very seriously, and that will go into
what we decide to do next,” she said.

It’s likely that compliance will follow.

The precedent established by similar requests of companies such as MasterCard, Visa and American Express suggest that
this summons will result in PayPal releasing names in some names to go along with suspicious
numbers for the IRS.