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US Residents Beware of Dangerous Offshore Banking and Products

From the beginning, 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 any of these people (and none of them are on the internet trying to sell you something), listen to me with both ears.

  1. I know that many US residents want to diversify their banking and portfolios to other countries. I do not blame them.
  2. I know that many US residents are tired of the tax system and are looking for relief.
  3. I know that many US residents know a little about “offshore”, especially with the barrage of tempting banking offers in Belize, Panama or “other jurisdictions”.

I’m going to tell you the truth.

It is almost impossible for a US resident/citizen to legally exit the US tax system. IT IS impossible for a US citizen to open a bank account they control with more than $10,000 CUMULATIVELY ANYWHERE IN THE WORLD without reporting it in your regular tax return and a special filing that has you list banks and account numbers. Unless the bank is in the US.

There are a few ways around all of this. I haven’t seen any of those ways mentioned on the internet and my email is flooded with offers.

  1. It is almost impossible to get a bank account abroad without presenting a utility bill. If the utility bill is from the US, why are you trying?
  2. There is no use buying offshore companies (IBC) unless you can get a bank account WHICH YOU DO NOT HAVE TO REPORT TO THE IRS.
  3. That immediately limits your total deposits worldwide outside of the US to less than $10,000. So why try it?
  4. Managing a foreign bank account from within the US isn’t 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 like you and making an example 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: Don’t trust anyone else with your money unless you can also trust them with your life. Even in the US, the days of confidence are OVER! For example, unless you have relatives in Panama that you trust, then you don’t know anyone you can trust in Panama. Panama is synonymous with anywhere. Banks and lawyers cannot be trusted. Period. There are no exceptions.

Rule: If you want to diversify your portfolio to a foreign location, GO TO THE PLACE and check it out. I’m not a fan of American banking, but I have to tell you that once you’ve been to a few of these places, you won’t want to change a $20 bill at a local bank, let alone leave your money there. You go to some restaurants and grocery stores and watch how they hold each bill you give them to light to verify that it is not a counterfeit. What does that tell you?

THIS IS WHAT WORKS:

  • Find an HSBC near you in the US Open an account. Nothing to report.
  • When you’re abroad, find another HSBC. Present your US HSBC Bank Card in good faith and your account will be opened without a hitch. Do not put more than $10,000 in the account. HSBC stands for any solvent foreign bank with a branch on US soil. Most advisors say never do this. they’re right. But since it’s very difficult to get a foreign bank account as a US citizen without a reference letter from your US bank, I disagree with the experts. Get a bank account at a local branch of a foreign bank, and then open the real account with your US sterling credentials. He’s not perfect at hide-and-seek, but he’s not so much anymore.
  • If you have real wealth, but not enough to want to spend $50,000 on real international lawyers, start reading up on “dynasty trusts” and check out Nevada as a jurisdiction. These are bulletproof US entities that can survive a government or creditor challenge or death much better than an offshore trust.
  • If you are really serious, become a RESIDENT somewhere else. Not a citizen. It has a resident. Much easier and it doesn’t cost a billion dollars for a cheap passport. Once you are a resident, with proper identification, you can open bank accounts in your new country of residence that are not tied to your US documents. Is there still a reporting requirement if you reach the limit? Yes.
  • If you so choose, you should explore “land tax” or “no tax” jurisdictions for your residence. See if your dream wish list can be combined with countries that have tax advantages.
  • If you’re satisfied, then buy a cheap condo somewhere you really don’t mind living and then rent it. If you can get a mortgage on it, great. But foreign lenders generally want a 50% down payment. Make it a cheap condo. The condo provides you with the utility bill you will need to open a bank account. But once you’re “there,” sometimes the utility bill requirements go away because your official address is on your government ID. By the way, YOU CAN USE YOUR IRA FUNDS to buy foreign real estate. If you’re nervous about the state of the US, clean out your IRA and buy real estate abroad. Need I tell you that due diligence is very, very important? Don’t buy anything that isn’t a place you have to live. You may have to.
  • If you can’t afford a cheap foreign condo, then reconsider the whole international thing and buy some gold coins or bullion before you have to register it.
  • If you’re a bona fide resident of a foreign country, there’s a great exemption on U.S. taxable income. Take it. That will save you a ton right there.
  • Don’t get too cute with encryption and secrecy. You hide in plain sight.
  • For God’s sake, if you’re not a billionaire, don’t give up your US citizenship. Just go if you don’t want to stay. The times change. It is a good passport and with the tax exemption you will rarely pay more US taxes.
  • Learn how to make money through a portable trade or occupation before you move out of the US Take your cash flow with you. And remember the $10,000 bank limit? That is the money you have IN A BANK ACCOUNT. Not money that you make and then take out of the bank and keep at home or in a vault. Remember, you reported it even though you didn’t pay taxes on it. it’s legal

HERE’S WHAT 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 over $10,000 in it and not report it, even if you don’t sign on the bank account. If you don’t report it, it’s a felony and prima facie tax evasion. No doubt you will also be charged with money laundering.
  • If you actually sign into the company account, even if you’re a minority shareholder, and there’s more than $10,000 and you don’t report it to the US, that’s also a felony and prima facie tax evasion. And money laundering.
  • What if you file a US tax return and don’t report foreign earnings? More problems.
  • If you set up a trust, but indirectly control it, it’s a crime if you don’t report it annually via a very nasty IRS return that’s about 40 pages long.
  • If you set up a trust with real money in it, in an offshore jurisdiction, but don’t control it, you’re a fool. I hope you see the rock and the hard place set.
  • There are trustees you can trust. You don’t know any of them or you wouldn’t be reading this.

THE FINAL SEA TRAP

  • Many decent-sounding banks have low entry requirements. They don’t dig too deep before “accepting” your deposits. Good online service. encryption. Privacy. Multi-currency accounts. Your confidence grows. You move more funds there. Perhaps you have decided that you are going to play tax games and you do not declare exactly all the money in the tax return of some country. Your balance builds up. One fine day you come to, say, USD $100,000.00 and decide to withdraw $25,000.00. Suddenly, the “compliance” department freezes your account. They’ll want to see your passport copy again, your utility bill again (oh, did you let that rental condo go?), they’ll want a statement and proof of source of funds, and yes, they may even want to see a statement of taxes Folks, I’m not talking about a silt bank in Belize. I’m talking about a good Swiss bank. And not a US citizen owner. And a year to untangle it.

CONCLUSION

These are difficult and dangerous times. Everyone wants your money, which very quickly amounts to a large part of your life. Your country. Other countries. Banks. Governmental agencies. County property tax authorities. State or provincial governments. Sales tax authorities. Added to that list of “official” pirates, you now have pirates abroad who want to sell you useless legal stuff.

Keep your money where it is. If you want to diversify, go somewhere and do something. Like go explore options and then walk away. If you don’t have that kind of money and you’re still scared, join the club. And keep your money hidden in your house and/or buy some silver and gold.

There are NO third party investment opportunities. If you don’t take care of your money, it will disappear. Dont wait. All loans are bad loans. Invest in and near you.

The real bad times haven’t even begun. This is, at best, the eye of the storm.

Author: Jack Campitelli, JD has lived and worked in several tax-advantaged foreign countries. He has taught asset protection in and out of the US He knows most people in the business. His website is jackcampitelli.com. Suggested daily books from him are “Portable Trades and Occupations” and “Bye Bye Big Brother” available at ascolibooks com. If you want to start an Internet business as a portable trade, consider his Legal Guide to Websites

jack is absolutely No available for “offshore” consultation!

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

by Jack Campitelli, J.D.

September 10, 2010

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