Is PayPal Involved in Online Gambling?

April 29, 2008

Everyone knows that PayPal pulled out of the online gambling sector about seven years ago � after settling with the Department of Justice for $10 million. However, it seems that someone may have gotten their wires crossed as the US Internal Revenue Service has served them a �John Doe� summons.

The company still has online gambling services outside the US, which would not come under US jurisdiction. However, the company has been subpoenaed to show financial records concerning the use of offshore credit cards.

The company says that it has to produce the documents due to US law, even though they feel it is a violation of their clients� privacy. The group Interactive Media and Entertainment Association says that this does not seem to be related to online gambling.

They say that this looks like tax issues regarding US residents that have bank accounts in so called �tax havens.� They don�t think it actually has anything to do with online gambling. They think it is a completely unrelated case.

The group says that the IRS can only demand this info if they have three tests met:

� The summons must relate to the investigation of a particular person or ascertainable group or class of persons.

� The Service must have a reasonable basis for believing that such person or group or class of persons may fail or may have failed to comply with the tax laws.

� The information and identities sought to be obtained from summoned records must not be readily available from other sources.

However, the group says that even if they meet all applicable parts of the law, they could still be on a �fishing expedition� and therefore should not be allowed to obtain the documents.
 

Back to April 2008 Archive.