(Bloomberg) -- American Express Co. must produce information to U.S. tax authorities seeking the identities of Dutch residents with debit or credit cards linked to bank accounts outside the Netherlands.
The Internal Revenue Service requested the information to help the Dutch government determine if people living outside the Netherlands are complying with tax laws, according to a Justice Department statement on Monday. On March 31, a federal judge in El Paso, Texas, authorized the petition, which Dutch investigators requested under a treaty that allows the two nations to cooperate in the exchange of tax information.
Countries around the globe are cracking down on tax cheats. The U.S. collected $1.37 billion in penalties from Swiss banks that helped Americans evade taxes but cooperated with the government in investigations. France, Germany, the U.K. and Australia have also begun criminal investigations.
“Hidden offshore accounts are a problem other nations face as well,” IRS Commissioner John Koskinen said in a statement.
Last Swiss Bank Settles in $1.37 Billion Tax Program
Dutch authorities arrested two people last week as part of a five-country investigation linked to Credit Suisse Group AG. The Dutch are probing dozens of people suspected of concealing millions of euros in Swiss accounts.
Marina Norville, a spokeswoman for New York-based AmEx, declined to comment on the probe.
The case is one of many known as a John Doe summons, in which the IRS has reason to believe that taxpayers aren't complying with the law but doesn't know their names. In this case, the Netherlands asked the U.S. to pursue the identities of Dutch taxpayers who had American Express cards between 2009 and 2016 that were linked to bank accounts outside the U.S.
Like U.S. tax authorities, the Dutch have sought information on debit and credit cards to try to find tax cheats. The Netherlands' Tax and Customs Administration ran a successful pilot project that collected such data from four companies to identify Dutch tax cheats who used debit and credit cards issued by foreign financial institutions, according to a U.S. memorandum in support of the request.
When the Dutch agency sought the same information from American Express, the company said the transactions are “processed exclusively on computer systems” in the U.S., according to the filing.
“Based upon the linking of these payment cards to accounts outside the Netherlands, without leaving an identifiable records of the transactions in those accounts, the Netherlands has reason to believe that the holders of the payment cards may have failed to report foreign financial accounts or income” on tax returns, the U.S. said.
The case is In the Matter of the Tax Liabilities of John Does, 17-mc-00094, U.S. District Court, Western District of Texas (El Paso).
To contact the reporters on this story: David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net, Jenny Surane in New York at jsurane4@bloomberg.net.
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Paul Cox
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