s part of an ongoing investigation into tax evasion, the IRS believes that many people in the U.S have been hiding income in offshore bank accounts and then spending the money in the U.S. by making purchases using credit and debit cards issued by the offshore banks.

The IRS recently expanded its investigation to identify people who may be using these accounts and cards illegally. It filed petitions in seven U.S. District Courts that would require more than 40 companies to provide information on customers who are suspected by the IRS.

The requests were filed in federal courts in Alexandria, Va.; Atlanta; Chicago; Dallas; Newark, N.J.; San Francisco; and Seattle.

The companies whose reports are sought include airlines, hotels, rental car companies, Internet services and major retailers such as The Gap, America Online, Microsoft, Amazon.com, eBay, US Airways and Yahoo. "In the U.S. district courts across the country, the IRS is moving forward with its effort to combat offshore tax evasion. Our goal is simple and straightforward - identify the people who may be using these offshore cards to evade paying their taxes," IRS Commissioner Charles Rossotti said.

In 1999, 117,000 taxpayers reported use of offshore cards on their income taxes, but the IRS believes as many as two million Americans may hold offshore credit or debit cards. Offshore cardholders are required to report account balances of more than $10,000.

The IRS began its campaign against illegal use of offshore cards in October 2000. So far in 2002, courts have authorized the agency to request transaction records from American Express, MasterCard and VISA International in the form of "John Doe" summonses.

The summonses seek to acquire information on transactions made with cards issued by banks in tax-haven countries such as Switzerland, Liechtenstein, Luxembourg, Singapore, Caribbean nations, the Bahamas and the Cayman Islands.

MasterCard has provided more than 1.7 million records involving more than 230,000 accounts, and Visa and American Express are expected to follow as well.

"By requesting these John Doe summonses, the IRS is not saying that these companies have done anything improper," said the IRS. "As these companies conduct normal business with customers, they are unaware whether someone even has an offshore credit card."

The IRS says that even though the John Doe summonses have provided significant data for the investigation, it has filed the recent district court petitions in order to gather more detailed information from merchants, such as names and addresses of suspected offenders, which the IRS does not know but is crucial to the investigation.

The IRS also says it has developed hundreds of cases for civil audits or potential criminal investigation, including cases against executives of publicly held companies, business owners, doctors, lawyers, investment professionals, tax-shelter promoters and other wealthy individuals who use credit and debit cards issued through offshore banks.