Offshore Asset Protection BLOG - Bob Bauman

Interesting Treaty News from Panama

O.K. amigos -- you knew it would happen, what with all the leftist welfare state tax collectors and the OECD clamoring for blacklists and boycotts aimed at one of the last nations with enough political courage and guts to stand up for financial privacy and banking secrecy -- our friends in Panama.

Yes, Panamanian President Ricardo Martinelli (left) and his Mexican counterpart, Felipe Calderón (far left) signed a "tax information exchange" treaty a few weeks ago at the Summit of Latin American and Caribbean Unity -- but this treaty is NOT what you may think of when you hear the dreaded "tax information exchange."

Article 26 Again

That phrase has taken on the meaning generally assigned to it by the loud, anti-tax haven advocates of Article 26 of the OECD model tax treaty.

Of course what these radicals really want is automatic tax and financial information exchange, and they are still working feverishly for that goal. (France has even adopted its own arbitrary blacklist of tax havens and imposed a huge tax on French transactions with the named places).

 
But generally "tax information exchange" is understood to mean negotiating and signing bilateral treaties between nations providing a specific method to be followed when one nation formally asks another nation for financial information about one of their citizens. Such requests are governed in each case by the specific terms of the bilateral treaty.

Bank Secrecy Takes a Hit

Some nations with (until now) strict banking secrecy, such as Switzerland and Austria, have publicly insisted that such treaty requests must name a specific person and a specific bank or other financial account, providing at least prima face evidence of a possible violation of the requesting nation's tax laws. No "fishing expeditions" allowed, they insist.

Panama's La Prensa report that the two leaders described the new treaty as "an agreement to avoid double taxation and to prevent tax evasion on income tax." In a political pas de deux, Mexican President Calderón said that with the signing of the agreement Mexico can promote Panama internationally as a country that meets OECD and international standards on tax and fiscal matters.

Panama's Martinelli added that the agreement was part of several actions his government is taking "to promote better transparency and competitiveness."

Devil in the Details

I have not seen the specific treaty terms, but our Panamanian sources say the agreement embodies Martinelli's strategy to avoid Panama being classified as a rogue nation or uncooperative tax haven by negotiating and signing bilateral information sharing double taxation agreements with like-minded nations.

These observers say that while the United States government wants to force Panama to "open it's books" in what the U.S. calls "information sharing," in fact the U.S. doesn't have any information Panama wants.

Territorial Taxes

Panama has a sensible "territorial tax system" which does not tax earnings outside its borders, so it does not need to know what Panamanians or foreign nationals earn elsewhere. Thus all information would flow one way, from Panama to the United States, negating the country's financial privacy laws.

Panama is one of many sovereign nations that share the view that the OECD and the United States have no right to twist their arms or force them to provide information on domestic corporations, trusts, family foundations and bank accounts, even if they are held by foreign nationals.

Traditional and Limited

What Panama and Mexico signed, (and what Panama is negotiating with other countries), are traditional bilateral agreements to avoid "double taxation" on an individual's offshore income -- and that does not include tax information exchange beyond what is required to avoid that double taxation.

Meanwhile Panama can and does point to and proclaim that the country is being responsible internationally by signing such traditionaly limited treaties.

 
SPECIAL PANAMA NOTICE

* I invite you to join me, April 17-20th, at the Intercontinental Playa Bonita at Kobbe Beach, Panama (see above) for International Living’s 2010 Live & Invest in Panama Seminar, April 18-20. Click here for information. Prior to the seminar there will be a Panama Profit Expedition real estate tour, April 9-16th. Check out tour details here.

What the Heck Is Going On in Liechtenstein?

Recent news reports prompt me to ask that serious question -- and I hope those in the offshore financial world will be given some good answers.

Understand that the Principality of Liechtenstein has, for several years now, been one of the Sovereign Society's four top recommended offshore tax, asset protection and banking havens. As with each choice, the factors we consider include stability of government, favorable laws and judiciary, available legal entities, low or no taxes, and maximum financial privacy.

Until last year the principality passed on all points with high marks. But money talks, as we all know, and the more cash involved, the louder the cry.

Money Drain

Liechtenstein's banking industry suffered a 60% drop in profits in 2009, in part due to the global economic downturn, but also as billions in deposits fled the country because of questions about its future as a leading tax haven. Assets under management by the principality's 15 banks were down 22% to 156.65 billion Swiss francs (US$144.3 billion) last year. These downward trends have continued this year.

