“Fear is the foundation of most governments.”
In 1776, John Adams of Massachusetts, fiery leader of the American Revolution and future U.S. president, was describing a tyrannical English king, but his words could be the official motto of the U.S. Internal Revenue Service (IRS).
As part of IRS enforcement by fear, every year about this time, the IRS begins grinding out a barrage of press releases under the “Dirty Dozen” heading, timed before the annual income tax filing date, April 15. A lazy, unquestioning “news” media reprints this stuff as truth. (Google news listed 107 articles on February 3, 2015).
Again this year for the fifth time the IRS headlines “Hiding Income Offshore” as one of its “Dirty Dozen Tax Scams.” Although the IRS magnanimously allows “there are legitimate reasons for maintaining financial accounts abroad,” we know the truth: the IRS grab for taxes is to justify excessive government spending, a nonexistent budget and an ugly deficit.
But global investing isn’t about shirking your tax duty … it’s about diversifying your resources through offshore asset protection.
Any of the 27,000 members of The Sovereign Society, or the 326,000 who receive our Sovereign Investor Daily, knows full well the obligation to report offshore accounts and pay taxes, because we issue constant reminders.
This annual scare campaign is needed because the IRS policy requires frightening U.S. taxpayers into paying up. Intimidating tax cheats into turning themselves in is much more cost effective than dragging people through the courts. The U.S. Department of Justice lacks the personnel to pursue thousands of tax cases each year and in a criminal prosecution the IRS must prove to a jury that the accused taxpayer knowingly and willfully failed to pay taxes.
Long Running Numbers Game
To back up the fear factor, for years the IRS has played a bogus numbers game that also goes unchallenged by news media.
According to the worthy public servants at the IRS, recent stepped-up enforcement has pushed more than 50,000 Americans into the IRS offshore voluntary disclosure program, making back payments of over $7 billion!
Wow! We think that’s good; if they owed it, they should pay it.
But before those numbers impress you, pause and consider that last year the U.S. government each day brought in about $5 billion of revenue, while spending $11 billion a day. We can wonder at what cost the IRS collected that $7 billion over several years, including the personal costs of liberty and financial privacy lost in the tangle of duplicate reporting requirements of FATCA, FBAR and income tax forms. The IRS itself estimates that Americans spend 6.1 billion hours a year complying with the tax code at an estimated cost of over $600 billion.
Bogus claims about “trillions offshore” in evaded taxes are part of a long running IRS “numbers game” aimed at alarming the public and scaring away Americans from offshore financial activity.
In 2000, then IRS Commissioner Charles O. Rossotti, claimed that 505,000 U.S. taxpayers were using offshore bank accounts to evade taxes. By 2002 the IRS upped that number to two million. The same Commissioner Rossotti in May 2001, seeking federal court subpoenas for offshore credit card records, claimed offshore tax evasion was costing the government $20 billion to $40 billion in 2000 alone!
That’s a very far cry from current 2015 IRS claims of 50,000 Americans in the offshore voluntary disclosure program and collection of $7 billion owed.
Offshore Financial Freedom
The IRS wants you to keep your cash and assets in jeopardy in the U.S. where, unannounced, they can freeze and attach your accounts and implement confiscation by taxation.
Because Americans are taxed on their worldwide income, there is some tax deferral, but few tax savings offshore.
But there are very good and real reasons to “go offshore” — direct investment and diversification, higher returns, currency availabilities and selected banks that offer greater safety and security.
Most of all, “offshore” offers far greater asset protection by allowing you to escape the immediate jurisdiction of U.S. courts and the U.S. government, as well as lawsuits and claims. The Patriot Act killed privacy in America, but offshore laws guarantee much greater financial privacy.
Even the IRS is correct when it says “there are legitimate reasons for maintaining financial accounts abroad.” We can tell you how and where.
Yours for liberty,
Bob Bauman JD
Chairman, Freedom Alliance