The taxman finds wise guys so very unimpressive

Two posts in one today.  The first on the announcement from the US Embassy in Panama on the Foreign Account Tax Compliance Act – FACTA

• IRS Issues Proposed Regulations for FATCA Implementation

  The Treasury Department and the Internal Revenue Service issued on February 8 proposed regulations for the next major phase of implementing the Foreign Account Tax Compliance Act (FATCA).

Second is a interesting case study for those of you who think you can outsmart the IRS.  Think twice

Eric Jackson at the Panama News posted this article that I found interesting.  People think that they can run and hide from Uncle Sam, ain’t gonna happen. As they say in sniper school “you can run but you will only die tired”.    Stay transparent as glass with the IRS as they need funds to keep their budget intact and guess where they get a lot of it.   Awhile back I heard form someone who told me a story how retired IRS agents sometimes work on commission and get paid travel to foreign lands including Panama where they investigate targets for part of the recovery.  If you need help with a situation involving undeclared foreign financial assets, drop me a note and I can put you in touch with someone who might be able to help.

By Eric Jackson:

So, you have been cheating on your taxes for years and you have it squirreled away in an account that Uncle Sam doesn’t know about, and with the IRS closing in you need to move it someplace safe. But you know that there are reporting requirements for cash transfers of $10,000 or more, so you figure that you will move your $280,860 to Panama in about 30 transfers, most for $9,500.

Think again, you dolt. US federal law — 31 USC 5324(a) to be precise — makes it a crime to structure financial transactions in order to cause a financial institution to avoid making a report of the movement of an amount of money over $10,000. It’s a crime on top of the tax evasion.

The Panama News got a call and some emails out of the US Attorney’s office in Hawaii, about one Michael Eric Stewart. He was on the island of Maui and in the business of helping people get mortgage loans for a fee, and made money at it during the real estate bubble. But he wasn’t reporting the income or paying taxes on it — he had a dummy company in Nevada and a series of bank accounts related to that, which he didn’t expect the IRS to be able to track.

The tax cheating broke down before the US real estate market crashed, but Stewart put up various procedural dodges, and as it looked like that game was about to run out — and indeed the mortgage business was about to go bust — he moved assets around in amounts less than $10,000 and made his way to Panama. It’s unclear whether and if he moved the money to Panama, but he moved here in 2008 and he probably did bring substantial assets here.

Now, nearly four years later, Uncle Sam has come down with an indictment that it wants to publicize.

Moving a large amount of money by way of multiple transactions structured to avoid reporting requirements has been a crime for many years. It’s one of the counts with which prosecutors nailed the legendary sleazy lobbyist / bribe broker Jack Abramoff.

So is this a reminder by the IRS to Americans living in Panama not to be wise guys? Or is it something more, maybe the prelude to a test of the new US-Panama tax information sharing agreement?

Historically, Panama has refused to extradite people for tax offenses. Stewart would not have been here long enough be eligible to become a naturalized Panamanian citizen unless he corrupted the government to bend the rules — a sort of thing that has happened from time to time — and so he could not legally avail himself of the Panamanian constitutional ban on the extradition of citizens. US authorities say that they will use lawful means to bring him to justice, but beyond that seem eager to allow just what those means might be to come as a surprise to Stewart.