According To Irs What Is A Flow Through Entity US Residents Beware of Dangerous Offshore Products and Banking

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US Residents Beware of Dangerous Offshore Products and Banking

Right from here — this is my territory. I know the legalities and practicalities of the offshore world better than all but, perhaps, the 500 experts in the world. If you don’t know one of these (and none of them are trying to sell you something on the internet), please listen to me with both ears.

  1. I know many US residents want to diversify their banking and their portfolios to other countries. I don’t blame them.
  2. I know many US residents are tired of the tax system and are looking for relief.
  3. I know many US residents know little about “offshore”, especially because of the bombardment of tempting banking offers in Belize, Panama or “other jurisdictions”.

I’m going to tell you the truth.

It is nearly impossible for US residents/citizens to legally opt out of the US tax system. It’s impossible for a US citizen to set up a controlled bank account anywhere in the world with more than $10,000 in the aggregate without reporting it on his regular tax return and filing special information that lists you banks and account numbers. Unless the bank is in the US

There are ways around all of this. I have never seen any route mentioned on the internet and my email is flooded with offers.

  1. It is almost impossible to get a foreign bank account without submitting a utility bill. If the utility bill is from the US, why are you even trying?
  2. There is no benefit to buying offshore companies (IBCs) unless you have a bank account that you do not need to report to the IRS.
  3. It immediately limits your total worldwide non-US deposits to less than $10,000. So why try?
  4. Managing an offshore bank account from the US is not only unwise but a death wish. If you haven’t been watching the news, these government people are very serious about catching people like you and making examples of you.

Rule: Panama foundations are idiots. First: If you got a bank account for it, you’re screwed. Second: If you let someone else open an account for you, you’re screwed.

Rule: You can’t trust your life until you can trust someone else with your money. The days of faith are over in the US too! For example, unless you have family in Panama that you trust, you don’t know anyone in Panama that you can trust. Panama is synonymous with any place. You can’t trust banks or lawyers. duration. There are no exceptions.

Rule: If you want to diversify your portfolio to a foreign location, go there and check it out. I’m not a fan of US banking, but I have to tell you that if you go to some of these places, you don’t want to change a $20 bill at the local bank, leave your money there. You walk into some restaurants and grocery stores and watch them hold up every bill you give them to check for fakes. What does that tell you?

What it does:

  • Find an HSBC account near you in the US. Nothing to complain about.
  • When you’re abroad, find another HSBC. Present your US HSBC banking bona fide and your account will be opened smoothly. Do not keep more than $10,000 in the account. HSBC is synonymous with any solvent foreign bank with a branch on US soil. Most advisors say never to do this. They are right. But since it is very difficult to get an offshore bank account as a US citizen without your US bank reference letter, I disagree with the experts respectively. Get a bank account at a local branch of a foreign bank and then open a real account with your sterling US credentials. Not perfect in the hide and seek game, but not much anymore.
  • If you have real wealth, but don’t want to spend $50,000 on real international lawyers, start reading about “dynasty trusts” and look into Nevada as a jurisdiction. These are bulletproof US entities that can survive a government or creditor challenge or your death much better than an offshore trust.
  • If you are really serious, live somewhere else. Not a citizen. a resident. A very simple and economical passport that doesn’t cost a kazillion dollars. Once you become a resident, with proper ID, you can open bank accounts in your new country of residence that are not linked to your US documents. Do you still need to report if you reach the limit? yes
  • If you are so inclined, you should explore the “territorial tax” or “no tax” jurisdictions for your residence. See if your dream wish list can be matched with countries with tax benefits.
  • If you’re flush, buy a nice condo somewhere you really don’t mind living in and then rent it out. If you can put a mortgage on it, great. But foreign lenders usually want 50% down. Make it a cheap condo. The condo gives you the utility bill you need to open a bank account. But once you’re “there,” sometimes the need for a utility bill goes away because your official address is on your government ID — so you can use your IRA funds to buy foreign real estate. If you’re worried about the US state, liquidate your IRA and buy foreign real estate. Do I need to tell you that due diligence is very important. Don’t buy anything you don’t need to live with. You might have to.
  • If you can’t afford a cheap overseas condo, rethink the whole international thing and buy some gold coins or bullion before you register it.
  • There is a large discount on US taxable income if you are a bona fide resident of a foreign country. take this That will save you a heap right there.
  • Don’t get too cute about encryption and secrecy. You hide in plain sight.
  • For god’s sake, unless you’re a billionaire, don’t give up your US citizenship. If you don’t want to stay, get out. Times change. It’s a great passport and with the tax exemption you’ll rarely pay US taxes anymore.
  • Learn how to make money with a portable trade or business before moving away from the US Take your cash flow with you. And remember the $10,000 limit on banking? You have that money in your bank account. It is not money that you earn and then withdraw from the bank and keep at home or in a safe. Remember, you have declared it even if you have not paid tax on it. It is legal.

