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Is the U.S. a Top Global Tax Haven?

  • 23 February 2016
  • Author: Cari Holbrook
  • Number of views: 2118
  • 0 Comments
Is the U.S. a Top Global Tax Haven?

Last month we covered how U.S. citizens working abroad were escaping outrageous U.S. taxes by renouncing their citizenships. It has now been announced that the U.S. has moved from the world’s sixth to the third top tax haven behind only Switzerland and Hong Kong  It is estimated that $21 trillion to $32 trillion in private wealth is untaxed or lightly taxed in what it calls worldwide “secrecy jurisdictions,” with the U.S. being a top spot for activity.

So how can this be? Can those of us facing heavy taxes find the key to unlocking this haven? It’s unlikely, thanks to increasingly complicated international laws. First among these for U.S. citizens is the Bank Secrecy Act, namely, the Foreign Bank and Financial Accounts Report (FBAR). Individuals must file an FBAR report for any combination of foreign financial accounts that exceeds $10,000 at any time during the calendar year.

Accounts that qualify include:

  • Bank accounts such as savings accounts, checking accounts, and time deposits
  • Securities accounts such as brokerage accounts and securities derivatives or other financial instruments accounts
  • Commodity futures or options accounts
  • Insurance policies with a cash value (such as a whole life insurance policy)
  • Mutual funds or similar pooled funds (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions)
  • Any other accounts maintained in a foreign financial institution or with a person performing the services of a financial institution.

The only way to lawfully avoid steep penalties—either civil or criminal—is to prove that not reporting or paying taxes on the account was either an act of negligence or was otherwise non-willful. If not proven, penalties can total up to 50 percent of the account total per year. Here’s the breakdown, according to the IRS:

So while the U.S. may be a tax haven for some, the risks are very real. For specific questions, contact us

Image Copyright: dvest / 123RF Stock Photo


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