No doubt at some point last year the royal Liechtenstein number crunchers concluded that the principality's strict financial privacy laws would have to be sacrificed in order to appease the OECD, the G-7 and the G-20.

First Over the Side

Thus it was that in 2009 Liechtenstein was the first tax haven to announce it would comply with Article 26 of the OECD model tax information exchange treaty, previously anathema in Vaduz. As in Switzerland, this meant banks would provide information in matters of foreign tax evasion when ordered to do so by the government, but, it was claimed, under limited conditions and only by applying the terms of tax information exchange treaties in individual cases.

That sounded comforting to some degree, but then last August the principality's government concluded a "ground breaking agreement" with the tax collectors of the United Kingdom.

Swap Shop

Under this extremely liberal deal, UK residents with Liechtenstein bank accounts would have their details shared with the British government to make sure they paid the right taxes.

This new tax information exchange agreement enables the UK and Liechtenstein to "swap information" on all accounts to ensure the right tax was paid in each country with minimal penalties, a guarantee of no prosecution in non-criminal cases and an exemption from the threat of "naming and shaming".

To sweeten the deal the tax disclosure program allows penalties on unpaid tax to be capped at 10% of tax evaded over the last ten years, a potentially huge savings, providing the taxpayer was fully open with the UK tax collectors.

Under Pressure

Liechtenstein devised the UK disclosure deal as a "creative and innovative solution" to the international outcry sparked by the evasion scandal following the 2007 theft of thousands of names from LGT Bank's trust business, stolen goods which were purchased by the tax hungry German government. (The German secret police agency, the Federal Intelligence Service (BND), (equivalent of the U.S. Central Intelligence Agency), paid an illegal €5 million ($ 7.3 mil) bribe to a disgruntled employee of LGT Bank).

Prince Max von und zu Liechtenstein, left, (one of thirty some royal princes) who heads LGT, the royal family's private banking group, said there has been no change of heart in Liechtenstein on the importance of privacy rights, but added: "With hindsight, we could have probably been a little more sensitive to the abuse that has taken place."

That Liechtenstein would abandon to such a degree its historic bank secrecy is somewhat amazing, even if understandable because of the international pressure.

Internal Dissent

Last October I spoke at a Washington Cato Institute forum entitled "The Case for Tax Competition, Fiscal Sovereignty, & Financial Privacy." The principal speaker was His Serene Highness Prince Michael von und zu Liechtenstein, (below).

Prince Michael complained that he felt his government had gone much too far in yielding to the OECD and compromising the principality's traditional financial privacy laws. Liechtenstein’s secrecy statutes historically had been considered stronger even than those in Switzerland.

Liechtenstein and the United States signed a tax information exchange treaty in December 2008 that entered into force on Jan. 1, 2010 providing for direct cooperation between the two countries' tax and judicial authorities. No doubt it too will be applied with this new found Vaduz liberality.

Step Right Up, Folks

But what really has shocked foreign observers has been Prince Max campaigning among wealthy British investors, urging them to come clean over assets hidden abroad, promoting his country's "unique and attractive" amnesty.

But for his plan to work, (and bring back those lost billions to Liechtenstein's banks), British non-tax compliant investors must move their money from Switzerland and other offshore centers to the principality.

"In Liechtenstein, we never had a huge UK customer base. If it's going to work, it will work through convincing UK citizens in other jurisdictions to come to Liechtenstein," he told the Financial Times.

As you can guess, this special, unique UK-Liechtenstein tax amnesty deal has been attacked by the British Left. But Prime Minister Gordon Brown, about to face a tough general election, insisted last week that the deal "...will bring £1billion (US$1.5 billion) of money back to this country".

Still Useful

Note: none of the above in anyway detracts from your using Liechtenstein as an excellent venue for the purchase of U.S. tax deferred annuities and life insurance, or even for banking – if you have paid your taxes back home. The times they are achanging.

