Kevin Wessell Discusses the Offshore Services Industry & International Tax Compliance

Kevin Wessell discusses the offshore services industry and international tax compliance and why the responsible, law-abiding US international service providers should be allowed to continue to provide their services in a responsible manner. End Quote

Los Angeles-Long Beach, CA (1888PressRelease) June 15, 2010 - There are perfectly legal and acceptable manners in which to utilize international companies and financial institutions. Boeing, for example utilizes offshore companies and bank accounts to operate its business enterprise, as does Microsoft, IBM, Exxon-Mobil, Ace Hardware as well as hundreds, if not thousands of other US-based businesses.

Many people who want to form international companies and establish international bank accounts do so for business expansion, asset protection or other acceptable purposes. There are satisfactory ways to utilize such tools, provided one complies with tax, securities and other laws.

With that background, we delve into the world of international taxation. There is a thought amongst some members of the public that if profits are distributed offshore, one is not required to pay taxes until they are brought back into the country. This may have been the case in the past. However, as of about 1964, US tax laws changed requiring taxation of both US and international income.

Like domestic companies, there are US reporting requirements with respect to owning, directing and controlling international companies. There are also tax and treasury department forms to complete when one has signature authority over an international financial account. Though the forms are relatively simple, it is recommended that one secures a knowledgeable, licensed accountant to insure the forms are properly and timely filed. Discuss the forms on the following page with a tax advisor: http://www.offshorecorporation.com/tax-forms/.

Some foolishly believe that offshore service providers should not exist in the US; that they should all be put out of business. Others want to go around the back door by placing such financial and psychological pressure on the leaders of the industry that they would want to change professions. This shortsighted thinking shows a great lack of understanding of the offshore services industry and would simply create a bigger problem. Here is why: It is a fact that some people in the US are determined to establish international companies and bank accounts. This may be for business expansion, international diversification or asset protection. Like it or not, those who desire these services with enough vigor will obtain them. If the providers in the US are put out of business, offshore service providers who reside outside the US are just a mouse click away.

Now, we agree that any US service providers that are knowingly and willfully assisting their customers in tax evasion, money laundering or other illicit activities should be put out of business. However, this is a very low percentage of providers in the US because those who provide such services are generally cognizant of the fact that in order to remain in business they must only act within the proper legal framework.

Our company, for example, insists that every sales representative signs an agreement that our company policy is to obey the law first and make a profit second. They are not to knowingly do business with would-be customers who intend to use our services to carry out tax evasion, evade securities laws or conduct other illegal activities. We repeatedly email reminders to employees, post bulletins, rehash the importance of legal compliance with co-workers in meetings, and overhear conversations to make sure that these policies are followed. Our reverent fear of and respect for our US laws, law enforcement and lawmakers make us dance like ticks on a hot griddle on a daily basis to make sure there is never a legal chink in our armor. Moreover, we live here, too, so we feel it is our patriotic duty to be sure that we do our part to support our laws.

Foreign service providers, on the other hand, have no such motivation to support our laws. They can put profit above adherence to US statutes because they are not necessarily bound by them. I did a simple Google search moments ago and below is a summary of what I found.

One misguided service provider in the Bahamas says, "Under the Statutory US tax Code, offshore banks and offshore companies can trade in the US stock market free of capital gains taxes." They proceed to illustrate an erroneous structure where US taxes can be evaded by the use of three international companies and two foreign trusts.

Another website operated by attorneys in Central America shows how US people may evade taxes in their jurisdiction. They say that a certain Central American government "…will not share information for tax offenses even if it is construed to be criminal tax matter."

What another website purported was quite shocking. It discussed using offshore entities to raise a certain amount of money by promoting illegal drug activities. "…these tax havens will not share information about you. This is why it's best to set a goal, reach it, and then STOP all illegal activity before the government nails you…" Yes, it actually says that. Shocking, indeed.

Another provider boasts of a certain African jurisdiction in that," there are no information sharing treaties" and that they "…will not share information with any other country…"

Moreover, I have traveled to Zurich, Switzerland to meet with several international bankers. I've walked down Bahnhofstrasse, the street with the highest concentration of banks in Switzerland. I visited the district in order to see firsthand the goings-on of the hub of the world's international financial center.

The scenario was the same in nearly every Swiss institution. I was shuffled into small, private room. A bank employee would push a silver cart offering me bottled water. Soon thereafter, a gentleman in a suit would come into the room and shut the door. One of the first questions I was asked in almost every instance was, "Will these accounts be reported or non-reported?" In other words, the banker wanted to know whether or not accounts were going to be reported to the government for tax purposes. Naturally, I said, "Reported." The first time I heard this question, my jaw almost hit the floor.

This being said, it is very obvious to any reasonable person, that annihilating the US-based offshore services industry, while good intentioned, would be a very big mistake. Responsible and law-abiding service providers, such as our company, that put legal compliance above profits and that provide guidance that one should seek licensed tax and legal advice should be allowed to remain alive and well. It would be a big mistake to leave a hole in the international entity formation industry that could only be filled by those who have no incentive to respect the laws of our country. The, "let's see what we can charge them with," or, "let's hassle them 'till they're broke" mentality is a suicide vest.

These statements are not merely self-serving persuasive tactics because I am associated with an organization that provides international services. (Incidentally, we establish far more domestic entities than foreign.) We talk with people day-in and day-out who truly believe they can put money over yonder and not pay taxes until they bring it back. If they do not have US-based companies, such as ours, to correct their thinking, you can see who would be left to fill the gap.

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