Gary S Wolfe, A Professional Law Corporation

Paradise Papers Update - Part 4 The aftermath of the Paradise Papers is now an international fire. In the words of Gabriel Zucman I think it is the first time there is public outrage on such a scale. At the global level people felt very strongly that something is wrong. In Dec 2017 the European Parliament voted to require all European countries to publish the names of all companies true owners in a new anti-money laundering measure. The EU countries have 18 months (thru ...8/19) to add it to their domestic laws. Since the publication of the Paradise Papers governments have opened tax investigations in: Viet Nam Lithuana Indonesia Ireland Greece Netherlands New Zealand Australia Nigeria Pakistan South Korea India Argentina In the US up to 14 different states (e.g. Nevada, So. Dakota, Delaware et al) have become tax havens and do not disclose company owners. The US has become the international financial center and is the facilitator of trillions of dollars in offshore banking tax evasion, money laundering and related tax and other felonies. US states have replace their Caribbean counterparts as the Tax Haven of choice since now the state secrecy laws are more effective than the British territories who are in the eye of much unwelcome publicity. The US level of culpability may be best seen in the ongoing dual federal investigations by the US Dept. of Commerce (Inspector General) and the GAO into US Commerce Secretary Wilbur Ross who the Paradise Papers revealed that he earned millions of fees from a Cayman Islands Company (Navigator Holdings, Ltd) that was co-owned by Putin’s inner circle (son-in-law/others). Ross sold his interest after it was publicly exposed. In the words of Joseph Stiglitz, Nobel Prize Winning Economist: Does the offshore system serve any legitimate purpose or simply allows the rich and powerful to flout rules followed by everyone elseThe reality is that they put their money there in order to engage in either tax avoidance, tax evasion, regulatory avoidance, regulatory evasionThere is no reason for the existence of these offshore paradises.

Paradise Papers Update - Part 3 The Offshore Industry involves trillions of dollars in cash, fees and assets. Estimates as to the size of global wealth held offshore are only estimates not verified amounts. However, current estimates are for the cash held. Other major assets include: Real Estate, Art, Jewelry, Boats, Planes and Luxury Items. Estimates of cash held by wealthy individuals offshore range from $8.7 Trillion to over $30 Trillion (out of total $70 Trillion+ worldwi...de assets). This cash estimate does not include cash held by multi-national corporations. The 2008 Financial Crisis exposed the offshore holdings. National governments with plummeting tax revenues were unable to fund their governments and went after offshore tax evasion as a likely source of tax revenue. Two international tax reporting standards were established: 1) Foreign Account Tax Compliance Act (FATCA/2010) which was not implemented until 2016. Since then, over 100,000 foreign financial institutions, in over 80 countries, now share information with the IRS on US clients or face a 30% tax withheld on US source gross income (including security sales which are not given preferential capital gains tax treatment under the 30% tax withholding). For US taxpayers with offshore accounts over $10k (that they own or control) or foreign financial assets over $50k annual disclosure filings are required or there is a risk of civil and criminal penalties. Under the FBAR filing (FinCEN form 114) all foreign bank and financial accounts over $10k must be reported annually by the US taxpayer who owns or controls the account. Willful failure to file is a 10-year felony for each of the 6 years not filed so total up to 60 years in jail. The Civil Penalty is up to 50% of the account balance annually for the 6 years due the total penalty may be up to 300%. The FATCA filing (form 8938) for foreign financial assets over $50k is a separate and independent tax filing (not part of the FBAR filing). 2) In Europe the G-20 Group of Nations (not the US) and the OECD created Common Reporting Standards (CRS) for transparency and information sharing. Starting in 2018/2019 over 100 countries will digitally transmit taxpayer information (from the relevant bank to the tax country of the client) to each other’s tax departments. The OECD/CRS rules are far more invasive than the US FATCA rules, which do not include: bank balances, withdrawal amounts, and life insurance products. A foreign investor who moves from a 3rd party country (e.g. India, China, Brazil, South Africa, Israel, Dubai et al) to the US but also has holdings offshore in a tax haven may face a triple threat of tax audit risks in their home country, in the US, and in the EU with criminal penalties as well.

Paradise Papers Update - Part 2 Luke Harding, Guardian Reporter (who worked on both the Panama & Paradise Papers), in 2016 observed: The Offshore world was once thought to be a shadowy but minor part of the economic system. Now we know it is the economic system. Gabriel Zucman, Professor and Author: Switzerland reported $2.4 Trillion in Assets managed by Swiss banks for foreigners about 60% in shell companies. US individuals evade $30 B per year in taxes thru unregistered..., offshore illegal assets (other estimates are much higher). US corporations that are multi-national with global earnings avoid $120B annually in taxes by shifting profits to Bermuda/other tax havens with no tax due until the offshore earnings are repatriated to the US. Zucman discloses massive worldwide corruption: The whole banking aspect to it Bankers in Switzerland and Luxembourg create shell companies, trusts and foundations and actively help their clients to hide assets, invest their funds on their behalf. Editorial from SF Chronicle 11/11/2017: The Paradise Papers show the magnitude of the exploitation. It’s a maddening reality for the rest of us who pay our fair share of the cost of public services (by paying taxes). The Offshore Industry was traced by journalist and author, Nicholas Shaxson, to the post-war collapse of the British empire. Island colonies (Bermuda, BVI & Cayman Islands) transformed into British Overseas Companies and like the United Kingdom became financial intermediaries. In 1959 there was $200m in offshore deposits, in 1961 $3B and in 2018 estimated up to $31Trillion. In the 1980’s the governments of the US and UK embarked on financial deregulation which supercharged offshore economies and then once Switzerland became compromised after the 2009 UBS and later other settlements much of the money there moved to other tax havens which includes up to 14 US states which maintain anonymous shell companies for unknown owners. So between the 14 US states and nearly 80 global tax havens there are nearly 100 places world wide to stash ill-gotten or otherwise gains.

