All you need to know about offshore banking

[DarrylParsons]

is right here:

http://www.libertarianworld.com/offbank.html

An excerpt:

As an example: income tax evasion is a crime in the U.S., however, in countries that do not impose an income tax, income tax evasion is not a crime. Therefore, those countries are not obligated (and usually don't) assist the U.S., or any other country, in enforcing or investigation a tax law which does not exist in their own jurisdiction.

THEREIN lies the confusion -- Offshore Banks, and Offshore Licensed Banks, located in countries that do not have income tax laws do not (usually) assist the U.S. Internal Revenue Service in enforcing, or investigation violations of U.S. tax laws. Therefore, without the consent and cooperation of those countries, the I.R.S. cannot (in most cases) get information regarding financial transactions conducted in those countries by Tax Evaders in the U.S.

Since the I.R.S. is the tax-collecting arm of the U.S. Government; upon which the Government depends to collect moneys for its self-serving purposes, the Government readily and willingly supports the I.R.S. in its condemnation of Offshore Banking. But, why do the Bankers join in the condemnation? The reason is simple. If you take your savings account out of a U.S. bank and place it, offshore, in a bank in another country, the U.S. bank doesn't have your money to use any more. To keep you from doing that, the Bankers jump on the bandwagon to condemn Offshore Banking; even though a good many of them do have deposits from other countries and do, therefore, benefit from Offshore Banking themselves. As long as they can keep YOU confused, fearful and suspicious about Offshore Banking, they have YOUR MONEY in their banks to use for this purpose.

 

[wilheim]

Daryl - interesting article. I copied it to The Rx. Daily Reporter - hope you don't mind. Natrually this thread will stay right here Offshore.


Thanks, wil.

 

[DarrylParsons]

Sure Wil, no problem

 

[WHALE]

Thanks for the article !!!

 

[JohnBuzz]

Just so everyone knows; US citizens are required to report ALL offshore acounts that they have any kind of control over. The requirement kicks in if your balance, anytime during the year, exceeds $10k. The penalty for failing to disclose an offshore account is $500k which is one of the most severe penalties on the books for a non reporting violation.

 

[DarrylParsons]

Is that 500k "the penalty" or "the maximum penalty", and has anybody actually been hit with it for failing to report an amount under 50k, say?

 

[DarrylParsons]

There's also the practical issue that if you don't have over $1500 in interest or dividend income (or fall into a couple of uncommon special categories), you would have to attach a whole schedule B to your return (or file a completely different return if you're using 1040-EZ) just to report your offshore accounts. If it were really important to the IRS they would put the question near the beginning of every type of 1040.

Just imagine all the 1040-EZ's chugging through the assembly line, clerks thankful that there's nothing special or complicated to deal with and at ease knowing they're only dealing with a small fish. What is the likelihood that in that huge pile of returns, they would single out yours and say "hmmm, let's see if this guy's got any offshore accounts that he opened with his whopping $30,000 annual income...what's the country code for Belize?" Then after trying about 15 countries they finally find yours, find your bank which happens to be willing to co-operate, etc... uhhh, I don't think so.

Come to think of it, it might be a good idea to open an offshore insurance company for non-reporters of offshore accounts. Pay a reasonable monthly premium and if the IRS audits you and hits you with a fine, I'll pay it for you.

 

[gridtalker]

is right here:

http://www.libertarianworld.com/offbank.html

An excerpt:

As an example: income tax evasion is a crime in the U.S., however, in countries that do not impose an income tax, income tax evasion is not a crime. Therefore, those countries are not obligated (and usually don't) assist the U.S., or any other country, in enforcing or investigation a tax law which does not exist in their own jurisdiction.

THEREIN lies the confusion -- Offshore Banks, and Offshore Licensed Banks, located in countries that do not have income tax laws do not (usually) assist the U.S. Internal Revenue Service in enforcing, or investigation violations of U.S. tax laws. Therefore, without the consent and cooperation of those countries, the I.R.S. cannot (in most cases) get information regarding financial transactions conducted in those countries by Tax Evaders in the U.S.

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Since the I.R.S. is the tax-collecting arm of the U.S. Government; upon which the Government depends to collect moneys for its self-serving purposes, the Government readily and willingly supports the I.R.S. in its condemnation of Offshore Banking. But, why do the Bankers join in the condemnation? The reason is simple. If you take your savings account out of a U.S. bank and place it, offshore, in a bank in another country, the U.S. bank doesn't have your money to use any more. To keep you from doing that, the Bankers jump on the bandwagon to condemn Offshore Banking; even though a good many of them do have deposits from other countries and do, therefore, benefit from Offshore Banking themselves. As long as they can keep YOU confused, fearful and suspicious about Offshore Banking, they have YOUR MONEY in their banks to use for this purpose.

Good Article thanks

 

[JohnBuzz]

Is that 500k "the penalty" or "the maximum penalty", and has anybody actually been hit with it for failing to report an amount under 50k, say?

I don't know. Most non-compliance fines carry a max penalty of $10k. I wouldn't think of opening an offshore account and not complying. Really, you should only use such an account for legit reasons. Trying to hide assets or avoid taxes is not going to work or I should say will put an ole boy at a very high risk of being caught. If someone wanted to go for it anyway then set up an offshore company and keep all funds in the local currency, certainly not dollars. This could easily unravel too. The article leads the reader to believe that countries will not help Uncle Sam hunt down their prey. Totally not true.

