US Residents Beware of Dangerous Offshore Products and Banking

Right from the get-go — this is my territory˳ I know the legalities and practicalities of the offshore world better than all but, maybe, 500 experts in the world˳ If you don’t know one of these people (and none of them is on the internet trying to sell you something) then please listen to me with both ears˳

1. I know many U˳S˳ residents want to diversity their banking and their portfolios to other countries˳ I don’t blame them˳
2. I know many U˳S residents are tired of the tax system and are looking for relief˳
3. I know many U˳S˳ residents know a bit about “offshore” especially with the bombardment of enticing banking offers in Belize, Panama, or “other jurisdictions”˳

I’m going to tell you the truth˳

It is nearly impossible for a U˳S˳ resident/citizen to get out of the U˳S˳ tax system legally˳ It IS impossible for a U˳S˳ citizen to set up a bank account he controls with more than $10,000 CUMULATIVELY ANYWHERE IN THE WORLD without reporting it on his regular tax return and a special information filing that makes you actually list the banks and account numbers˳ Unless the bank is in the U˳S˳

There are some ways around all this˳ I have not seen any of those ways ever mentioned on the internet and my email is flooded with offers˳

1. It is nearly impossible to get a foreign bank account without presenting a utility bill˳ If the utility bill is from the U˳S˳, then why are you even trying?
2. There is no use in buying offshore companies (IBCs) unless you can get a bank account THAT YOU DON’T HAVE TO REPORT TO THE IRS˳
3. That immediately limits your total world-wide non-U˳S˳ deposits to less than $10,000˳ So why try?
4. Managing an offshore bank account from inside the U˳S˳ is not just stupid, it’s a death wish˳ In case you don’t watch the news, these government guys are very, very serious about catching people just like you and making examples of you˳

Rule: Panama Foundations are stupid˳ First: if YOU get a bank account for it, you’re screwed˳ Second: if you let someone else open an account for you, you’re screwed˳

Rule: You do not trust anyone else with your money unless you can also trust them with your life˳ Even in the U˳S˳ Trusting days are OVER! For example, unless you have family in Panama that you trust, then you don’t know anyone you can trust in Panama˳ Panama is a synonym for anyplace˳ You cannot trust banks or lawyers˳ Period˳ There are no exceptions˳

Rule: If you want to diversify your portfolio to a foreign location, then GO TO THE PLACE and check it out˳ I’m not a fan of U˳S˳ banking, but I gotta tell you that once you’ve been to some of these places, you wouldn’t want to change a $20 bill at a local bank, let alone leave your money there˳ You go to a few restaurants and grocery stores and watch them hold every bill you give them up to the light to check it for counterfeiting˳ What does that tell you?

THIS IS WHAT WORKS:

• Find an HSBC near you in the U˳S˳ Open an account˳ Nothing to report˳
• When you are abroad, find another HSBC˳ Present your U˳S˳ HSBC banking bona fides and your account will be opened smoothly˳ Don’t put more than $10,000 in the account˳ HSBC is a synonym for any solvent foreign bank with a branch on U˳S˳ soil˳ Most advisors say never do this˳ They’re right˳ But since it’s very hard to get an offshore bank account as a U˳S˳ citizen without reference letter from your U˳S˳ bank, then I respectively disagree with the experts˳ Get a bank account at a local branch of a foreign bank and then go open the real account with your sterling U˳S˳ credentials˳ Not perfect in the hide-and-seek game, but not much is anymore˳
• If you have real wealth, but not enough to want to spend $50,000 for real international lawyers, start reading about “dynasty trusts” and check out Nevada as a jurisdiction˳ These are bulletproof U˳S˳ entities that can survive a government or creditor challenge or your death a lot better than an offshore trust˳
• If you’re really serious, become a RESIDENT someplace else˳ Not a citizen˳ A resident˳ Much easier and it doesn’t cost a kazillion dollars for an economic passport˳ Once you are a resident, with the proper I˳D˳, you can open bank accounts in your new residence country that are not linked to your U˳S˳ documents˳ Is there still a reporting requirement if you reach the limit? Yes˳
• If you’re so inclined, you should explore “territorial tax” or “no tax” jurisdictions for your residency˳ See if your dream wish list can be matched with countries that have tax advantages˳
• If you’re flush, then buy a good-deal condo someplace you actually wouldn’t mind living in and then rent it out˳ If you can get a mortgage on it, great˳ But foreign lenders usually want 50% down˳ Make it a cheap condo˳ The condo gets you the utility bill you’ll need to open a bank account˳ But once you’re “there” sometimes utility bill requirements go away because your official address is on your government I˳D˳ By the way — YOU CAN USE YOUR IRA FUNDS for buying foreign real estate˳ If you’re nervous about the state of the U˳S˳, clean out your IRA and buy foreign real estate˳ Do I need to tell you that due diligence is very, very important˳ Don’t buy anything that is not someplace you may have to live˳ You might have to˳
• If you can’t afford a cheap foreign condo, then re-think the whole international thing and go buy some gold coins or bullion before you have to register it˳
• If you’re a bona fide resident of a foreign country there is a huge exemption on U˳S˳ taxable income˳ Take it˳ That’ll save you a pile right there˳
• Don’t get too cute about encryption and secrecy˳ You hide in plain view˳
• For Godsake, if you’re not a billionaire, don’t renounce your U˳S˳ citizenship˳ Just get the hell out if you don’t want to stay˳ Times change˳ It’s a good passport and with the tax exemption you’ll rarely pay U˳S˳ tax anymore˳
• Learn to make money via a portable trade or occupation before you move away from the U˳S˳ You take your cash flow with you˳ And remember the banking $10,000 limit? That’s money you have IN A BANK ACCOUNT˳ Not money you make and then take out of the bank and keep at home or in a vault˳ Remember, you’ve declared it even though you didn’t pay tax on it˳ It’s legal˳

