Offshore Scams

The Offshsore Tax Haven Scam

One of the most persistent and pernicious scams foisted on U.S. citizens and permanent residents (persons) of the U.S. is the claim that offshore tax havens can be used by U.S. persons to avoid or to defer taxes. The harsh truth is that the U.S. is only one of four countries in the world that impose income and estate taxes on citizens and residents based on their world wide income - regardles of where they live. While many high tax countries tax the worldwide income of their residents, they do not tax the worldwide income of non-resident citizens. Thus, a citizen can escape from a high tax country (other than the U.S.) by moving to a low tax country. And, in many countries of the world, income earned by a trust or corporation that is domiciled in another country is not subject to tax by the owner of the corporation or by the grantors or beneficiaries of the foreign trust.

While there are some limited exemptions and exceptions for U.S. persons working outside the country, by U.S. corporations that engage in substantial export or other business outside the U.S. and for trusts that are funded by non-resident aliens of the U.S., the U.S. person is often subject to more harsh tax treatment on foreign entities than on domestic entities. For example, a foreign corporation controlled by U.S. persons may be subject to immediate tax whereas the same corporation domiciled in the U.S. would not be subject to immediate tax or would be eligible for a lower rate of tax. In some cases, a more favorable estate tax treatment is afforded U.S. irrevocable trusts than the same kind of trust domiciled in a different country.

Meanwhile, in an effort to stem a flood of money that is moving away from the U.S. and the continuing efforts of U.S. citizens to evade U.S. taxes, the U.S. authorities continue to intimidate and extort other countries into divulging information about the financial affairs of U.S. citizens in their countries.

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