The IRS, Paypal, John Doe--and ME???

January 3, 2008 2:41 PM

I just received an email from PayPal notifying me that my account information has been requested by the IRS. I rarely use the account--it has very little activity other than the occasional small purchase (ebay, etc) and small ebay sale. It doesn't seem like a scam email, but I have no idea why my info would be requested? Should I get a lawyer involved or is this just a large-scale email I should ignore? Here is the email with my name removed (however, the case does refer to John Doe):

Notice of IRS Summons

Dear [NAME REMOVED BY ME],

PayPal has received a summons from the United States Internal Revenue Service requiring us to produce various account records, including data related to your PayPal account. PayPal understands the summons relates to the IRS' offshore compliance program in which the IRS has sought information about offshore credit card accounts from a number of companies.

Your privacy is extremely important to PayPal. PayPal is obligated, however, to turn over the requested data. PayPal has been ordered by the United States District Court for the Northern District of California to provide the information to the IRS, and PayPal expects to begin providing this information to the IRS on January 10, 2008. The summons and court order both issue from the United States District Court in an action entitled: In The Matters of the Tax Liabilities of John Does, Case No. CV-05-04176-JW.

If you have any concerns about the disclosure of this information, you should consult with your tax or legal advisor. You may have rights in connection with the summons, including the right to seek to prevent the IRS from obtaining some or all of the information. The statute of limitations that limits the time in which the IRS may assert tax liabilities against you may be suspended beginning on the date which is six months after the IRS served the summons upon PayPal and continuing until PayPal finally resolves its response to the IRS. See 26 U.S.C. § 7609(e)(2).

PayPal cannot provide you with legal advice. If you have questions concerning the summons and court order, we encourage you to contact the IRS, your tax advisor and/or your attorney.

If you wish to contact the Internal Revenue Service regarding this matter, they can be reached at [phone].

Thank You,
The PayPal Legal Team

posted by verevi to law & government (25 comments total)

Terrorist!

I'd call the IRS and ask them why, but if you're not making cash with the account wouldn't worry about getting a lawyer. Just print off your account activity and show it to your tax preparer.
posted by cjorgensen at 2:45 PM on January 3

There's no links suggesting a scam. Looks legit. Log into your paypal account, you should have a note there that PayPal contacted you. Looks like the IRS is checking you out, you may want to talk to your lawyer.
posted by Kioki-Silver at 2:47 PM on January 3

This article is over two years old and comes from a UK site, but it sounds related.
posted by katillathehun at 2:49 PM on January 3

PayPal and the IRS. Sounds legit.
posted by Evangeline at 2:50 PM on January 3

Call the IRS phone number provided. It appears to be a real recording by the IRS with more information about the case, which is apparently a large-scale case between PayPal and the IRS. It almost certainly has nothing to do with you personally.
posted by Cool Papa Bell at 2:51 PM on January 3

This article is over two years old and comes from a UK site, but it sounds related.

Indeed, the phone recording said the case dated to 2006.
posted by Cool Papa Bell at 2:52 PM on January 3

Looks like the answers already here are pretty right. Worth noting though that it might not be paypal itself that has alerted the IRS to want to audit/check you out... paypal is just a part of your various economic vehicles, so they're going to request info on all of that too...
posted by twiggy at 2:52 PM on January 3

Apparently, this could be legit. I would heed Kioki-Silver's advice. Immediately.
posted by purephase at 2:52 PM on January 3

It could also be that the IRS is checking out someone you paid or received funds from. Unless you can think of some reason why the IRS would be interested in you, I wouldn't worry about it until you hear from them.
posted by ubiquity at 2:52 PM on January 3

If I read this sentence correctly:
PayPal has received a summons from the United States Internal Revenue Service requiring us to produce various account records, including data related to your PayPal account.
It doesn't really sound like you're being singled out at all. "Data related to your account" could mean alot of things... maybe the IRS is tracking active ebay sellers?
posted by bkiddo at 4:01 PM on January 3

I called Paypal and the email is legit. The person on the phone said they are doing this "every year" which doesn't sound quite right. The are sending name, email and account transactions to IRS it seems.
posted by martineno at 4:12 PM on January 3

Wouldn't income from selling stuff on eBay still be considered as regular taxable income? If someone (not you) were making a decent living from selling stuff and not paying tax on it then I would not be at all surprised if the IRS were taking an interest. Maybe you bought something from a party the IRS were interested in and they are checking that you paid the seller whatever it was they said you paid.