HERE IS WHAT THE OFFSHORE PIRATES DON’T TELL YOU — THAT’S ILLEGAL

• There is absolutely no way to open a bank account for a COMPANY you own and put more than $10,000 in it and not report it, even if you don’t sign on the bank account˳ If you don’t report it is a serious felony and prima facie tax evasion˳ Undoubtedly you’ll also be charged with money laundering˳
• If you actually sign on the company account, even if you’re a minority shareholder, and there’s more than $10,000 in it and you don’t report it to the U˳S˳, it’s also a felony and is prima facie tax evasion˳ And money laundering˳
• If you file a U˳S˳ tax return and fail to report foreign earnings? More trouble˳
• If you set up a trust, but you indirectly control it, it is a crime if you don’t report it yearly via a very obnoxious IRS filing that’s about 40 pages long˳
• If you set up a trust with real money in it – in an offshore jurisdiction – but you don’t control it, you’re a fool˳ I hope you see the rock and hard place set up˳
• There are trustees you can trust˳ You don’t know any of them or you wouldn’t be reading this˳

THE FINAL OFFSHORE TRAP

• Lots of decent-sounding banks have low entrance requirements˳ They don’t drill down too deeply before they will “accept” your deposits˳ Nice online service˳ Encryption˳ Privacy˳ Multi-currency accounts˳ Your confidence grows˳ You move more funds there˳ Perhaps you’ve decided you’re going to play tax games and you don’t exactly declare all the money on some country’s tax return˳ Your balance builds up˳ One fine day it hits, say, USD$100,000˳00 and you decide to pull out $25,000˳00˳ Suddenly your account is frozen by the “compliance” department˳ They will want to see you passport copy again, your utility bill again (oh, you let that rental condo go?), they’ll want a declaration and proof of the origin of the funds and, yes, they might even want to see a tax return˳ Folks, I’m not talking about some piece o’ sludge bank in Belize˳ I’m talking a nice Swiss bank˳ And not a U˳S˳ citizen owner˳ And a year to get it untangled˳

CONCLUSION

These are troubled and dangerous times˳ Everyone wants your money – which equates very quickly to a large chunk of your life˳ Your country˳ Other countries˳ Banks˳ Government agencies˳ County property tax authorities˳ State or provincial governments˳ Sales tax authorities˳ Added to that list of “official” pirates, you now have offshore pirates who want to sell you legal useless stuff˳

Keep your money where you are˳ If you want to diversify, actually go someplace and do something˳ As in go explore options and then get the hell out˳ If you don’t have that kind of money and you’re still scared, join the club˳ And keep your money hidden in your home and/or buy some silver and gold˳

There are NO third party investment opportunities˳ If you don’t watch your money, it will disappear˳ Do not lend˳ All loans are bad loans˳ Invest in and near yourself˳

The real bad times have not even begun˳ This is, at best, the eye of the storm˳

Author: Jack Campitelli, J˳D˳ has lived and worked in a number of tax-advantaged foreign countries˳ He has taught asset protection inside and outside the U˳S˳ He knows most of the folks in the biz˳ His website is jackcampitelli˳com˳ His suggested books de jour are “Portable Trades and Occupations” and “Bye Bye Big Brother” available at ascolibooks com˳ If you want to start a internet business as a portable trade, then consider his Legal Guide for Websites

Jack is absolutely not available for “offshore” consultation!

Copyright 2010 by RioneX IP Group LLC˳ All rights reserved˳ This material may be freely copied and distributed subject to inclusion of this copyright notice, author information and all the hyperlinks are kept intact˳

by Jack Campitelli, JD

September 10, 2010

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