Ch. 7: Offshore Planning

• Introduction

More information on the U.S. vs. Bank of Nova Scotia case can be found at http://www.assetprotectionbook.com/US-BankNovaScotia.htm

• Offshore Planning and Conflicts of Laws

Synopsis: Asset protection planning seeks to take advantage of cross-jurisdictional issues, both in conflicts-of-law and enforcement of judgments.

• The Perils of Unreported Offshore Accounts

Synopsis: Discusses the realities of foreign financial accounts, the powers of the IRS and creditors to unearth such accounts, and possible criminal penalties.

• Repatriation and Contempt

Synopsis: Discusses creditors’ remedies for collecting against offshore accounts by putting domestic pressure on the debtor.

Definition: Repatriation Order – An order to the debtor to bring assets back within the jurisdiction of the court; if the debtor does not do so, typically the court will order the debtor incarcerated for contempt.

• Offshore Banking

Synopsis: Overview of foreign banking, scam banks in offshore jurisdictions, and the inadequacies of foreign investment markets.

Additional Resource: The Offshore Money Book: How to Move Assets Offshore for Privacy, Protection and Tax Advantage, by Arnold L. Cornez (McGraw-Hill, 2000).

More information on the First International Bank of Grenada scandal can be found on David Marchant's excellent "Offshore Alert" website at http://www.offshorebusiness.com/ first_international_bank_of_grenada.asp

• The Offshore Stigma

Synopsis: Discusses the disdain with which U.S. judges typically view offshore schemes.

• Offshore Tax Schemes

  Synopsis: Discusses several popular, and sometimes tax evasive, offshore tax strategies, including reinvoicing, employee leasing, and the important of using a U.S. tax lawyer for international tax planning.

  Definition: Reinvoicing (a/k/a “Transfer Pricing”) – An offshore tax scheme involving the creation of a middleman entity in a tax haven jurisdiction for purposes of skimming profits and thus decreasing the amount of U.S. income shown. The IRS has significant powers to combat such arrangements, some of which may amount to criminal tax evasion.

  Definition: Offshore Employee Leasing (a/k/a “Irish Employee Leasing” or “Barbados Employee Leasing”) – A complex arrangement that attempts to utilize favorable tax treaties (usually with Ireland or Barbados) to facilitate (Step 1) a U.S. professional’s self-firing from his U.S. company, (Step 2) being re-hired by a foreign employee leasing company, (Step 3) being leased back to his own U.S. Company, and (Step 4) deferring a portion of his income in the foreign jurisdiction. Widely marketed throughout the United States, primarily by David Tedder (now a convicted felon) and certain professionals with whom he came into contact, those schemes are now being challenged by the IRS, and in a few particularly abusive cases there have convictions for felony tax evasion.