The IRS and Department of Justice have expanded efforts to uncover offshore accounts by tracking credit card use. The IRS has named this new effort Offshore Credit Card Program (OCCP).
The IRS efforts include issuing John Doe summonses to obtain information from VISA, Master Card and American Express. In addition, the IRS has summoned information from Credomatic, a Florida credit card processor that services banks located in Caribbean tax haven countries.
By issuing a John Doe summons to credit card companies and processors the IRS can discover the identity of individuals with offshore credit cards. After obtaining offshore credit card holders' identities, the IRS will begin a civil examination and may commence a criminal investigation.
The OCCP is part of the IRS's attempts to increase tax revenues. The government's efforts are a carrot and stick approach. The "stick" is the threat of civil penalties and criminal prosecution upon discovery of unreported income and offshore accounts. The "carrot" is the Offshore Voluntary Disclosure Program (OVDP) which results in significantly reduced civil penalties and eliminates criminal prosecution.
Under OCCP the government will identify many offshore accounts. This program will result in many criminal prosecutions. Even though a John Doe summons has been issued, a person can enter the OVDP as long as the government has not yet received the information from the offshore banks, credit card companies or credit card processors.