In This Issue:
* COMMENT: I.R.S. Out of Control

* OFFSHORE: Liechtenstein-US MLAT Signed! Isle of Man Promo Worldwide. Russian Expat Capital. US Subpoenas Foreigners. Canada Bucks Trends. Caymans Wakes Up to Threat of Information Echange.

GIBRALTAR: Joint Sovereignty? Loud Protests. Conservatives Say No. Major Tax Reforms Planned. Spanish Gunboat Diplomacy in the Straits.

SWITZERLAND: Bad Image! Ambassador Arrested. UBS Reprimanded.

RE-INCORPORATION: View from Bermuda. US House Curbs Contracts. Major US Tax Reforms Proposed. Labor Unions Join Opposition.

* COMMENT: IRS Out of Control

Dear A-Letter Reader:
A few weeks ago we recommended that you see Steven Spielberg's latest film, 'Minority Report,' a disturbing indictment of Big Brother government of the future. The film features 'PreCrime,' a police agency that employs psychic judges to predict and prevent murders. Without due process or appeal, those accused by the always right government psychics are arrested and whisked away.

It appears the US Internal Revenue Service has now adopted its own tax 'pre-crime' system, publicly attacking citizens for nothing more than consulting tax experts about tax shelters the IRS deems suspect.

This new IRS blacklist was revealed in lawsuits filed by the IRS against two major tax accounting firms. The accountants had refused to reveal their clients' names on valid grounds that these communications are privileged. The Wall Street Journal reported: 'Historically, the agency has been careful to guard the identities of taxpayers who haven't been accused of wrongdoing and none of those on the list has been accused of violating any tax rules.'

One tax attorney angrily denounced the tactic. 'They are prohibited by law from disclosing taxpayer information,' said Mark Wiley, who represents some named by the IRS. 'It's obvious the IRS broke the law here.' US Rep. Ron Paul (R-Tex) said: 'It's the use of fear to try to intimidate people.' Stephen Moore of the Cato Institute, says: 'There are real privacy and due process of law concerns about creating a kind of IRS blacklist of suspected taxpayers.'

This latest violation of confidentiality of taxpayers by the IRS follows last year's IRS demand for the names of every US person with a credit card issued by offshore banks in The Bahamas, the Cayman Islands and Antigua. All are IRS suspects without any proof of tax evasion.

So now the IRS, one of government's most incompetent agencies, has embarked on a campaign of fear and intimidation, not to collect taxes owed, but to scare taxpayers from exercising their legal right to minimize their taxes by seeking professional help.

We ask again: who is in charge of government tax enforcement policy? Pres. Bush -- or a bunch of storm trooper IRS bureaucrats?

That's the way that it looks from here.
BOB BAUMAN, Editor

COMMENT LINKS:
* Outed by the IRS for Asking. Washington Post.
LINK: http://www.washingtonpost.com/wp-dyn/articles/A63515-2002Jul12.html
* IRS Names People Who Used Disputed KPMG Tax Shelters.
LINK: Click Here.
* KPMG, BDO Seidman sued by US for tax shelter data.
LINK: http://www.ananova.com/business/story/sm_626186.html?menu=
* Turning Up The Heat On Tax Shelters. CBS, Reuters.
LINK: http://www.cbsnews.com/stories/2002/06/28/national/main513715.shtml
* US Accuses 2 Audit Firms of Assisting Tax Violations. NY Times.
LINK: http://www.nytimes.com/2002/07/10/business/10HAVE.html
* Cato lists the Top 10 US Civil Liberties the IRS regularly abuses.
LINK: http://www.cato.org/dailys/04-11-02.html
* Why You Can't Trust the IRS. Cato Institute Report.
LINK: http://www.cato.org/pubs/pas/pa222.html

 