 

You can learn all about "going offshore" and how to bank legally in legitimate offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

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

IRS Millions for Informants

As do millions of others, I use Google, among other web sites, for my research. Interestingly enough, if you click on Google news and then type in "tax havens" in the search block, here below ironically is what you will see at the top of the page:

Tax Havens Still Legal

www.SovereignSociety.com   3 Legal Offshore Asset Protection Secrets Investors Must Know. Free

Get Paid by the IRS.

www.irs-fraud.com   Up to 30% Reward. Report IRS Tax Underpayments of $2m+.

 

Sovereign Society Tops IRS

 

Well, I must say that I am pleased that the Sovereign Society tops the IRS when it comes to Google ads, but look more closely at that IRS advert. It offers a substantial reward to informants who turn in U.S. persons that may be engaged in illegal tax evasion and who are convicted.

 

In December 2006, the IRS was given a much improved tool in their ongoing efforts to collect taxes from taxpayers. The IRS "Whistle Blower Program" provides that individuals who report substantial tax violations (at least $2 million in tax owed) have a legal right to receive rewards of 15% to 30% of the amount of tax that the government collects from a non-compliant US taxpayer.

 

One such informants a few months back was former UBS bank employee and IRS informant, Bradley Birkenfeld, (below right) was sentenced to 40 months in prison for facilitating offshore tax evasion through UBS banking schemes. He got hard time even though he assisted federal investigators in exposing the bank's tax frauds.

 

Just before he was sentenced Birkenfeld appeared on CBS "60 Minutes" on January 4, 2010 as part of his PR campaign to avoid prison. Even as the prison doors closed behind him he still was protesting loudly that this was no way for the IRS to treat their major UBS tax rat.

Not many people know Birkenfeld was the key player in the UBS scandal, the American inside banker who gave up all the information the IRS needed to make its case against UBS -- and, sadly, against Swiss banking secrecy in general.

Unfortunately for him, he failed to rat on one of his own UBS clients who later cooperated with the IRS and admitted Birkenfeld's part in helping him evade taxes -- thus Brad got prison instead of the probation he felt he had earned by turning in others.

Birkenfeld's Millions

More interestingly, most folks don't know that Birkenfeld has filed a claim under the IRS "Whistle Blower Rewards Program" that the Google advert (above) extols. One report says his claim is for US$34 million, roughly 30% by his calculations of what UBS clients may have to pay the IRS.  Thus there is big money to be made in "outing" tax cheats.

No More Whistles?

No doubt that Birkenfeld got jail time instead of probation may dampen the enthusiasm of other whistle blowers who may have been involved in the tax offense they report. But there are always those who have no direct involvement in the tax fraud -- ex-spouses, former business partners, disgruntled employees who know where the cash is stashed.

Under the IRS informant system even in criminal tax cases, the identity of the informant remains completely anonymous and will never be revealed to the taxpayer being prosecuted.

So a word to the wise for the wealthy: file and pay your U.S. taxes as required by law -- and be very careful about those you hire or assigned to handle your financial affairs -- even your banker. Extreme due diligence is in order. 

 

You can learn all about "going offshore" and how to save taxes legally in legitimate offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

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

Big Brother's Money Laundering Fraud Expands

I'm writing today from Baltimore, Maryland where I am attending  meetings -- and my topic for you is the governmental fraud that is perpetuated by so-called "anti-money laundering" laws.

These Draconian laws have been on the books in the United States and other countries for the last two decades, supposed originally aimed at drug kingpins and their illicit cash. Later the AML laws were claimed by politicians to be needed to stop terrorist cash.

In fact, these laws have been mainly used as prosecutorial bargaining chips, since they impose heavy fines and prison sentences. Add ML charges to any threatened indictment and a putative defendant is likely plea to a lesser charge.

In the lead in promoting AML laws has been the Paris-based Financial Action Task Force (FATF), a subdivision of the stridently anti-tax haven, pro tax Organization for Economic and Community Development (OECD).

Mainly a front group for the high tax, welfare state G-20 countries, both the OECD and FATF have skillfully advocated AML laws for their tax hungry sponsors as a pious means to destroy financial privacy -- and to track down what they claim is massive offshore tax evasion.

Tax Offenses as ML Crimes

It was only a matter of time until it happened -- and this week it did; the OECD plans to list tax offenses as -- you guessed it -- a form of money laundering!

Such a move would add still more criminal penalties for alleged tax offenses that already are crimes. In some countries, such as Switzerland if tax offenses were reclassified as money laundering, local experts say lawyers, tax advisors, accountants and bankers who are implicated in such offenses could get up to three years in jail.