Here’s what offshore pirates don’t tell you — it’s illegal

  • There is no way you can open a bank account for a company you own and keep more than $10,000 in it and not report it, even though you didn’t sign the bank account. If you do not report it is a serious crime and prima facie tax evasion. You will undoubtedly be charged with money laundering as well.
  • Even if you are a minority shareholder, if you actually sign the company’s account and have more than $10,000 in it and you don’t report it to the US, that is also a crime and prima facie tax evasion. and money laundering.
  • What if you file a US tax return and fail to report foreign earnings? more trouble
  • If you set up a trust, but you indirectly control it, it’s a felony if you don’t report it every year via a 40-page extremely unpleasant IRS filing.
  • If you set up a trust with real money – but you don’t control it – in an offshore jurisdiction, you’re an idiot. I hope you see a rock and a hard place set.
  • Trustees you can trust. You don’t know any of them or you wouldn’t be reading this.

The ultimate offshore trap

  • Most decent banks have low entry requirements. They don’t drill too deep before they “accept” your deposits. Great online service. encryption. Privacy. Multi-currency accounts. Your confidence increases. You move more funds there. Maybe you decide you’re going to play the tax game and you don’t exactly declare all the money on some country’s tax return. Your balance increases. On a good day it reaches USD$100,000.00 and you decide to withdraw $25,000.00. Suddenly your account is frozen by “Compliance” department. They’ll want to see your passport copy again, your utility bill again (hey, did you let that rental condo go?), they’ll want declarations and proof of origin of funds, and yes, they’ll want to see it. A tax return. Guys, I’m not talking about some pieces in Belize. I am talking to a nice Swiss bank. And not a US citizen owner. And a year to unravel it.


These are troubling and dangerous times. Everyone wants your money – which quickly balances out as a big part of your life. your country other countries. banks. Government Institutions. County Property Tax Officer. State or Provincial Governments. Sales Tax Officer. Added to the list of “official” pirates, you now have offshore pirates willing to sell you legitimate junk.

Keep your money where you belong. If you want to diversify, actually go somewhere and do something. Explore the options on the go and then exit. If you don’t have that kind of money and are still scared, join a club. And hide your money in your house and/or buy some silver and gold.

There are no third party investment opportunities. If you are not looking at your money, it will disappear. Don’t lend. All loans are bad loans. Invest closer and closer to yourself.

The real bad times haven’t started yet. It is, at best, the eye of the storm.

Author: Jack Campitelli, JD has lived and worked in several tax-advantaged foreign countries. He has taught asset protection in and out of the U.S. He knows most of the people in the biz. His website is His recommended books are “Portable Trades and Occupations” and “Bye Bye Big Brother” available at ascolibooks com. If you want to start an internet business as a portable trade, consider the legal guide for their websites

Jack is exactly No Available for “offshore” consultation!

Copyright 2010 by RioneX IP Group LLC. All rights reserved. This material may be freely copied and this copyright notice, author information and all hyperlinks are kept intact.

By Jack Campitelli, JD

10 September 2010

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