We Assume You Are an Honest American Taxpayer

 In making that statement, I repeat an assumption on which Sovereign Society advice, publications and policies have been firmly based ever since our founding over a decade ago.

Towards that end, we have repeatedly explained, in great detail, current tax reporting obligations for U.S. persons (citizens and resident aliens) contemplating or engaged in all sorts of offshore financial activity -- banks accounts, credit cards, investment funds, insurance, annuities, currency dealings. We even have reprinted IRS Forms in our books and publications to help you stay compliant.

We do all this because we know that in exercising our freedom to "go offshore" we are fighting a basic assumption held by the IRS bureaucracy (and government bureaucrats in general) --  that any U.S. person who has offshore financial dealings of any kind is probably guilty of tax evasion or some criminal activity. Of course this turns on its head the traditional American legal principle that a person is presumed innocent until proven guilty.

Indeed, I have heard this unconstitutional prejudice confirmed in public statements by U.S. Department of Justice officials, and it is a constant theme of the U.S. Senate's leading anti-tax haven demagogue, Carl Levin of Michigan.

 

IRS Offshore Amnesty Program

 

With this background, let's return to a subject I raised a few weeks ago, the so-called IRS amnesty for U.S. persons who may have undeclared (unreported) offshore accounts.

The U.S. Internal Revenue Service (IRS) claims it wants to give offshore tax evaders a big break. On March 26th the IRS announced a plan that lowers a 50% penalty levied on Americans who stash unreported cash overseas to evade taxes. The IRS says it will "generally not prosecute" taxpayers who come forward voluntarily, provided their money does not flow from criminal activity. And it will not assess a 35% penalty on money secretly transferred to foreign trusts.

  
Vernon Jacobs, CPA, (left) a recognized authority on offshore tax matters, warns against rushing into any IRS so-called "amnesty" program. Jacobs points out that U.S. tax laws and IRS rules contain many traps for unwary taxpayers lured by IRS promises. "Any U.S. taxpayer who has any unreported income first should contact a criminal tax defense attorney for a complete review of the person's tax status," says Jacobs. Your lawyer, not you, should approach the IRS."

 

Web Page to Check

Now Vern has gone a valuable step further and had created a special page on his web site  entitled "Offshore Voluntary Compliance Initiative for 2009." It contains a full description of what the IRS proposes, along with many web links to IRS and other documents.
It also includes a useful list of U.S. law firms that understand this issue and can assist those who may need help. (An earlier page explains IRS amnesty facts and is also well worth reading).

For those who may find themselves in this status of having unreported offshore financial activity, the web page is a must. The IRS amnesty ends in September.

As Vern says: "The safest course of action is to hire an attorney who represents taxpayers in disputes with the IRS and who is familiar with the international tax rules. The attorney can then retain an accountant (under a special agreement so that the accountant is covered by the attorney-client privilege) who is familiar with the required returns for foreign entities."

The Sovereign Society is a recognized voice in the complex offshore world.  Join the Sovereign Society and keep informed.