Friday, December 16, 2005 - Vol. 7 No. 252

In Today's Letter: Comment: Choosing An Offshore Tax Advisor Wealth: Gold Demand Slipping? Offshore: Grenada Ruby Bank Fraud Man Dies Privacy & Rights: Protect, Defend & Spy

Choosing An Offshore Tax Advisor

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Today's guest comment is by author Vernon Jacobs CPA, CLU, Sovereign Society Tax Advisor & a member of our Council of Experts.

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Dear A-Letter Reader:

Before you agree to any kind of international financial arrangement, whether for business, for investment or for asset protection, you need to obtain a review of your plans from an American tax professional, an attorney or a certified public accountant, who is thoroughly familiar with the international aspects of the US tax law. That part of the US tax code is lengthy and complex and you need an advisor who knows what it means -- and how it may apply to you.

Often the person who is trying to persuade you to conduct some of your financial activity offshore is a lawyer who will sell you a trust or a foreign limited liability company or international business company for a flat fee. Unless you are well acquainted with that person and are certain that he or she is an expert in international taxation, you definitely should consider obtaining a second opinion from someone who is not going to benefit from the purchase of an off-the-shelf foreign trust, foreign corporation or other foreign structure.

If the offshore promoter who is trying to help you establish a foreign structure is not a US person, he or she has no reason to worry about whether you get into trouble with the IRS. If that happens, you will have little recourse against the offshore promoter.

Most US taxpayers turn to their tax preparer, an attorney or public accountant, for help or advice on tax matters. But that person may have never studied and learned the complex US tax rules that apply in the international area. A better source of help is the tax department of a large accounting firm that has international clients. Too many of these larger firms aren't interested in just a few hours of consulting work, but if you keep looking you should be able to find one willing to help.

Another source for s second opinion on offshore structures is a competing lawyer or US based promoter. But if that alternative person simply tries to persuade you to buy their product rather than the one you already are considering, you can conclude that they are not giving you truly objective advice.

There are many hundreds, perhaps thousands, of lawyers and CPAs who claim to specialize in international tax law and you can find them all over Internet. If you use a popular search engine such as Google, and enter a phrase such as "international tax CPA" in the search box, you will get as many as 240,000 listings. (My listing was number six on the first page when I tried that). If you enter "international tax lawyer" in the search box, you may get about 750,000 listings.

Be careful, but follow the links, looking for individual's record of professional education and experience. This will allow you to judge the level of their expertise. Send them an e-mail asking: "Do you provide second opinion services regarding international transactions?"  If they say "yes," find out if they offer any similar or competing offshore services or products themselves. You can often learn a lot from those who offer competing products or services, but don't expect them to give you an unbiased opinion on the arrangement you are evaluating.

My point is, before you agree to any offshore structure, you must get expert opinions from qualified sources about the US tax consequences that will result. And, just as in the case of surgery or medical treatments, usually a second opinion is better than just one.

Vernon K. Jacobs, CPA, CLU
E-mail: jacobs@offshorepress.com
Web site: http://www.vernonjacobs.com

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COMMENT LINK:
* Vern Jacobs answers questions on asset protection and taxes in the
FREE Jacobs Report
on International Financial Planning. LINK:
http://finance.groups.yahoo.com/group/jacobsreport/
* For more on offshore due diligence, LINK:
http://www.offshorepress.com/duediligence.htm

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   Gold Demand Slipping?

 

 

PORTLAND, Ore. A good example of what Vern Jacobs warns against in today's Comment -- ascertaining the legality of proposed offshore financial activity -- was reported yesterday. The founder of an offshore bank in Grenada accused of defrauding investors of $206 million has died of a heart attack. Gilbert Ziegler, 54, also known as Van Arthur Brink, died while awaiting trial on 147 counts of conspiracy, fraud and money laundering involving the collapse of First International Bank of Grenada in 2000. Ziegler had promised investors, too many of whom believed him, that they would get huge returns on money invested in a bank he claimed was backed by a $20 million ruby carved into a statue of a boy on a water buffalo. The indictment alleged that Brink solicited investors through church groups, get-rich-quick seminars and the Internet, even winning the endorsement of a Grenada banking regulator despite allegations of corruption. The collapse of the bank also contributed to the deflation of Grenada's pretensions as an offshore financial center.