Everywhere in the world, but especially in the United States, a great deal of scrutiny has been directed to the existence of international bank accounts (IBC) and the intentions of those maintaining those accounts.
In April 2016, various non-U.S. media outlets, led by Germany’s Süddeutsche Zeitung, began releasing 11.5 million leaked documents from the Panamanian law firm Mossack Fonseca revealing the names of certain government bigwigs (Hillary Clinton), their family members, and other influential people who maintained offshore bank accounts.
The media was quick to paint anyone who owns such accounts as crooks and tax cheats. The subhead on the German story reads, “The secrets of dirty money.” In the body of the story, a sentence refers to such dealings “that can only exist in the shadows.”
“This flies in the face of reality, as there are many reasons, both ethical and logical, to operate an offshore account,” said Adele Weiss, principal at Weiss+Associates, a European-based consultancy firm specializing in the U.S. Federal Income Tax. “That being said, it comes as no surprise that politicians work together with known criminals to conduct business relations.”
Many legitimate advantages exist for individuals to form international business companies and foreign bank accounts. Among them are:
- Asset protection: It pays to place a significant percentage of liquid funds (and non-liquid assets) under the umbrella of an IBC. This adds a shield against lawsuits and prying government regulation.
- Investment options: Maintaining a bank account in a foreign country will make investing abroad much easier. In some countries, people aren’t allowed to buy real estate unless they are citizens/permanent residents or have established some solid financial presence in that nation.
- Stock/paper asset availability: Yes, there exists stocks other than the ones listed on the New York Stock Exchange. Many are profitable. Smart investors do what’s necessary to open the world up to them.
- Currency diversification: As hard as it may be to believe, the days of U.S. Dollar hegemony are numbered. The current state of a strong dollar will not last, and owning a foreign bank account makes it simple to exchange funds between currencies. Go down to your local bank (in the U.S.) and ask if they will establish a separate account in a foreign currency. That is extremely unlikely.
“Having all your eggs in one basket is not a good idea if later that basket is found to have a hole in it,” added Weiss. “Many wise and responsible investors have a financial presence in 3-4 countries. You don’t need to be a millionaire to utilize these methods — it’s also important for new and intermediate investors to grow and protect their hard-earned money. And IBC formation is a vehicle used to make that happen.”
Yet, the media is quick to quote politicians who try to paint anyone holding a foreign account as a tax cheat. This has helped create a false public perception that prudent investing must include criminal activity.
Isn’t is ironic that the very politicians who are painting this picture and hold the key to tax legislation are themselves utilizing the strategies that they demonize? Is it slightly possible that, through selective enforcement, they may exclude themselves from the spotlight?
The United States is one of only two countries in the world (Eritrea being the other one) that taxes its ‘statutory citizens’ regardless of residence. So, it’s important to at least point out that Brits, Germans, Russians and others who live abroad can form corporations, operate bank accounts, and earn income not taxable to their homeland. It’s not only legal — it’s smart.
“What may surprise many in the United States, is that this international taxation law only exists for ‘statutory U.S. Citizens,’ people who are born in the District of Columbia, territories like Puerto Rico or those born in the 50 states who have made a voluntary election to be taxed,” Weiss pointed out. “You made that voluntary election if you ever filed a Form 1040 tax return or other return like a Form 1099.”
All of this has occurred without the awareness of the American public, and as George Orwell is credited for saying something similar to:
“Omission, hiding the truth by willful and intentional failure to comment, is the most powerful form of a lie.”
Weiss’ firm not only helps people form international corporations and bank accounts, but also serves those born in the 50 states who, whether purposely or unknowingly, joined the U.S. Tax Club to lawfully revoke that election. His firm has helped over 3,000 clients legally revoke their election and permanently leave the U.S. Tax Club without challenge by the IRS.
Weiss stresses that, regardless of what the Panama Papers ultimately reveal, no aspersions should be cast on the legitimacy of foreign investing.
“Prospective clients who have contacted us about IBCs are doing so because they are concerned about the skyrocketing debt in the United States, the loss of freedoms previously secured by the U.S. Constitution, and an erosion of morality that exists in Washington. These responsible Americans are keeping their options open, as the financial storm clouds are building.”
The release of the Panama Papers comes on the heels of other political pressures thrown on the doorstep of the Russian government. The United States is engaged in an economic war with Russia and its president, Vladimir Putin.
The Ukrainian crisis hit during the 2014 Olympic Winter Games in Sochi, and the FIFA scandal has conveniently brought some to doubt whether the Russian government had any suspicious involvement in corruption. Russia is to host the next FIFA World Cup in 2018, and some American politicians were quick to suggest that it would not be appropriate for the Russians to keep the bid.
It’s extremely doubtful that FIFA would move the World Cup 2018 out of Russia at this late stage, but at the very least, there are people who would love to make the world’s biggest sporting event an ever greater financial disaster than the 2014 World Cup was in Brazil.
It’s definitely possible that the U.S. government is behind the release of these papers in order to give another black eye to the Russian government, and perhaps that of the Chinese as well. At any rate, the only black eye should be solely on those specific individuals who continue to conduct business “in the shadows,” while at the same time profess to work in the best interest of the people they are paid to serve.
“Wouldn’t it be revealing if those politicians who have foreign bank accounts are secretly betting against the rotten policies and currencies they endorse?” Weiss posed. “It would be very similar to past activities of big banks recommending mortgage investments to clients, while they personally placed bets against those toxic investments. Remember, government and big banks work in lockstep.”
For those interested in the Revocation of Election process, which lawfully removes qualified individuals from the U.S. Tax Club, or IBC formation, people can email firstname.lastname@example.org.