Banking offshore can save you money or lead you down a path to a potential tax crime. How does that happen?
An offshore tax haven is a foreign jurisdiction that offers attractive tax and financial features to investors, trusts, and many types of businesses. Tax havens are located around the globe, including the British Virgin Islands, the Netherlands, Hong Kong, Luxembourg, and—Wyoming USA, currently a hot on-shore prospect.
Tax havens usually offer a generous or no-tax rate on investments, earnings, and assets. Individuals, companies, and families with high wealth can avoid taxation through the careful use of offshore tax havens. In addition to tax avoidance, use of offshore tax jurisdictions can be helpful if a home economy is unstable. Large swaths of the world are at unrest at present. A tax haven can sometimes be a monetary safe haven in those instances.
Shell companies are usually created to facilitate the anonymous movement of money offshore. While legal, global tax regulators continue to work toward tightening regulations around shell companies and their owners. Shell companies are used by legitimate investors and companies, as well as criminal enterprise. In addition to the strident pursuit of offshore tax crime by the Internal Revenue Service (IRS), the U.S. recently enacted the Beneficial Ownership Information Registry, applicable to certain companies, that requires identification of company ownership to deter tax evasion and financial crime.
Shell companies and tax havens attract attention from regulators due to their opacity and history of facilitating tax evasion. Document leaks to investigative journalists made in recent years threw open the doors to the hidden world of foreign bank accounts and offshore finance. U.S. taxpayers with ownership in an offshore tax haven or foreign account are required to file a Foreign Bank and Financial Account (FBAR) on an annual basis. Similarly, foreign institutions risk pursuit by the IRS if they do not annually file Foreign Account Tax Compliance Act (FATCA) reports with the IRS that identify U.S. taxpayer holdings.
Offshore tax investment is a legitimate strategy for tax avoidance. When offshore investments are under the radar with no tax consequence, it becomes tax evasion. If you are interested—or concerned—about an offshore tax investment, speak with attorney with experience in offshore tax portfolios.
Our tax group offers skilled guidance on offshore options, tax litigation, and compliance issues
Serving local and international clients from offices in Chicago and Cleveland, the legal team at Robert J. Fedor, Esq., LLC helps you create strategic goals to build and nurture wealth as well as respond to allegations of tax fraud, or tax crime. Call 800-579-0997 or contact us today.
