Hi All, I just found this forum and figured this may be the place I can ask something that I have been wondering about for some time.
I recently heard that UBS in Switzerland is shutting down around 16,000 offshore accounts held by American citizens, and as far as I can tell its getting harder and harder for the wealthy to hide their money in offshore accounts around the world.
So, if we say the wealthy corporations, politicians and people have so much influence over the US gov’t, why wouldn’t they be fighting to keep these tax havens for their own benefit?
Who is behind the policy to eliminate tax havens and why?
Well, you can take one of the two following justifications:
They are altruistic and want what’s best for the common weal.
Or
They want other peoples tax havens shut donw for they can collect more taxes, and thus spend more tax dollars, making them more popular as politicos.
Besides, you can be very rich and still not want or need offshore tax havens or anything else that looks a little dodgy. There are quite a few perfectly legit domestic tax “havens”.
I thought it was perfectly legal to have an offshore account, as long as you list such an account on your taxes? Is UBS shutting down legal accounts held by US citizens?
Here is a link to a New York Times article on this. It’s actually 19,000 accounts held by Americans and these accounts are specifically for hiding undeclared income and investments. As for who is behind this, my guess is the IRS.
In general, it’s because the enforcement arms of the FBI / IRS / etc are non-political, and the investigators really like to bag a big fish.
The elected side of the government has some control over this, like when FBI assets were directed towards counter-terrorism rather than financial fraud, but it’s not overt.
The power is used to create legal tax havens in the US, so that the illegal ones don’t have to be used with their commensurate risk.
It is indeed perfectly legal to have offshore accounts, provided you either 1) pay all US taxes, or 2) fill out the proper forms to show that you already paid more in foreign taxes than you would have in the US (this depends on the agreements between the US and the country in question; the advice here only applies to the UK). I do this every year.
If you have more than $10,000 total in offshore accounts, you must also fill out this form:
Not filling out that form can get you the wrath of Cornholio.
Authorities in the Caymans have made it much more difficult for foreigners, including those who are Cayman residents, to open investment accounts, mostly at the behest of the US.
It’s not because of the lost revenue, though- it’s because of security concerns regarding terrorist funding.
No cite, I’m afraid; this comes from the manager of the Grand Cayman branch of RBC, who happens to be my dad’s next-door-neighbor.