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Americans Evading Taxes Put On Notice: US Government's Disclosure of Forthcoming Wave of Offshore Bank Investigations
Saturday 24 September 2011 – Hong Kong
By Winstone Group Inc. | Attorney Salazar, Alberto
Earlier this week, the US Department of Justice website noted the intention to commence world wide criminal investigations of offshore institutions assisting Americans to evade taxes. Such written intention was taken off the website within 24 hours. No listing of the financial institutions had been noted on the website as it would have been a Federal crime.
SCOPE - Taxpayers should not be fooled into believing that the U.S. Justice Department solely investigates financial institutions that have U.S. branches and U.S. operating licenses. Investigations have expanded to include entities with representative offices or no formal US presence.
Based on history, the institutions may avoid prosecution by paying fines and revealing detailed data on the accounts held by US citizens. According to the Justice Department website ( www.justic.gov/tax/offshore_compliance_intiative.htm ), "the Tax Division's top litigation priority is the concerted civil and criminal effort to combat the serious problem of non-compliance with our tax laws by U.S. taxpayers using secret offshore bank accounts"- a problem that a 2008 Senate report concluded costs the U.S. Treasury at least $100 billion annually. The result will be thousands of accounts handed over to the IRS by the financial institutions.
The US government's amnesty program has successfully resulted in nearly 18,000 taxpayers in an 18-month period concluding in February 201 to "come in from the cold" and voluntarily disclose to the IRS their previously hidden foreign accounts and also to agree to pay hundreds of millions of dollars to the U.S. Treasury.
IMMEDIATE ACTION TO BE TAKEN: File Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts pursuant to the instructions on the form. The forms may be downloaded at www.irs.gov/pub/irs-pdf/f90221.pdf for no charge. Please understand that "I didn't know I had to file form TD F 90-22.1" is not a valid legal excuse.
SPANISH TAX AUTHORITIES' INVESTIGATIONS of HSBC Swiss Bank Accounts— Mr. Emilio Botin, billionaire Spanish banker, has been inconvenienced this week by the Spanish Tax Authorities' investigations. Knowing Mr. Botin's character, all transactions are well documented and exceptionally well organized. Most critical, is the apparent source of the information that led to the commencement of the investigation: former IT employee (French national) of HSBC's Swiss Private Bank.
THE EFFECT OF "OPERATION TWIST"- BRAZIL'S CURRENCY WAR
THIS WEEK THE FEDERAL RESERVE announced the decision to reduce long-term interest rates by further loosening of monetary policy through "Operation Twist". This "Quantitative Easing", also known as surreptitious deficit financing, scheme should further weaken the US Dollar.
For our clients engaged in Brazil, the government had to intervene to hold up the Real. Brazil will continue to implement anti-dumping duties on select imports and increase taxes on foreign-built automobiles. This apparent "protectionism" policy is directly related to other countries' holding down their currencies. Last year, Brazil had imposed such schemes to reign in the rapid rise of the Real; this week, the scheme is to hold the Real.
To Our Readers:
"Press on. Nothing in the world can take the place of persistence. Talent will not; there is nothing more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."
U.S. President Calvin Coolidge
Books On The Desk in September 2011
Alberto Salazar is an international tax attorney based in Asia since 1994.
He's an active member of the American Bar Association and the Washington DC Bar Association.
President Obama’s “Buffet Rule” Proposal Should Benefit US All
Sunday 18 September 2011 ? Hong Kong
By: Winstone Group Inc.| Tax Division ? Attorney Salazar, Alberto
On the surface, the recent proposed tax increase for individuals making more than $1 million a year appears to focus on the class of the wealthiest taxpayers.? In reality, this is not the case.?
From IRS sources, there are only fewer than 400,000 individuals earning more than $1 million a year. The number of individuals earning a $1 million a year is yet far fewer with the exclusion of millionaires with passive income from investment sources, that is taxed at a much lower rate of 15 percent.? Most millionaires receive “unearned” income in the form of capital gains, dividends, “carried interest”, and other sources that would continue to be taxed at the lower rate of 15%.?
The “class warfare” argument is unsound.? The vast majority of the millionaires have their tax attorneys set up legal tax strategies to minimize tax exposure.??? The highly sophisticated millionaires understand the value in the use of corporations and other vehicles to reach the goal of tax deferment.??? The taxpayers end up paying a lot less in taxes than the middle class employee.? The Republicans’ argument that this proposal would “limit growth and hurt corporate investment in an already stagnating economy” is disingenuous.? Although the economic benefit from the Buffet Rule would be insignificant, the action of increasing taxes on the “wealthy” is a fine start towards equilibrium.?
However, the most important part of President Obama’s proposal includes the replacement of the Alternative Minimum Tax (AMT) with an increase of tax for the millionaires.? In order to benefit us all, the narrow scope of the AMT replacement should be expanded to encompass the middle class.? No need to increase taxes on the middle class taxpayer, since nearly all of their income is subject to Social Security payroll tax.? Whereas millionaires are only exposed to such tax up to $106,800 of their earnings.?? Instead of raising the political pressure on Republicans to agree to tax increases from the wealthy in return for Democrats’ support of future cuts from Medicare and Medicaid, the few millionaires, the middle class, and the US economy, would greatly benefit from the elimination of the AMT on all taxpayers.?????
The AMT was created to ensure a minimum tax payment from high-income taxpayers with scores of deductions and credits.? Sine the AMT is not indexed to inflation, millions of middle-class taxpayers are burdened with this unintended additional tax.
Alberto Salazar is an international tax attorney based in Asia since 1994.
He’s an active member of the American Bar Association and the Washington DC Bar Association.
