Bermuda-based e-commerce provider First Atlantic Commerce (FAC) has been targeted by the US Government in an investigation into First Data Corp.'s involvement in offshore tax-haven schemes, according to The Denver Free Post.

FAC, which is partnered with First Data subsidiary, Cardservices International (CSI), is involved in the probe by the Internal Revenue Service focused on merchants who deposit the proceeds of domestic sales into offshore banks to hide them from tax authorities, said the US newspaper.

The paper said that a federal judge on Thursday ordered First Data to release client lists to the Department of Justice in its investigation into alleged offshore tax evasion.

"CSI clearly markets offshore merchant account services to US merchants as a means of tax avoidance by advertising its services on the websites of foreign promoters of abusive offshore tax schemes and products," IRS agent Daniel Reeves declared in court documents filed in US District Court in Denver.

First Atlantic's founder, Andrea Wilson, implemented First Data's credit-card processing system at a bank in Bermuda before launching a consulting and software service the IRS alleges is helping merchants hide sales revenues from tax authorities, claims the publication.

But it added that First Data believes the IRS is seeking information from the company only in its capacity as a holder of third parties' records and not targeting the company itself, spokeswoman Jody Soper said.

"First Data does not ap"First Data does not approve or support any practice whose purpose is unlawful tax avoidance," she said.

"First Data has an excellent track record of co-operating with all government agencies and will continue our practice of complying with all lawful requests for information with due regard for the confidentiality of our customers' data."

In earlier investigations, the IRS focused on US citizens holding money in offshore accounts who used credit and debit cards to access their unreported holdings, with American Express, Master Card International, Visa International and First Data have co-operated in those probes, said The Denver Free Post.

US citizens had more than $1 trillion in assets held offshore and illegally evaded between $40 billion to $70 billion in US taxes each year, according to a report in the summer of 2006 from the Senate Permanent Sub-committee on Investigations.

President Barack Obama has made the elimination of illegal offshore tax shelters and tax-evasion schemes a priority in his administration.