Dateline: Kotor, Montenegro
In the second century BC, the Romans settled the city of Acruvium – now Kotor – as part of their expansion into the province of Dalmatia.
Seven centuries later, Byzantine emperor Justinian fortified the city in order to keep invaders out during his campaigns to take back the western lands of ancient Rome from his seat in Constantinople.
His plan didn’t work for long; not long after fortification was complete, Arabs plundered the city. However, Kotor remained one of the most prolific and romanticized city-states in Dalmatia.
And to this day, a sign remains part of the stone just outside the entrance to Kotor’s Old Town. It reads simply, “Tude necemo svoje nedamo”.
In English, “What belongs to others we don’t want, what is ours we will never surrender.”
If only today’s nation states followed such sage advice.
On the other side of the world in The Land of the Free, the US government has just won a landmark victory in a civil case regarding offshore accounts. IRS penalties are about to become even stiffer as the tax agency seeks unheard of damages against an eighty-seven year old man who the court determined had $1.5 million in an undeclared Swiss bank account.
Carl Zwerner, the man in question, will likely have to pay 50% ABOVE the high watermark value of his account in IRS penalties. Tax lawyers suggest his legal team is likely trying to negotiate a deal with the IRS right now in order to avoid a government judge ruling on his fate later this year.
However, the IRS is never content. They originally sought 200% of the highest account value in penalties.
That’s right; your friendly tax collectors wanted a man with one Swiss bank account to pay THREE TIMES the value of the account just in penalties. Money the US government could put to good use flying drones over wedding parties in Yemen, trading terrorists for soldiers, or paying off the new NSA data center.
Before I go any further, let me make this clear: I don’t encourage anyone to violate the laws of their home country when it comes to banking offshore, because the potential IRS penalties (or penalties from your local tax gestapo) and just too high.
Whether you live in the USSA, the UK, or elsewhere, governments are cracking down on offshore accounts.
I’m not troubled by the latest IRS penalties because I support criminal activity. Quite frankly, it seems there are plenty of bigger issues for the US to deal with, including not running up the largest debt in the history of man that compels them to go after octogenarians with Swiss bank accounts, but that is not the issue.
Staying out of an orange jumpsuit should be your top priority.
What troubles me about this case is that that is just the latest dog and pony show the IRS is using to come out against offshore accounts. There is no doubt that the US government not only wants to scare YOU into not opening an offshore bank account, but they want to further indoctrinate the public that everyone who has an offshore bank account is bad.
I’ve seen the evidence of a coming western collapse all over Europe over the past few months. The US and other western governments know that the smart money is getting out of town, the way it always has.
And while they figure out how to impose total Argentina-style capital controls, they want to build up enough political goodwill to be able to do so.
Throughout history, the most draconian laws were passed in the light of day. From ancient Rome’s aggressive tax policy to the horrors of Nazi Germany to the recent “stability levy” that allowed the EU to steal money in Cyprus…
…the US government knows that if it can only continue to beat up on the few bad apples with undeclared offshore accounts, the IRS can not only rack up massive penalties, but the government will be able to pass more and more draconian laws to force US capital to stay onshore.
The IRS is trying to bamboozle the public into thinking that numbered Swiss bank accounts still exist in order to foment public rage against “the evil rich”.
That’s exactly what they’ve done with FATCA, the Foreign Account Tax Compliance Act.
Essentially, FATCA makes every foreign bank a slave to the IRS. Anyone who doesn’t tattle on US persons banking overseas will face severe penalties as rapacious as the IRS penalties applied to actual account holdings, all in the form of a withholding tax.
Banks around the world have signed up to comply with FATCA, bringing up the question as to whether banks in countries with bank secrecy are even legally able to do so. However, the US government’s carrot/stick approach to dealing with its peers has certainly “helped” things along.
Just this past week, banks in countries some thought would fail to comply with FATCA agreed to join forces with The Land of the Free and turn over data on US persons banking with them.
Not only that, a laundry list of new offshore banks declared that all US persons – Americans, green card holders, those born in the US, or those born to US parents overseas – would be expelled from their banks.
One example is VTB Bank, the largest privately-owned bank in Russia. All American depositors will have their accounts at VTB shut down effective July 1, when FATCA takes effect. That includes Americans living and working in Russia, who may maintain checking or current accounts at the bank.
As a result of US financial imperialism, Americans abroad will no longer be able to conduct business in Russia.
Several banks in Mexico also announced they will close accounts held by US persons to avoid running afoul of US banking laws.
Imagine: if Mexico or Russia demanded that the IRS turn over data on all Russians banking at Chase, the loons in Washington would have a conniption. “How dare those commies tell us what to do?”, I imagine they’d say.
Then they’d salute the flag and sing “God Bless America” in a self-congratulatory fashion.
However, the United States government is shutting down the ability of Americans to even so much as live and hold a job outside of the kingdom by virtue of their draconian laws regarding “offshore accounts”.
This is a testament to the political capital they have already built up among the average American, who is all too happy to take a stand against the “greedy 1%”, even if that uninformed stand actually hurts normal Americans doing totally legal business overseas.
The latest IRS penalties coming down the pike are just part of a circus routine designed to get even more Americans on board with the US government’s plan to SHUT DOWN your ability to move money offshore.
FATCA is just the start. Like all good dictatorial mandates, it is supposedly well-intentioned in that it will bring back untaxed money from offshore.
However, the reasoning behind FATCA – and the next steps Uncle Sam has up his sleeve – is nothing more than capital control. The US government is broke and has to find money to steal in order to keep the party going and avoid being the next Argentina or Greece.
With that in mind, they will do anything they have to do to keep your money within their borders.
That’s why setting up an offshore bank account, as well as other offshore strategies, is so important. From foreign real estate to offshore gold storage, there are plenty of totally legal (and sometimes non-reportable) ways to get your money out now, before it’s too late.
Every month, we provide fresh new content on how to do exactly this to Members of The Nomad Society. If you’re not a Member, consider applying today not only to gain access to our exclusive live events (including a five-star dinner I’m holding with an offshore banker later this month), but to gain access to dozens of hours of actionable videos and interviews on how to protect your wealth.
And, heck, once your wealth is offshore, we’ll actually offer some suggestions to GROW it, which may be an odd concept if you’re used to 0.1% interest rates at the bank. You can learn more and apply for Membership here.
Latest posts by Andrew Henderson (see all)
- The Trifecta: How to Travel Less as a Tax-Free Nomad - October 11, 2017
- Schengen Area and Visa Free Travel for Nomads:How Does it Work? - October 5, 2017
- Mauritius Offshore Companies for Tax Reduction: An Introduction - September 29, 2017