Worse still, some claim that Swiss bank secrecy laws would no longer block assistance to foreign tax authorities, since that secrecy law is waived in money laundering cases.

CFP Video Reveals ML Fraud

By coincidence, a new video just released y the Center for Freedom and Prosperity Foundation (CF&P) discusses how anti-money laundering laws, which require banks to snoop on their customers, are costly and ineffective.

Entitled "Making Banks Spy on Their Customers is Not Effective Crime Fighting: The Failure of Anti-Money Laundering Laws,"  the mini-documentary explains that these laws impose heavy costs on the financial industry. These costs might be worthwhile if they passed a cost-benefit test. Unfortunately, there is no evidence that anti-money laundering laws decrease crime. 

 Links to the video:  YouTube | Yahoo | Capitol Hub

"Anti-money laundering laws result in millions of reports on innocent bank customers and genuine hardship for many people who are improperly treated as potential criminals," said CF&P Foundation President Andrew Quinlan. 

Dan Mitchell of the Cato Institute. "The time has come for a dramatic reassessment of these laws so that resources can be allocated where they will best fulfill the legitimate government function of protecting life, liberty and property."

From the Sovereign Society

As it has been since our founding 12 years ago, our staff is available to assist in opening a Swiss or other offshore account.

Take advantage of these special Swiss banking arrangements and the advice of our Swiss advisors – sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

Editor’s Note: You can learn all about going offshore, about Switzerland and about all the legitimate and legal offshore financial centers – in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

The End of Swiss Bank Secrecy?

That headline might be a reasonable question following an official statement last week by the Swiss Federal Council.

 
The country's governing body officially announced that it no longer wants "undeclared, untaxed funds from overseas". The council said it will act to "regularize untaxed assets" in Swiss banks and keep out new, untaxed cash known as "Schwarzgeld" or black money.

Saying that the "integrity and stability" of one of the world's leading offshore financial centers were crucial factors, Finance Minister Hans-Rudolf Merz (below) added: "We are not interested in untaxed money". (My, my, how times have changed!)

But there was no indication about how the government would go about determining whether existing funds in banks or new deposits had been taxed properly by foreign governments.

No Automatic Info Exchange

One thing Merz made very clear -- he ruled out Switzerland adopting automatic exchange of information for tax purposes. One must wonder how linger that will last?

"Automatic exchange of information would be the end of banking secrecy, and it would greatly damage the Swiss financial industry," Merz said. "The Federal Council continues to reject the automatic exchange of information in terms of laying bare every detail of citizens' lives," the statement noted.

Article 26 Again

Merz reiterated Switzerland’s commitment to adhere to the standards of Article 26 the Organization for Economic Co-operation and Development (OECD) model treaty on tax information exchange. The OECD procedure can only be accomplished in bi-lateral, double-taxation agreements.

Switzerland, under tremendous OECD and G-20 pressures, has signed 18 such treaties in the last year; the first with the United States. Five agreements are scheduled for discussions in parliament next month amid very real threats by opponents to challenge them to a nationwide vote where they may well be rejected.

Fraud No, Evasion Yes

As I have often noted, foreign tax evasion is not a crime under Swiss law, but tax fraud is considered as a criminal offense.

In a landmark deal with the U.S., the largest Swiss bank, UBS last year was forced to agree to disclose bank account details of thousands Americans, who were alleged to have evaded taxes, but the Swiss Administrative Court blocked the release of the names, ruling that would violate Swiss law.

It is generally understood that under the OECD Article 26 procedure, the requesting country must name the individual and the bank involved and also show some prima face evidence of alleged tax fraud. No broad scale "fishing expeditions" are allowed.

R.I.P.?

So is Swiss bank secrecy dead? Not hardly.

The statement by the Federal Council was in the nature of a public relations ploy, another attempt to show that the top Swiss politicians want to cooperate with other nations seeking tax information.

But there remains in place a strict Swiss bank and financial secrecy law that, unless repealed by parliament, will not allow wholesale release of the names of foreign account holders -- no matter how apoplectic the OECD, the G-20 and the IRS may become.

