SURVENT

It sounds like the IRS is getting their hands on your information if you have used PayPal between 1999 and 2004. Hopefully you declared all your online purchases when you did your taxes because they will find out. This article states that the IRS is mainly interested in finding offshore accounts held by citizens of the US in order to avoid taxes.

A federal court in San Jose, California, gave the IRS permission to ask PayPal Inc. -- a company that enables online money transfers -- for account information for American taxpayers who have bank accounts, credit cards or debit cards issued by financial institutions in more than 30 countries reputed to be tax havens.

I knew E-Bay owns PayPal, but I had no idea that $27.5 billion passed through PayPal in 2005, nor did I know that they have 100 million account holders worldwide (per the article). That is a bunch of change. Per the following, it sure sounds to me like PayPal is about to lose the Pal it provides to people all over the world as it falls prey to the IRS.

The IRS also hopes PayPal can help them identify currently unknown taxpayers' and their payment cards, as well as offshore bank accounts, that might be evidence of tax evasion.

David Utter wrote on this topic back in October 2005 in this article on WebProNews (hat tip to Search Engine Journal). The IRS is interested in this data because:

The IRS believes more than $40 billion in tax revenue goes uncollected due to abuses of credit cards linked to countries with less than stringent money transfer policies, and bank secrecy laws that prevent them from cooperating with American authorities. These tax havens provide a shelter for income that is illegal under US law.

Check out TaxProf Blog for links to this and related topics. See their post about a post on CNet titled "States Push to Tax Online Shopping"

When all is said and done, watch yourselves online as everything can and will (at some point) be tracked and traced back to you. Oh, and pay your taxes for online purchases - you're gonna pay them one way or another.