IRS Summons Records of Online Payment Processor

The battle between the federal government and the online casino world continues to heat up as the battle begins over the Unlawful Internet Gambling Enforcement Act (UIGEA). The Internal Revenue Service, the federal tax authority of the United States, has called on online payment processor PayPal to release some of their records to be examined, possibly for online gambling activity.

Since 2006, it has been illegal for online payment processors and banks to carry out transfers of funds between players of casino games and online casino sites. This summons requires the company to turn over records related to use of offshore credit cards.

Not everyone is ok with this act. According to one source: "...this is a huge breach of personal privacy...they should not be allowed to comb through citizens' accounts on a fishing expedition for illegal activity." The source adds that he expects the IRS to target many online gambling players for unpaid income.

This is not the payment processor's first run-in related to online gambling or suspicious thereof. Years ago, former Attorney General of New York Eliot Spitzer fined the company for its online casino transactions in 2002. The company had only been involved in online gambling for just over a year at that time.