So long as you, as a foreign person with a Swiss account, are not engaged in tax fraud or some other criminal acts, information concerning you cannot be released by Swiss banks. And if information is released improperly, you have the right to appeal to the Swiss courts that I just mentioned that have upheld the law.

Help for You

At the Sovereign Society we meet regularly with Swiss and other offshore banker. We have agreements with reputable Swiss banks willing to accept new accounts from those who identify themselves as Sovereign Society members.

These arrangements are in full compliance with IRS and SEC rules and other U.S. laws. U.S. clients must sign an IRS Form W-9 that allows an offshore bank to report required information to the IRS.

As it has been since our founding 12 years ago, our staff is available to assist in opening a Swiss or other offshore account. Take advantage of these special Swiss banking arrangements and the advice of our Swiss advisors -- sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

 

You can learn all about "going offshore, about Switzerland and about all the legitimate and legal offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

Reid Bill Imposes 30% Tax On Foreign Banks

(Washington, D.C., Wednesday, February 24, 2010) The Center for Freedom and Prosperity Foundation, joined by many of the nation's most influential free-market and taxpayer groups, has sent to all members of Congress a letter warning about the adverse impact of anti-investment provisions in Senator Reid's "Jobs" Bill.  The bill has passed in the Senate, but it is substantially different from the legislation approved by the House, so it is still possible that anti-growth provisions can be removed. The Coalition for Tax Competition letter highlights the inclusion of provisions taken from the "Foreign Account Tax Compliance Act."  These provisions impose a stiff thirty percent withholding tax on the American investments of foreign financial institutions unless they agree to onerous and intrusive reporting requirements with the U.S. Treasury Department and the IRS  Additionally, the letter points out that these provisions create significant threats to fiscal sovereignty and financial privacy.  European governments and bureaucrats are increasingly meddling in the affairs of American companies, so setting a precedent for further interference seems particularly foolish.   "The Foreign Account Tax Compliance Act contained in Senator Reid's so-called jobs bill would result in the loss of jobs as investors would shift funds outside of the United States," said CF&P President Andrew Quinlan.  "This bill is a threat to fiscal sovereignty, both in the United States and around the world" added Dan Mitchell of the Cato Institute. "Governments should have no right to impose laws and regulations outside their borders, and this effort to impose bad American policy on foreign banks will invite bad consequences and open the door for foreign governments to do the same to us." Text of letter below: February 23, 2010 Speaker of the House of Representatives Nancy Pelosi, House Minority Leader John Boehner, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, Members of the House of Representatives and Members of the United States Senate cc:  President Barack Obama Dear Representatives and Senators, We write today to warn you of anti-growth components to Senator Reid's newly proposed "jobs bill" (S.A. 3310 to H.R. 2847). Specifically, we are concerned that provisions lifted from the Foreign Account Tax Compliance Act of 2009 will discourage investment in the United States. In brief, these provisions would impose a stiff thirty percent withholding tax on the investments of foreign financial institutions unless they agree to onerous and intrusive reporting agreements with the Treasury Department about their American accounts.  These provisions will make it more expensive to invest and do business in the United States. Making it more expensive to invest in the United States will divert global capital to other nations. This will reduce growth and jobs creation in America. Furthermore, the reporting requirements are a threat to fiscal sovereignty. By attempting to impose American laws on foreign companies acting outside of the United States, we open the door for similarly misguided efforts on the part of foreign governments and international bureaucracies. European bureaucrats already are interfering with mergers and acquisitions among and between U.S. companies, so it seems particularly foolish to create further precedent for this type of fiscal imperialism. Finally, these anti-jobs provisions in a so-called jobs bill will not raise the funds that proponents claim.  Financial institutions and other international investors will simply shift funds out of the United States. The only effect of these provisions will be the movement of investments and jobs overseas. Sincerely, Andrew F. Quinlan ~ President, Center for Freedom and Prosperity Foundation

Austin Plane Crash: Attack on the IRS?

Leave it to TIME magazine to try to link the Tea Party Movement the suicide pilot of an airplane that crashed into an IRS office building today in Austin, Texas!

Said TIME "The long, rambling rant posted on a web site eerily reflected the angry populist sentiments that have swept the country in the past year. In it, a Joe Stack inveighed against intrusive Big Brother government, corrupt corporate giants, irrational taxes, as well as the "puppet" George Bush."