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LIECHTENSTEIN SIGNS M.L.A.T. WITH UNITED STATES
VADUZ. A new mutual legal assistance treaty covers tax fraud, but claims not to include foreign tax evasion. There goes financial privacy!
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8761
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ISLE OF MAN PROMOTES ITSELF WORLDWIDE
DOUGLAS. Corporate tax cuts, tax free zone, new openness.
LINKS: Click Here.
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OFFSHORE CAPITAL STAYS AWAY FROM RUSSIA
MOSCOW. Business elites say they're in no hurry to repatriate billions in offshore capital as demanded by Pres. Putin.
LINK: http://www.russiajournal.com/weekly/article.shtml?ad=6357
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U.S. FOREIGN VISITORS CAN BE SERVED WITH SUMMONS
NEW YORK. US Court of Appeals says a French national served with civil discovery subpoena during NY visit must answer.
LINK: http://www.law.com/jsp/article.jsp?id=1024078955880
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CANADA BUCKS THE ANTI-IMMIGRATION TREND
TORONTO. One of the richest nations welcomes skilled immigrants.
LINK: Click Here.

* But Canada's high taxes keeps foreign investment away.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8741
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CAYMAN ISLANDS WAKES UP TO INFO EXCHANGE DANGER
GEORGE TOWN. Having signed a wide open tax information exchange agreement with the US, Cayman Islanders suddenly get cold feet on UK Foreign Office demands they agree to the EU savings tax directive.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8762
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GIBRALTAR WEEK IN THE NEWS
This was the 'week that was' for The Rock, with UK and Spanish deal makers failing to agree, although the UK Labour government says eventually it is willing to share joint sovereignty with Spain
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8787
http://www.nytimes.com/2002/07/14/international/europe/14GIBR.html

* Gibraltar residents demonstrated against the UK-Spanish deal.
LINK: Click Here.

* UK Conservatives says they would annul any such deal.
LINK: Click Here.

* Under EU/UK pressure Gibraltar will end special tax exemption for offshore corporations, but new zero tax plans apply to all companies.
LINKS: http://www.tax-news.com/asp/story/story.asp?storyname=8790
Click Here.

* Spain brings back gunboat diplomacy in the Straits of Gibraltar.
LINK: http://uk.news.yahoo.com/020712/80/d3b5e.html

* Low-Tax Net Gibraltar special news page.
LINK: http://www.lowtax.net/lowtax/html/gibraltar/jgigat.html
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A BAD IMAGE WEEK FOR SWITZERLAND
ZURICH: Swiss journalists worry about its tarnished world image.
LINKS: http://www2.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=1228848
http://www.tax-news.com/asp/story/story.asp?storyname=8786

* Swiss ambassador to Luxembourg arrested for money laundering.
LINKS: http://www.tax-news.com/asp/story/story.asp?storyname=8776
http://www2.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=1227762

* UBS reprimanded over dirty cash of Nigerian dictator Abacha.
LINK: Click Here.

* EU claims only Swiss can save its pernicious 'savings tax directive.'
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8782
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THE VIEW FROM BERMUDA
HAMILTON. The former head of the Bermuda Stock Exchange examines the perverse American trend against offshore US corporate inversions.
LINK: http://www.offshoreon.com/articles/3242.asp?docid=3242

* CONGRESS LIMITS EXPAT COMPANY CONTRACTS
US House panel cuts contracts for offshore corporations.
LINK: http://www.washingtonpost.com/wp-dyn/articles/A47002-2002Jul9.html

* HOUSE REPUBLICANS PROPOSE OFFSHORE TAX CHANGES
WASHINGTON: An unlikely revolution in corporate tax laws is offered by the Ways & Means chairman; prospects clouded.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8777

* U.S. LABOR UNIONS JOIN ANTI-OFFSHORE ATTACK
Unions demand crack down on companies reincorporating offshore.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8783
-----
WHICH CITY COSTS MORE?
Last week we reported The Economist had picked Tokyo as the most expensive city in the world. This week Hong Kong claims the honor.
LINKS: http://www.nytimes.com/2002/07/10/international/asia/10CITI.html
http://www.tax-news.com/asp/story/story.asp?storyname=8758

 

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