First it was banks, now it is the offshore tax havens like the Cayman Islands who will no longer secretly shelter the assets of wealthy Americans. A Tax Connections article titled: “Caymans Makes it Tougher for Wealthy to Hide Money!” states that the Cayman Islands, a major financial center and home to operations for dozens of banks, funds and wealth-management entities, has made an agreement with the U.S. that it will comply with the Foreign Account Tax Compliance Act, or FATCA.
The passage of FATCA in 2010 essentially makes hiding money in offshore bank accounts much harder because foreign banks are now required to report their accounts to the U.S. Internal Revenue Service or face, in some cases, a 30% withholding tax.
According to the article, the following are some of the major banks that do business in the Cayman Islands:
- The Royal Bank of Canada
- HSBC Holdings Plc (HSBA)
- Bank of Nova Scotia
- Bank of America Corp.,
- Deutsche Bank AG, UBS AG
- CIBC First Caribbean International Bank
The article also points out that one of the first to fall to U.S. pressure was Switzerland who signed an agreement with the U.S. in February to comply with FATCA. Both U.S. and Swiss governments are negotiating terms of how to hand over data about former U.S. clients suspected of tax evasion that doesn’t entirely weaken Swiss banking secrecy laws. See this previous Tax Resolution University post for more information on IRS Offshore Banking Strategy.
Other Caribbean jurisdictions with significant financial industries, such as Bermuda and the Bahamas, the article reports, are among the dozens of countries having similar discussions.
However, it’s not just tropical or alpine offshore havens who are feeling Uncle Sam’s long reach. Back in March, I wrote a post about how Israel, India, Singapore and China were targets of the U.S. Government who believes these countries are secretly sheltering the assets of wealthy American citizens to evade paying taxes on them.
The Cayman Islands Agreement is an excellent example of how fiercely determined the U.S. government is to prosecute not only individuals, but also banks suspected in aiding abetting U.S. tax evaders wherever they reside on the planet.
If you have unreported offshore accounts, you need to be proactive about disclosing your foreign funds immediately. Your best defense will be to hire a certified tax resolution specialist with experience handling offshore tax compliance cases to help you accomplish the following:
- Reduce your chances of criminal prosecution (criminal sanctions can be as much as up to 5 years in prison.)
- Take over all communications with the IRS.
- Make the required disclosures, file FBAR reports and amend your tax returns.
- Minimize severe IRS penalties that can exceed 100% of the value of the asset, plus tax penalties and interest.
- Negotiate an offshore tax settlement that gets you back into tax compliance.
But you must act now to get more favorable treatment from the IRS.
More Tax Help, IRS News and Tax Relief Tips:
- Offshore Tax Evasion-US and Swiss Make A Deal
- U.S. Investigates Swiss Bank Rahn Bodner for Secret Accounts
- Treasury Proposes Multilateral Agreement for Offshore Compliance
- FATCA-No Tax Relief for Americans Living Abroad
- To Avoid Tax Issues-Americans Give Up Passports
Tags: Cayman Islands, certified tax resolution specialist, FATCA, FBAR reports, IRS enforcement, IRS penalties, offshore bank accounts, offshore tax settlement, tax evasion, tax relief, tax resolution expert, Tax Resolution University