And I might add, that my blog entry yesterday, (Taxes, Crime and Punishment) was pure coincidence.

A White House spokesman was quick to say the incident was not a plot by overseas terrorists. But, TIME asked, "Was it terrorism nevertheless?" Perhaps, the home grown, domestic variety?

Tax Terrorist?

In his note, Stack was very clear he was unhappy with the U.S. government. He complained about onerous and merciless taxation of individuals like him as well as corruption and the special treatment the executives of big corporations allegedly received after their companies failed. And he seemed to be as emboldened as any suicide bomber.

In the Web note of more than 3,000 words, he wrote, "I ... know that by not adding my body to the count, I insure nothing will change. I choose to not keep looking over my shoulder at big brother while he strips my carcass, I choose not to ignore what is going on all around me, I choose not to pretend that business as usual won't continue; I have just had enough."

He signed off, "Joe Stack (1956-2010)."

Taxes, Crime and Punishment

There is a degree of irony in that one of the most famous quotations concerning American taxes was written by Benjamin Franklin as an expression of his concern about the permanence of the United States Constitution. That is especially so, since some Americans still doubt the constitutionality of these taxes.

In a letter from America's famous Founding Father to Jean-Baptiste Leroy (13 November 1789), Franklin wrote: "Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes."

Truth or Consequences

But even more than some Americans in this age of longevity try to cheat death, some few try to cheat on their taxes -- with grave consequences -- interest on taxes owed, penalties and possible criminal indictment and jail time. Exhibit A: Actor Wesley Snipes (below) who in 2008 was sentenced to three years in prison for willful failure to file income tax forms.

The New York Times reports today that a "wealthy investor in Virginia pleaded guilty on Tuesday to criminal tax evasion involving an international bank, said by a person briefed on the case to be HSBC, one of the world’s largest private banks."

In December, it was reported that the U.S. Justice Department had expanded its investigation of foreign banks with offshore private banking services to include HSBC and Credit Suisse. HSBC’s private bank, one of the world’s largest, managed assets of $352 billion as of the end of 2008, according to the company.

UBS Down, HSBC Next

As the Times points out, this new case is significant because it shows that the IRS and the U.S. Justice Department are moving beyond UBS, the giant Swiss bank that pled guilty to assisting Americans to engage in tax evasion and paid a $783 million fine.

This new case also suggests that HSBC may have taken steps to hide its operations in the wake of the UBS case, even while many offshore banks were shutting down undeclared offshore banking services for American clients.

The investor, Dr. Andrew B. Silva, of Sterling, Va., pleaded guilty to failing to disclose to the American tax authorities more than $250,000 given him by his late mother which was kept in a bank using a Liechtenstein trust, according to court papers filed in U.S. District Court for the Eastern District of Virginia.

While the papers do not identify the bank, a person briefed on the case said it was HSBC, which is based in London, but has a large Swiss operation.

"Enforced Exactions"

I am fond of quoting the late distinguished Judge Learned Hand (right) of the U.S. Court of Appeals in New York. In a memorable tax case dissent, Judge Hand offered these timeless remarks: "There is nothing sinister in arranging one's affairs so as to keep taxes as low as possible... nobody owes any public duty to pay more than the law demands. Taxes are enforced exactions, not voluntary contributions." Commissioner v. Newman, 159 F2d 848, 851 (2nd Cir 1947).

But under U.S. law, failure to file or engaging in tax fraud, as Dr. Sterling is alleged to have done, is in another realm entirely. Read about his case and you will find allegations of conspiracy and extensive money laundering as well.

IRS Paid Informants

My colleague, Mark Nestmann, recently shared with me an article about the expanded IRS informant program.

In December 2006, the IRS was given a much improved tool in their ongoing efforts to collect taxes from taxpayers. The new IRS "Whistle Blower Program" provides that by statute individuals who report substantial tax violations (at least $2 million in tax owed) have a legal right to receive rewards of 15% to 30% of the amount of tax that the government collects from a non-compliant US taxpayer.

Put that together with the 800 IRS agent expansion of offshore auditing and investigations and Mark's recent observations about the IRS offshore crack down, and it would seem that only the certifiably insane would try to evade taxes due.

We Told (and Tell) Tell You So

A great deal of time and effort on our part goes into exploring and explaining legal ways by which you can avoid, minimize, and defer taxes -- I repeat -- legal ways.

