Is going offshore really legal?
This question has come about because of a series of planned, unjustified attacks on offshore financial activity over the years by the U.S. IRS, the United Kingdom Customs and Revenue, Canada Revenue, and tax collectors in other high tax nations. Needless to say this has sowed confusion and fear in the minds of people who have shied away from offshore. It looks like the tax collectors got what they wanted.
Yes, there are definitely U.S. reporting requirements and U.S. tax laws you need to comply with when you "go offshore" (and the same is true in the U.K. and Canada). But there are no - repeat - no outright and explicit prohibitions against American, British or Canadian nationals to engage in a slew of offshore financial activity. Granted, the U.S. and other governments make it difficult to invest offshore directly, but there are legal and legitimate ways to do that.
Make a note! Offshore bank accounts, investments and other financial activity offshore are completely legal under American law.
The Wall Street Journal reported in early 2006 that "many wealthy individuals are turning to foreign entities, such as offshore trusts and insurance policies, as part of their tax planning and asset protection strategies. Although U.S. citizens generally must report any foreign accounts and entities with the U.S. government each year, going offshore could add extra roadblocks on an audit trail."
You can expect U.S.-based lawyers, accountants, investment gurus, and insurance salesmen to do everything they can to discourage Americans from going to where the best investments and best asset protection reside - offshore. Most of all, your friendly local IRS agent wants nothing more than for you to keep your money in the U.S., so he can freeze or confiscate your accounts.
This is something to keep in mind at all times: unlike almost all other nations, the United States taxes all its citizens and permanent residents (green card holders) on their worldwide income regardless of their place of residence.
Many nations, like the United Kingdom and Canada, exempt their citizens from most or all taxes if they choose to live elsewhere.
It is imperative that the U.S. government follow the example of most other major nations by adopting a territorial policy on taxes. But this policy must cover only tax on income earned within the U.S. and nowhere else. Period!
Do NOT be afraid of the IRS bluster. The Offshore Advantage Course tells you how to obey U.S. tax laws, file all the required reports but will ensure that a substantial portion of your assets and investments should be located in a place where the best profits are - offshore! |
