by Brian Mahany
“What about hiding my money from Uncle Sam in some of the lesser known countries?” That question has been asked of us from time to time. Of course, we can’t and won’t help people evade taxes.
By now, readers of this blog know that it isn’t safe to hide your money from Uncle Sam in Switzerland. Ever since the UBS Bank investigation and subsequent settlement in 2009, the IRS has been making huge inroads into the Swiss banking system. Now, a recent treaty signed by the G-20 nations in November means it’s not safe to hide it most anywhere. In addition to U.S. Justice Department investigations into HSBC Bank and banks in India, Israel and Singapore, many nations now have agreed to share information.
The G-20 nations include the U.S., Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, the Republic of Korea (South Korea), Turkey and the United Kingdom. The European Union is also a member.
Of course the level of compliance varies from country to country but the movement is to greater cooperation.
There will always be places to stash cash but the number of safe places is dwindling. Who, for instance, wants to put their money in a North Korean bank?
The other problem with hiding money is the paper trail it leaves. Our law firm not only concentrates in offshore tax reporting but in fraud recovery as well. The first thing we do in any asset recovery case is trace the money trail. Unless one gets on a plane with a suitcase full of cash (also illegal unless declared), there is always a trail left by checks, wire transfers and interaccount transfers.
The final problem with trying to hide money from Uncle Sam is human. People talk. Ex spouses, former business associates and even your private banker. For the last two years, U.S. prosecutors have been indicting bankers affiliated with foreign banks at a record pace. In return for their “cooperation” (read: disclosing the identities of their present and former clients), the government will offer a reduced sentence. How loyal do you think your banker would be if facing 20 years in the federal pen?
If you are hiding money, give thought to the current 2012 tax amnesty program offered by the IRS. Called the Offshore Voluntary Disclosure Program, or OVDP, the program let’s most people avoid criminal prosecution and get a reduction on the civil penalties. While the penalties can be quite low for those who’s violations were not intentional, even those who knew they were doing wrong can catch a break.
The IRS operates on a first contact policy. That means if they find you first, its too late to seek amnesty. Get to them first, however, and amnesty is available for most taxpayers.
If you are tired of constantly looking over your shoulder, give us a call. We understand the offshore reporting laws, rules and regulations and get you into compliance quickly and in most instances, for a very reasonable flat fee.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; San Francisco, California and now Minneapolis, Minnesota. IRS services available anywhere in the world.