In the first pages of each of our book publications the following text appears:

The Sovereign Society advocates full compliance with applicable tax and financial reporting laws. U.S. law requires income taxes to be paid on all worldwide income wherever a U.S. person (citizen or resident alien) may live or have a residence. Each U.S. person who has a financial interest in, or signature authority over, bank, securities, or other financial accounts in a foreign country that exceeds $10,000 in aggregate value, must report that fact on his or her federal income tax return. An additional report must be filed by June 30th of each year on an information return (Form TDF 9022.1) with the U.S. Treasury. Willful noncompliance may result in criminal prosecution. You should consult a qualified attorney or accountant to insure that you know, understand and comply with these and any other reporting requirements.

Render, Don't Surrender

The Biblical admonition of Jesus to "'Render unto Caesar" does not mean we have to surrender unto Caesar, and we shouldn't. But it does mean that no one should intentionally evade taxes due. The price of that sort of deliberate act is painfully high.

Dr. Silva, who is scheduled to be sentenced on May 7, faces a $500,000 fine, (twice the amount of money he tried to hide), plus 10 years in prison.

 

You can learn all about "going offshore" and how to save taxes legally in legitimate offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

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

Money Mobility Can Be Yours

These days tax hungry governments and their storm trooper tax collectors are doing there very best to impose laws that imprison taxpayers at home where they conveniently can be plucked like a goose. See Obama’s latest taxpayer plucking plans here.

Which Exit?

The richest citizens of the American State of New Jersey, who in the past generated most of the tax revenue, have been fleeing the state, a new university study shows. As reported in The Star-Ledger (Newark), the total aggregate personal net worth of New Jersey's residents fell by $70 billion between 2004 and 2008 -- a sharp reversal of a net $98 billion inflow that had occurred during the previous five years.

Guess why?

New Jersey has some of the highest real estate and income taxes in the nation and its death tax is imposed on estates in excess of $675,000. These rich folks know that many other States don’t tax income or estates at all, and property valuations and tax rates are much less, (just like many offshore tax havens).

Tax Haven Attacks

It’s not a full-scale migration yet, but it appears that many insurers and re-insurers are leaving their sunny southern Atlantic and Caribbean island homes and heading for Europe, often "re-domesticating," as the phrase goes, in Ireland -- which has one of the lowest corporate tax rates in the EU.

XL Group announced that it was leaving the Cayman Islands and setting sail for the Emerald Isle. Last September, the world’s third largest insurance broker, Willis Group Holdings, announced that it was moving from Bermuda to Ireland. Ace Limited, which was the biggest Bermuda-based insurer and reinsurer, jumped ship in 2008 headed for Switzerland. CEO Evan Greenberg was crystal clear about the reason: Switzerland offered more stability and a "network of tax treaties."

The tax free haven of Bermuda long has been home to reinsurers that provided huge pools of liquid capital that backed up the domestic American property insurers when disaster such as 2005’s Hurricane Katrina hit. But now Bermuda is being made into a villain with President Obama’s new populist rhetoric and public anger at huge executive bonuses.

Business Week warns that, "Anti-tax legislation in Washington could limit the ability of U.S. companies located in Bermuda to shelter overseas profits." Obama's trillion dollar deficit budget released on Jan. 31 denies U.S.-based insurance companies a major deduction for certain premiums ceded to their offshore parents.

Why this insurance migration to safer climbes? See above.

Go East

In the last days of the British Labour Party’s waning power, PM Gordon Brown, in radical election mode, is chasing after what remains of wealth in Britain with new confiscatory taxes on income and bonuses.

Under Brown’s direction Customs & Revenue also is hunting down offshore accounts and even trying to impose retroactive taxes on trusts going back decades.

No wonder the talk at the World Economic Forum in Davos, Switzerland last weekend was of the best addresses in Geneva and Zurich. The Swiss real estate industry is preparing to accommodate U.K. bankers and hedge fund managers disgruntled by political and public censure of their pay and bonuses, and the 50% rate of income tax on incomes above £150,000, (US$234,000) which takes effect on April 6.

But it's not only financial sector executives who are viewing homes overlooking the lakes or near the slopes. Highly paid staff at non-financial businesses are also interested in Switzerland's benign tax system. The income tax rate in the canton of Zug, for example, is about 10%.

