Offshore Tax Scams Top IRS "Dirty Dozen" Tax Scams By Vernon K. Jacobs, CPA  & J. Richard Duke, J.D., LLM

In mid-February, the IRS updated their list of the "Dirty Dozen" -- consisting of the 12 worst or most common kinds of illegal tax scams. On the top of the list was Offshore Tax Schemes -- including the use of credit or debit cards to access unreported foreign accounts.  According to the IRS, Some people use offshore transactions to avoid paying United States income tax. Use of an offshore credit card, trust or other arrangement to hide or underreport income or to claim false deductions on a federal tax return is illegal. Note that the use of the offshore debit or credit card is only illegal if it is used to hide or to underreport income or to claim false deductions. The IRS isn't very clear about how someone uses an offshore credit card to generate false deductions but we presume it can be done the same way as with a checking account, with cash or with a U.S. credit card. Even though it is perfectly legal to have foreign accounts and to use debit cards that access funds in those foreign accounts, the IRS presumes that any U.S. taxpayer with a debit or credit card drawn on a foreign account is likely to be commiting tax evasion. They have even announced a "limited" amnesty program for those who have been using foreign accounts but have not been reporting the income. The key word is "limited".  We suggest that anyone with unreported foreign income take a very close look at all the fine print in the IRS program before stepping into their mine field of equivocation about how much amnesty they will actualy give you.  For some articles and links to various points of view on their amnesty program see http://www.offshorepress.com/amnesty.htm Vernon Jacobs & Richard Duke Reprinted in part from The Offshore Tax Seminar Manual Copyright, 2002, All rights reserved. Co-authors of The Offshore Tax Seminar Manual http://www.offshorepress.com/offshoretaxmanual.htm

About the authors: Vernon Jacobs is a CPA who provides tax accounting and consulting services for clients with international interests. He edits and publishes the online International Wealth Protection Reports ..  J. Richard Duke , JD, LLM is an attorney who specializes in international tax law and is an Adjunct J. Richard Duke is a Professor of international tax law. and a practicing attorney in the international specialty.  He is a Consulting Editor for the online International Wealth Protection Reports Sponsored by Offshore Press, Inc .., Copyright, 2002, all rights reserved. Offshore Press, Inc., Box 8194, Prairie Village, KS 66208. Phone (913) 362-9667. Email to Offshore Press   Vernon K. Jacobs, Webauthor . .