Regardless I would contact an accountant or licensed tax-preparer at the least.
posted by 543DoublePlay at 4:31 PM on January 3

We received an e-mail and called the phone number and it sounded official but the message machine was full. We did a reverse phone number search and the number comes back as a Verizon (Cell Phone) in PA. We then contacted the I.R.S. and it appears this is not legitimate. We can't find a US District Court case that matches the case number or the names. The IRS believes it is a phishing scheme and asks that you forward the e-mail to [e-mail]
I would also suggest you forward it to [e-mail] as well.
posted by sowder at 4:32 PM on January 3

Anecdotal evidence: I recently received this e-mail, which was sent to an e-mail account that (1) never had anything at all to do with PayPal or eBay, (2) never had anything at all to do with buying or selling anything, and (3) gets a fair amount of spam.
posted by booksandlibretti at 4:34 PM on January 3

Pull the case file using the case number (CV-) and get the case from the district court. Tomorrow. Then see a lawyer.

If that is your actual case number, please email an admin and have those numbers taken off this question. It is a personal identifier.

I am not your lawyer and this is not legal advice.
posted by Ironmouth at 5:01 PM on January 3

Might involve another party and you are on the other end of the activity, so don't panic, but take care of it.
posted by Ironmouth at 5:02 PM on January 3

Ironmouth: If that is your actual case number, please email an admin and have those numbers taken off this question. It is a personal identifier.

If that's a concern, Google already indexed this page, and this is the only hit for that case number.
posted by WCityMike at 5:17 PM on January 3

Doesn't sound like a phishing attempt. They're not requesting information, but notifying you that they've been required to disclose information about your account, and if this concerns you , you can take it up with the IRS themselves.
posted by hungrysquirrels at 6:26 PM on January 3

chill out. when the irs wants a piece of you, they'll let you know. worrying doesn't do any good and there doesn't seem to be anything else you can do.
posted by bruce at 6:37 PM on January 3

Update:

I called Paypal and all active accounts have been disclosed as the result of the subpoena. The e-mail is real and from Paypal. While on the phone with a representative from Paypal she checked her e-mail and found she received the same notice on her account. I requested they post a notice on their website explaining the situation letting their customers know that they are not necessarily under investigation ALL accounts have been disclosed. In my earlier conversation with the IRS, they said that the IRS would contact you directly if there was an investigation regarding your taxes. Within the next few days I expect thousands of people will have the same questions we have.
posted by sowder at 8:09 PM on January 3 [1 favorite]

This case number seems funny, for what it's worth. The Northern District of California seems to have had a case with that number, but it appears to be closed now.
posted by chinston at 5:14 AM on January 4

The court order from the U.S. District Court is real. The IRS is entitled to get information from PayPal only on U.S. accounts with offshore credit cards issued in jurisdictions the IRS considers as "tax havens" (this includes several Caribbean countries, Switzerland, Singapore and a few others). PayPal is giving you notice so you can challenge the IRS if you believe you have grounds for a legal challenge.
posted by sdparadigm at 2:07 PM on January 5

Here's some info from the IRS on their Offshore Credit Card Program. http://www.irs.gov/newsroom/article/0,,id=105698,00.html
posted by sdparadigm at 2:12 PM on January 5

Yes, but notice how the IRS web page gives a date of August 29, 2002 for when the IRS petitioned the court to issue a summons and subpoena on businesses (including, presumably, PayPal). Has it taken almost five-and-a-half years for PayPal to begin responding? Maybe, but that time gap along with the fact that the case in the Northern District of California appears officially closed, suggests to me that something funny is going on.

That said, I can't figure out what the profit would be. Both the area code and exchange of that telephone number appear to be linked to a Philadelphia IRS office, so unless the e-mail was designed just to get recipients to write back, in a kind of quasi-Spanish prisoner game, I'm at a loss.
posted by chinston at 11:11 PM on January 5

But maybe I'm wrong. The wheels of justice turn slowly.
posted by chinston at 11:17 PM on January 5