Singapore, Switzerland of Asia

But Switzerland is not the last stop on the world money movement trail.

With the U.S. IRS attacking Switzerland’s largest bank, UBS, for more than a year now, even many Swiss depositors are beyond nervous.

Rich individuals from Europe and the Middle East are moving money from Switzerland to Asia, says Renato de Guzman, head of private banking at Oversea-Chinese Banking Corp. "It's a favorable trend," Guzman says. "Having a Singapore bank with no ties to Switzerland is an attractive proposition for a lot of them." (And the bank secrecy law is just as good).

Guzman is trying to capitalize on wealthy clients seeking to shift funds from UBS AG and other Swiss banks amid a dispute with the U.S. on disclosing client data to the IRS.

UBS CEO Oswald Gruebel said this month that it's "imperative" Switzerland's biggest bank halt withdrawals. Net redemptions by wealthy clients at UBS accelerated in the third quarter, bringing the total to 182.9 billion francs ($US179 billion) over 18 months and undermining profit at the bank.

On the Move

There are many current threats that logically should prod Americans to move cash, assets and even themselves to other much freer places – places other then Obama’s socialized America.

One scary example: the not so quiet move by radical Democrats to "pull an Argentina" and confiscate all U.S. private pensions.

The news stories I’ve cited above demonstrate how thinking people can stay abreast of many threats, how they and you can react with legal relocation of wealth, assets, investments -- even by moving your business, yourself and your family.

We Are Specialists

All of these offshore personal and financial havens are areas of expertise in which the Sovereign Society has specialized since our founding 12 years ago.

Look around you. What threats do you see? The chances are excellent that we can advise you on what to do – and how it can be accomplished quickly. Act now.

 

The Passport Book

If you are interested in obtaining dual citizenship and the second passport that comes with that enhanced status, you can learn about every aspect of what is required in the latest 2009 edition of my book, The Passport Book.

The Passport Book is one of our most popular publications, also lists almost 100 countries and explains the residence and citizenship requirements of each, along with contacts.

The Sovereign Society also provides its members contact information for qualified professionals who can assist you in acquiring second citizenship based on naturalization, ancestry, marriage, religion, or even past political persecution by some nations -- and they do it the legal way.

Unusual Feature of Obama Tax Enforcement Plans?

Why on earth would the Criminal Investigation Division of the U.S. Internal Revenue Service need sixty 12 gauge pump-action shotguns?

(Don't answer that question, because I don't really want to know).

I raise this question, (and it is not rhetorical), because our intrepid A-Letter editor, Matt Collins, has sent me a public "solicitation" just issued by the IRS, in which our tax collectors seek bids for providing them the following impressive armaments:

 
The Internal Revenue Service (IRS) intends to purchase sixty Remington Model 870 Police RAMAC #24587 12 gauge pump-action shotguns for the Criminal Investigation Division. The Remington parkerized shotguns, with fourteen inch barrel, modified choke, Wilson Combat Ghost Ring rear sight and XS4 Contour Bead front sight, Knoxx Reduced Recoil Adjustable Stock, and Speedfeed ribbed black forend, are designated as the only shotguns authorized for IRS duty based on compatibility with IRS existing shotgun inventory, certified armorer and combat training and protocol, maintenance, and parts.

Protest Politics?

Now perhaps the IRS knows something about the Tea Party Movement that has escaped most of us.

Or maybe they have seen the polls showing the breadth and depth of American pubic reaction against President Obama's historic trillions in planned deficits and spending -- or those trillions in new income, capital gains and estate taxes on just about everything and everybody.

Or might these weapons be used to ensure that every last American is forced to buy ObamaCare health insurance?

But then, this may simply be a defensive measure against the ira of the millions of Americans whose constitutional right to bank and invest offshore may be seriously curtailed by the President and his Reid-Pelosi congressional radicals -- (not that such knowledgeable offshore Americans would ever stoop to the IRS level when its comes to coercion).

The Home Office

The 60 shotguns are to be delivered to the IRS national headquarters at 1111 Constitution Avenue NW, Washington DC 20224. We’ll keep an eye out to see of they’re building battlements and a moat or mounting canon.

But, all things considered, don’t you wonder if only 60 shotguns will be sufficient for the IRS? (Just kidding, officer!)