 

[fathead]

Many posters here have over $10,000 in their Neteller account at some point during the year. Even though not a bank or brokerage house, would this be considered a non-US account and would these bettors be required to report this fact to the IRS or face penalty?

Something I have wondered about from time to time. Any thoughts?

 

[fathead]

Or how about having over $10,000 in a sportsbook account offshore? Report to the IRS or face penalty? Thoughts?

 

[DarrylParsons]

I guess it depends on the offshore country to a great extent because laws and practices can vary widely. I agree that blindly assuming you're safe in any country is probably wrong.

Hungary (where I live) has so-called personal data protection laws which require banks to disclose to the customer the full extent to which any of his data will be given to any third parties, including the IRS or US Gov't. In other words, if you have an account at a Hungarian bank and the bank gives the US Government or IRS any information about your account, they are required by Hungarian law to inform you about exactly who was given the data, what was given, when and why. There are also restrictions on when they can give such data without your prior approval, or at least prior warning giving you a chance to file an appeal. Of course this won't necessarily get you off the hook if you are a tax evader and the IRS is on to you, but it will least give you a head start on the audit.

Another thing about Hungary is that a lot of stuff works informally. If you have a good relationship with the teller and you get a large sum from abroad which they would be required to report to the authorities, they will often smile and say something like "this was a gift, right? <wink>" and you just say "yes of course <wink>" and she puts it in a category which she knows will not raise a flag and will not get audited. The atmosphere here (for historical reasons) is that we're all in it together against the government, and this goes as high as the branch manager of larger banks. If you are American, look reasonable and speak good, clear English, you will even get more of those winks than the locals. You just have to know what it means and play along.

 

[mj23]

There's also the practical issue that if you don't have over $1500 in interest or dividend income (or fall into a couple of uncommon special categories), you would have to attach a whole schedule B to your return (or file a completely different return if you're using 1040-EZ) just to report your offshore accounts. If it were really important to the IRS they would put the question near the beginning of every type of 1040.

Just imagine all the 1040-EZ's chugging through the assembly line, clerks thankful that there's nothing special or complicated to deal with and at ease knowing they're only dealing with a small fish. What is the likelihood that in that huge pile of returns, they would single out yours and say "hmmm, let's see if this guy's got any offshore accounts that he opened with his whopping $30,000 annual income...what's the country code for Belize?" Then after trying about 15 countries they finally find yours, find your bank which happens to be willing to co-operate, etc... uhhh, I don't think so.

Come to think of it, it might be a good idea to open an offshore insurance company for non-reporters of offshore accounts. Pay a reasonable monthly premium and if the IRS audits you and hits you with a fine, I'll pay it for you.

Since 9 11 isnt it alot harder to think about investing offshore?

 

[JohnBuzz]

TDF 90-22.1 Any bank account, security account or financial account.

"The term also means any savings, demand, checking, time deposit, or any account maintained with a financial institution or other person engaged in business of a financial institution."

So sportsbook accounts I would say NO.

Neteller; from reading this I would say YES

 

[DarrylParsons]

Since 9 11 isnt it alot harder to think about investing offshore?

For an American it might be, but I'm not American :>Grin> I didn't mean the insurance company idea seriously anyway, since I'd probably get knocked off by the mafia if I tried anything that would cut so heavily into the IRS's piece of the pie.

But I did live in New York for 2 years and part of my job was to do corporate IRS filings, so I do have some knowledge of the forms and the typical mentality of IRS representatives. IMO if they ever were to clamp down, it would be where they could get the most money for the least effort -- ie. make (probably corrupt) deals with some larger offshore banks that have a lot of American business (to get client data) and harass the clients with larger balances there.

Best bet is to go with a bank that has a very small percentage of Americans in its client base. Countries which are not too friendly politically are advisable also, like France or Germany, since they are more likely to be defiant towards the US Gov't. Hungary is also a great place as I already mentioned. Bahamas would be a no-no IMO, since it's too close and too obvious a choice.

If your original question meant just having a bank account that you use for sports betting, I don't think 9-11 impacted it that much, except maybe for a lowering of transaction limits for some transactions in the US. The trick is to keep the transactions below the reporting limits and get the money offshore slowly. Once it's there, you can go back and forth from there to Neteller at will, use your Neteller ATM card all you want, and basically be financially free.

I should mention that I don't claim to be a financial expert, just a fairly knowledgeable dude who has some experience moving money around internationally. The article is by an expert, though.

 

[poopah]

one place comes to mind, Caymen Islands, very simple people the only way the u.s. is allowed to look at your banking info would be by showing proof to the bank that your money in the caymen accounts was made by an illegal activity(drug dealing) very hard to prove anything like that without financial info. Tax evasion would not be considered by the banks as illegal activity, and the banks will never release your info because of tax evasion, That is why the Caymens is called Tax Haven. Population 25,000 and they have 540 banks, you do the math. It is well known by all that money in the Caymens mostly belongs to people evading taxes, but since the banking laws in this island are very similar to swiss banking laws, the U.S has very little power. Simple, your account info is confidential to you and you only, the only exception would be if you were considered a very serious terror threat, but I doubt there are too many Bin ladens at the RX.

 

[Sugarbear]

What new nuggets of wisdom can we add to this thread from 3 years ago?