In a move that some observers have described as “the best way to annoy its customers and scare them away”, the online banking company PayPal, which was used by many online sportsbetting and online poker sites before it was acquired by Ebay.com,  has provided the IRS with was supposed to be “privileged client account information”. PayPal representatives declared that the IRS requested information regarding several accounts linked with the use of offshore accounts and credit cards. As an effect of PayPal's action, some online gamers have received notifications informing them that their accounts were investigated by the IRS.  However, the real intention behind these actions seems to be finding unclaimed income. There is some doubts that make several people to think that in the end the IRS investigation has not much to do with online gambling at all, as explains Edward Leyden, the president of iMEGA, the Interactive Media Entertainment & Gaming Association.

“This appears to be part of a larger IRS investigation that commenced several years ago of tax issues involving Americans holding credit cards issued by banks located in places the Treasury Department considers to be potential 'tax havens'.  While i-gaming concerns certainly may become caught up in this effort, this does not mean that Internet gaming in the primary target of the investigation." said Leyden.

PayPal accepted online gambling transfers until it was fined by the Attorney General Eliot Spitzer in 2002. PayPal was found guilty on the count of supplying services to offshore gambling sites and breaking the 18 US Code 1960 that prohibits fund transfers "derived from a criminal offense", and 18 US Code 1084 that refers to the transmission of information on wagers. A total of $10 million was paid by PayPal for providing services to illegal gambling operations.

In addition to the fine, PayPal was obligated to start an internal corporate compliance program for at least two years. Now, even when serving all this info to the IRS on a silver plate is clearly bad publicity for Pay Pal, it is obvious why the company didn’t refuse to comply with the IRS request. If the IRS says jump, Pay Pal will simply respond “how high?”

SunPoker.com