Spoiler Alert: Check out #PasoRobles

Panama Papers Update - Part 1 In Nov 2017, a massive data leak was reported by the ICIJ and global media partners on Appleby (a Bermuda based law firm, previously voted as Offshore Law Firm of the Year). 13.5m + leaked documents show how Appleby over 50 years used secret offshore companies for clients including princesses, prime ministers, celebrities and career criminals, tax evaders and their accomplices. While at the same time placing huge multi-national corporations (N...ike, Apple, Facebook, Glencore Commodities, etc) in tax havens enabling their earnings to compound tax free, untaxed by the US until those profits were repatriated to the US. (Now, under the 2017 Tax Act US companies may repatriate offshore earnings and pay a one time 15.5% tax on the earnings instead of the 35% tax rate otherwise due for prior tax years, which in 2018 is now 20% corporate income tax rate forward). Since their Nov 2016 Publication the Paradise Papers have lead to the opening of tax investigations in 14 countries from Netherlands to Viet Nam to New Zealand. It has sparked new or expanded criminal tax investigations in Switzerland and Argentina and triggered tax audits in India, and South Korea as well as creating a political uproar in Turkey and Angola. In December 2017 the ICIJ as a follow-up to the November 2017 Paradise Papers global expose, released an additional 290,000 names of companies related to Paradise Papers increasing the searchable database to include (as of 2018) 785,000 companies and 720,000 officers. Arun Jaitley, India Finance Minister told the India Express With the Paradise Papers the secrecy of the tax havens and transactions done through them have been smashed by the publication of the Paradise Papers it shows that nothing remains a secret The Offshore Industry has become all pervasive. Hidden companies divert hundreds of billions of dollars from cash strapped governments globally to kleptocrats, corrupt politicians and criminals of all types from drug dealers to arms merchants to slave traders. Powerful global corporations and wealthy individuals assisted my major banks, law firms and accounting firms reap billions in fees while starving their national governments of much needed tax revenues. The Paradise Papers described in detail how Appleby collaborated with the world’s biggest banks (Citigroup, Bank of America, HSBC, Credit Suisse, Wells Fargo Bank), law firms (Baker and McKenzie, Akin Gump) and accountants ( KPMG, PWCM, E&Y). Everyone gets paid. Governments become insolvent and the countries econonomically disintegrate. For example, see the Greece tragedy where the entire country went broke while 89% of taxes due remain uncollected.

For all those with foreign assets...

The Wolfe Law Group is proud to announce that Gary Wolfe was quoted in two recent articles in Forbes Magazine: 1. How U.S. Film Makers Can Make More Movies and Earn Way More Money (2/17/18) Gary Wolfe, a leading international tax attorney, especially likes this L-1 and E-2 visa approach to U.S. film making because such visas enable him to help foreign investors avoid the significant U.S. tax exposure present in other forms of U.S. immigration options.... 2. EB-5 Investor Immigration Program Faces New Challenges From Kushner's Involvement (2/15/18) Now consider the tax issues associated with the EB5 program. Gary Wolfe, a leading international tax attorney, summarized them nicely as follows...The extent to which a new immigrant is exposed to U.S. taxation..."

California and the 2017 Tax Act For High Net Worth ("HNW), California taxpayers the 2017 Tax Act (passed into law December 2017) may end up as a tax trap causing higher taxes and not lower as promised. Consider the elimination of these historical major income tax deductions now deleted for Tax Years 2018 forward:... 1. Elimination of "SALT" Deductions over $10k (State and Local Income Taxes, Property Taxes, Sales Taxes); 2. Elimination of Deductions for Alimony (effective 1/1/19); 3. Elimination of Deductions for Personal Property Casualty (Theft) Loss. HNW Californians and high-income earners who expect tax reductions may find they will now have to pay higher federal income taxes due to the elimination of these tax deductions. My suggestion: Do tax planning projections for 2018 now and eliminate any unwelcome surprises i.e. bigger federal tax bill in future years. If you need guidance please send me an email ([email protected]) and I will revert back if I am able to help you.

Please forward to those in need.

For our American Brothers and Sisters in Texas and Florida, the IRS may actually be of great help to you through immediate tax relief. Please see my recently published article and act quickly.

I am please to announce the publication of my 13th book, Asset Protection 2015: IRS Tax Audits & Lawsuits.