How can tax be evaded by investing in offshore funds?

Question

How is it done? What are the chances of not getting caught?

Answer 1

Before 9/11/01, people would get paid offshore, leave their earnings offshore to grow without paying taxes and invest and spend from offshore, non-treaty low tax jurisdictions (illegally--the offshore investment strategy is still available legally as an asset protection technique on after tax dollars). In the post-Patriot Act world, where the IRS gathers information to track terror funds, you are highly likely to be caught. If you are lucky, you will owe taxes and substantial civil penalties and interest. If you are unlucky, and a lot of money is at stake, you could face tax evasion charges. As one answerer on this board once put it, your loud dressing uncle would give you gifts of bracelets, new clothes and free rent. Hardly seems worth it. About 5 years ago, the IRS ran a program to bring in all of the offshore investments in exchange for no penalties. When that program expired, it meant they were not going to be taking any more prisoners (economically speaking).

Edit: Ignore that Marc guy. He is either a tax protestor, a dupe or a fool. In any case, you don't want to share the pain he could be facing. Ask him if he has a checking account? Does he only get cash? The federal prisons have plenty of inmates who spouted the same trash that he is.

Answer 2

Smart people who invest in offshore funds are doing it to get a better return--upon which they pay their taxes, which is what makes them smart.

Suppose you are rich and pay something upwards of 40 percent in taxes. There is the big federal tax bite, but significant nibbles by the state or possibly even the city in which you live. In some places, but not all, the state and city tax is only charged for what you earn in that state or city. A lot of places, however, will tax you even though someone else has also already taxed you. In my state and a neighboring one, if I went to the state next door and earned money, I would pay both states for the same earnings. Yet in other states, such as one I used to live in, that state only charges me tax on earnings for what I earned in that state. Of course, there are still a few states that don't have state income taxes.

Now if you invest offshore, it is possible that your earnings abroad may not be taxed there, but won't be doubly taxed back home. If you lived abroad and invested there, then there is (or was, things have a knack for changing) something like about an $80,000 deduction you could take on earnings outside the country.

Some folks legitimately invest abroad so the potential higher earnings means there is more left over after the tax man gets his piece. Some folks legitimately invest abroad so that some jurisdictions don't get their piece because it is outside their taxible interest. This isn't evading taxes, it is minimizing taxes. You still have to declare your earnings. It is no different than someone moving from New York or California to someplace like Texas or Washington so their tax bill will be less. Investing in some new high rise in Panama is no different than moving to Denton, Texas because you don't like the tax (or pace of life) in New York City.

Avoidance and evasion are two entirely different things.

Answer 3

You are certainly a direct girl nikita!
If you reside in the USA or EU, income from off-shore funds (so called tax havens) is liable to your country's income tax, whether you repatriate it or not. However, unless you are a suspect terrorist, those funds do not have to disclose you have an account with them and so your income from them can be kept secret.

The big risk is when you send the money out or bring it in. There will be a record in your bank a/c and also banks are required to report any suspicious transactions. Another problem is that those funds exploit the situation and charge much more than local funds and so do the brokers and financial advisers involved. Also their regulation is not very good and if their performance is not satisfactory, it is difficult to move your money some where else .

Unless you are very rich, it is not worth the trouble.

Answer 4

So you do not want to pay taxes? Are you special? Is their some reason why you want a discount on your payment for living in this great country? Your motives are suspect.

Having said that, it is best to seek a professional if this is your goal. I have conversed with an art dealer who is based in Toronto who claims that if I invest in art through him, my capital gains would not be reportable when I sold the art. The concept intrigues me not because I want to evade paying taxes, but I like the idea of having a small "rotating" art exhibit in my house. The idea that in theory I would make money is also intriguing.

Having said that, I have not actually done this. The downside of seeking a professional's help is that you have to pay him. What is worse, paying his commission or paying taxes? Sometimes the dollar you save costs you ninety-eight cents.

Answer 5

Take care not use use the words "tax evasion"; minimizing taxes through legitimate means is legal; tax evasion is not, and you could be subject to imprisonment and fines for tax evasion.

I can't really comment on your question about offshore funds. To answer it, we would need to know what country you live in, which country you are thinking of putting investments in, whether there are tax treaties between your country and that country, what type of investment you're talking about, and your particular country's rules with respect to worldwide income.

Answer 6

There are several ways to get this done safely and legally. We call it tax planning, not tax evasion (which is illegal). The difference is that tax evasion is illegally not paying tax. Tax planning is setting up your situation so that you owe less tax legally! It just so happens I have a law firm that specializes in this. The problem is that, for obvious reasons I don't want to give away the secrets in print. Visit our website at http://www.searchallinone.com/offshore-banking for some ideas. If you want to get the inside scoop call the number listed on the website.

Answer 7

im a let you in on a secret it is not against the law to not file your income taxes i havent filed in 8 years the irs has never been after me but if they do come after me i got something for them.they will not win against me.you just have to know your rights and as an american you have the 4th and 5th amendment which protect you from paying your taxes.it would take me forever to explain this to you but i will give you a video to watch google video freedom to fascism check it out it is over an hour long but extremly interesting