Wealthy Americans are running out of ways to hide their money. The IRS has been relentless in prying open the secret Swiss bank account — dozens of Swiss banks are cooperating with the agency. Just last month, a settlement with the private bank BSI revealed bankers used coded language and nameless credit cards to help Americans avoid taxes. Credit Suisse and UBS, Switzerland’s largest banks, have already paid fines for similar shenanigans.
The rest of the world is also getting less hospitable to American tax dodgers. A 2010 federal law, the Foreign Account Tax Compliance Act, requires all foreign banks report to the IRS on their American customers. It’s working so well that Americans abroad say they’re having trouble opening bank accounts even for legitimate purposes. Banks don’t want the regulatory and paperwork hassle.
So, what’s left for the secretive and tax-averse American? Not much, accountants and attorneys say. Here are four ways the wealthy can still get secrecy, or lower taxes — though rarely both at the same time.
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There are legitimate reasons to have an overseas bank account. Americans who live overseas might want ready access to their money. An offshore trust may offer more protection from creditors or lawsuits than one set up in the U.S. An overseas limited liability company, or LLC, might let you hide aspects of your business from competitors. That’s “totally legal,” says Martin Press of the Gunster Law Firm. “You can have money anywhere in the world.”
It’s not the tax dodge it used to be. Traditionally, banks in tax havens like Switzerland haven’t reported those accounts to the IRS, making it possible to hide not just what’s in the account but its entire existence. The Foreign Account Tax Compliance Act is putting an end to that, though.
Hide inside a shell