{"id":7502,"date":"2016-11-17T09:00:28","date_gmt":"2016-11-17T14:00:28","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=7502"},"modified":"2020-08-28T10:07:25","modified_gmt":"2020-08-28T14:07:25","slug":"offshore-banking-illegal","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/offshore-banking-illegal\/","title":{"rendered":"Is Offshore Banking Illegal?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">With all of the hype around offshore banking these days, many are wondering is offshore banking illegal. Just about every client calls with a statement like, \u201chey, I don\u2019t want to do anything illegal, but\u2026\u201d The possibility that offshore banking is illegal permeates the industry and the media. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The truth is simple: <\/span><b>offshore banking is not illegal<\/b><span style=\"font-weight: 400;\">. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">What is illegal is failing to report an offshore account to the tax authorities. So long as you file the proper paperwork with your tax return, you\u2019ll be in compliance and your offshore account will be \u201clegal.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I should point out that <\/span><span style=\"font-weight: 400;\">this article on whether offshore banking is illegal is written from an American point of view<\/span><span style=\"font-weight: 400;\">. We gringos can be hit with big fines and even jail time for failing to disclose an offshore account. Europe is following Uncle Sam\u2019s lead (through the OECD), but laws vary from country to country.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The mainstream media is filled with claims that offshore banking and international asset protection is illegal. But, they\u2019re both tried and true techniques\u2026 so long as you follow the rules and pay your taxes, all is well. <\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">For a detailed article on the media and offshore asset protection, see: <\/span><a href=\"http:\/\/premieroffshore.com\/dont-believe-the-media-hype-around-offshore-asset-protection-trusts\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Don\u2019t Believe the Media Hype Around Offshore Asset Protection Trusts<\/span><\/a><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Paying taxes or not paying taxes is at the heart of this issue. People with unreported offshore accounts don\u2019t report because they don\u2019t want to pay tax on their income. Again, it\u2019s not the offshore bank account which is illegal, it\u2019s the failure to report that account (and pay) to the tax authorities. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">And <\/span><b>it\u2019s the IRS who\u2019s pushed the idea that offshore banking is illegal<\/b><span style=\"font-weight: 400;\">. The Service has turned failing to report and pay taxes into a criminal matter. Back in 2003, no one went to jail for offshore banking. Beginning in 2005 and Swiss bank accounts, the IRS went all in and started <\/span><a href=\"http:\/\/premieroffshore.com\/the-irs-has-no-problem-finding-and-using-weapons-of-mass-destruction\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">putting its citizens away<\/span><\/a><span style=\"font-weight: 400;\"> for years for unreported accounts. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">These prison sentences had little to do with the underlying crime. The IRS had figured out it could raise billions of dollars from abroad by making examples of a few unfortunates. They created to <\/span><a href=\"http:\/\/premieroffshore.com\/irs-voluntary-disclosure-program\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Voluntary Disclosure Program<\/span><\/a><span style=\"font-weight: 400;\"> and started arresting anyone they could find with an unreported offshore account. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Overall, the <\/span><span style=\"font-weight: 400;\">voluntary program<\/span><span style=\"font-weight: 400;\"> has resulted in more than 45,000 voluntary disclosures from individuals scared into compliance. The cash haul has been about $6.5 billion in back taxes, interest and penalties from 2009 through 2014. The program is still running, but the IRS hasn\u2019t released data any since 2014.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Portraying offshore banking as illegal has been very profitable for the U.S. Internal Revenue Service. As a result, Americans with offshore accounts have big time targets on their backs and must be cautious not to anger the beast. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s talk a minute about the reporting requirements for offshore accounts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you have a bank or brokerage account outside of the United States, you probably need to send in a form each year to the Treasury. If you have more than $10,000 in accounts abroad, you must file file <\/span><a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/report-of-foreign-bank-and-financial-accounts-fbar\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">U.S. Treasury Form TD F 90.22.1<\/span><\/a><span style=\"font-weight: 400;\"> (generally referred to as the FBAR).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Note that this is $10,000 combined in bank and\/or brokerage accounts. So, if you have $3,000 in 5 accounts outside of the United States, you have a total of $15,000 offshore and must report. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This cumulative total is taken from your highest balance during the year. If you have $1,000 in your account for 364 days, and $11,000 for one day of the year, you must file an FBAR and report a balance of $11,000. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">These reporting requirements apply to anyone who is the beneficial owner of an offshore bank account and anyone who is a signor on an offshore bank account. Placing a nominee between you and your foreign account does not absolve you of this obligation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Exceptions to the FBAR filing requirements are: <\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Certain foreign financial accounts jointly owned by spouses<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">United States persons included in a consolidated FBAR<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Correspondent\/Nostro accounts<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Foreign financial accounts owned by a governmental entity<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Foreign financial accounts owned by an international financial institution<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Owners and beneficiaries of U.S. IRAs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Participants in and beneficiaries of tax-qualified retirement plans<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Certain individuals with signature authority over, but no financial interest in, a foreign financial account<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Foreign financial accounts maintained on a United States military banking facility.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The bottom line is this. <\/span><b>An offshore bank account is not illegal.<\/b><span style=\"font-weight: 400;\"> Failure to report an account and pay the taxes due is illegal. For this reason, you should hire a U.S. expert to setup your offshore structure and keep you in compliance. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">I hope you\u2019ve found this article on offshore bank accounts to be helpful. If you can look past the media hype, and withstand pressure from the IRS to keep your money at home, setting up offshore can increase your investment returns and provide solid asset protection. Just be sure to stay on the right side of the law. <\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>With all of the hype around offshore banking these days, many are wondering is offshore banking illegal. Just about every client calls with a statement like, \u201chey, I don\u2019t want to do anything illegal, but\u2026\u201d The possibility that offshore banking is illegal permeates the industry and the media. The truth is simple: offshore banking is [&hellip;]<\/p>\n","protected":false},"author":686,"featured_media":5348,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","om_disable_all_campaigns":false,"footnotes":"","_jetpack_memberships_contains_paid_content":false},"categories":[9410,9409],"tags":[],"yst_prominent_words":[1724,2309,1761,1712,5479,13132,5470,5472,13131,13133,3701,2313,2302,3961,2305,2318,2301,11420,8543,1804],"acf":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.escapeartist.com\/wp-content\/uploads\/2016\/08\/Gambia-Offshore-Bank-Licenses-are-a-Scam-pic.jpg","_links":{"self":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/7502"}],"collection":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/users\/686"}],"replies":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/comments?post=7502"}],"version-history":[{"count":3,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/7502\/revisions"}],"predecessor-version":[{"id":30209,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/7502\/revisions\/30209"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/media\/5348"}],"wp:attachment":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/media?parent=7502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/categories?post=7502"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/tags?post=7502"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/yst_prominent_words?post=7502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}