Some interesting information can be obtained from the video of the Offshore Alert Conference held on May 3 in South Beach, Florida. Panelists included Gerard Ryle, head of the International Consortium of Investigative Journalists (ICIJ), and Arthur Vandesande, a retired senior special agent in the IRS criminal Investigation division. ICIJ coordinated the leak of the Panama Papers in conjunction with German newspaper Süddeutsche Zeitung and more than 100 other news organizations.
American Citizens and Residents Apparently Listed in Panama Papers
The conference video includes a statement by David Adams of Univision, Digital News that they are “scouring “ the Panama Papers for American names. Mr. Adams went on to explain that the Papers do contain a number of probable US names, yet to be revealed. At that time, the names had been withheld as the journalists continued their verification that the persons were indeed American citizens or residents. It appears that the Papers contain names of many non-US citizens residing in the USA who have used non-US passports to set up their offshore vehicles and accounts via Mossack Fonseca, the Panamanian law firm behind the Panama Papers. The number of American names that will ultimately be found in the database is unknown, but criminal investigations have already commenced. The US Attorney for the Southern District of New York announced the opening of a criminal investigation, and some foreign banks have now been told by the New York Department of Financial Services to produce banking records.
US Residents — Days of US Presence Tracked by Homeland Security
Maybe such non-US citizens residing in America forgot that the Department of Homeland Security is constantly tracking their days “in and out” of the United States and keeping that information on an easily accessible data base. You too, can access that data base. If you can access it, it is obvious that this same data base enables the Internal Revenue Service (IRS) to count a foreign individual’s days of physical presence in the US, thus leading the individual into the treacherous territory of becoming a US “resident”, subject to tax on his worldwide income (including the income from offshore accounts and entities associated with Mossack Fonseca!). US residency can easily occur if the individual is not diligent in day counting or if he has a green card (even one that expired decades ago but still sits gathering dust in an old desk drawer).
While big American names apparently have not been found, there are Americans hiding in the flurry of Panama Papers (including, companies and accounts for various American fraudsters). The apparent lack of any significant American names is most likely due the fact that because Panama has been under intense US government scrutiny for many decades, it is an unlikely destination for an American to illicitly hide cash.
The discussion of American names can be found commencing at 57:45 and again at 1:09:37 in the video of the Offshore Alert Conference.
Come Clean Before IRS Reads the Papers
The IRS, however, is reportedly chomping at the bit to get to the Papers and is urging Americans to come clean before it’s too late and they read the Papers. Once the IRS discovers the unreported offshore assets, the taxpayer is not eligible to join a voluntary disclosure program. If you have undisclosed offshore accounts or assets, be very careful in obtaining professional advice. Everyone’s situation is different and a one-size-fits-all approach is not the answer. Your best bet is to seek advice from a US tax attorney familiar with the offshore issues and voluntary disclosures. You will then have the protection of attorney-client privilege. This is NOT available with any other party such as your financial advisor or your accountant.
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