The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs.

There is a rumor going round that the Swiss banks may enter into a sweeping settlement with the U.S. government to settle civil claims.  The banks will hand over names of thousands of U.S. clients and pay billions of dollars.  The settlement will not cover criminal charges pending against several Swiss and Israeli banks.

Press Release

The U.S. government is requesting information on American account holders from several more Swiss banks. These banks include the giant Credit Suisse, as well as HSBC, Julius Baer Group Ltd., Wegelin & Co., Basler Kantonalbank and Zuercher Kantonalbank. These banks are apparently under secret grand jury investigation in the U.S. The banks have not yet commented on the inquiry.

A corporate trustee is a bank or a licensed trust company that provides trustee services on a professional basis.  A corporate trustee may be as large as the trust department of Bank of America or the Northern Trust Company, or a little organization you have never heard of.  All corporate trustees charge for their services.  Some on a flat fee basis, some as a percentage of assets under management.  How much a trustee will charge depends on what it is required to do under the trust agreement.

Read my latest article, A Practical Primer and a Radical Approach to Asset Protection, published in the June 2011 issue of Estate Planning, a Thomson Reuters publication.

There are several scenarios for married couples to consider in asset protection planning: To protect assets from creditors or potential lawsuits, to provide for a spouse and/or minor children after death, and to protect oneself in the event of a divorce. 

According to a press release issued by the Internal Revenue Service, U.S. taxpayers with foreign bank accounts now have a second chance to come forward a plead mia culpa.  The new program has a deadline of August 31, 2011.  The taxpayers who come forward will be subject to penalties and interest on unpaid taxes for the past 8 years, and an additional penalty of 25% of the highest balance in the offshore account.

I have a few seminars coming up on asset protection planning.  On January 19, 2011 I will be teaching a morning webinar, with nation-wide distribution, sponsored by Thomson Reuters, and an evening seminar at the Los Angeles County Bar in Downtown, Los Angeles.  On February 16, 2011 I will be teaching a nation-wide webinar on asset protection, sponsored by the Rossdale Group.

This morning, the Senate rejected a bill that would have extended the Bush-era income tax cuts.  We don’t know how this issue will resolve itself, but tucked into the bill was a provision that will have a profound effect on estate tax law.  What is worse, it may make your living trust obsolete at best, and dangerous at worst.  We think this estate tax provision is likely to find its way into any bill that eventually passes, because both the President and the Republicans favor it.

By the time 2010 draws to a close I will end up having taught well over 50 seminars this calendar year.  Most are full day programs.  It is hard work, but I enjoy teaching, and it keeps me out of trouble.

Yesterday's New York Times had an interesting article on offshore banking.  Apparently, following the shameful conduct of UBS and the Swiss government (yes, shameful), hundreds of billions of dollars left Swiss bank accounts and moved to Singapore and Hong Kong.  It is estimated that at least $200 billion left UBS alone.

Show of hands, who has not heard of the McCourt divorce case?  If you live in Los Angeles there is barely any other news coverage.  While public divorces of the rich have always made great fodder for gossip journalists, this divorce sheds some light on a frequently used, but infrequently discussed, asset protection technique. 

Many foreign jurisdictions have enacted LLC statutes.  A lot of these jurisdictions are so-called tax havens, which generally means that an entity organized in that jurisdiction will not be taxed by that jurisdiction if the entity is not conducting any business in the jurisdiction.  If a U. S. business or U. S. real estate is owned by an entity organized in a tax haven, the entity will not be doing any business in the tax haven and will not be taxed there.

In a recent decision (Olmstead v. FTC, Supreme Court of Florida, June 24, 2010), the Florida Supreme Court held that the charging order protection, an "exclusive remedy" for creditors pursuing LLC interests, is actually not the exclusive remedy, despite the plain meaning of the statute.

After many months of suspense, the Swiss parliament has finally approved the deal struck by UBS and the US Justice Department to disclose the names of about 4,500 US-based clients of UBS who are suspected of tax dodging.

A week after the upper house of the Swiss parliament voted to allow disclosure of UBS clients to the US government, the lower house of Switzerland’s parliament voted to prevent the disclosure of the names and financial secrets of as many as 4,450 Americans who held undeclared accounts at UBS.

The quagmire involving US taxpayers with unreported foreign bank accounts continues.  The latest word:  IRS has over 200 dedicated agents conducting audits of those taxpayers who voluntarily disclosed them prior to the October 15, 2009 deadline.  These agents are conducting full audits of the taxpayers who came forward (where there is smoke, there is fire, and potentially other unreported tax issues) and looking to impose fairly significant civil tax penalties.  The audits also extend to those taxpayers who voluntarily came forward following the amnesty deadline, hoping to avoid criminal sanctions.

The Hiring Incentives to Restore Employment (HIRE) Act (Pub. L. No. 111-14) was signed into law on March 18, 2010. The Act creates tax breaks for businesses hiring new workers and extending higher expensing limits for small businesses that make capital investments. The Act also incorporates provisions of the Foreign Account Tax Compliance Act of 2009, which has far-reaching implications for foreign financial institutions that may have U.S. clients.

On January 22, 2010 the Swiss Federal Administrative Court published its first judgment with respect to the IRS’s request for information.  The case relates to a UBS client who failed to provide the bank with a Form W-9.

As the October 15 deadline has come and gone, more and more of our clients have reported receiving letters from UBS.

The Internal Revenue Service has extended the deadline to participate in the FBAR amnesty program to October 15, 2009, and has indicated that there will be no more extensions.

The IRS has announced today that UBS will reveal names of 4,450 American account holders.  The actual names have not yet been released, and over the next few months these account holders will receive notices from UBS that their names will be disclosed to the IRS.  The account holders will then have the option of appealing the proposed disclosure to the Swiss appellate court on the grounds that the disclosure would violate Swiss banking secrecy laws.  It is not yet clear how successful such appeals may be.

Earlier this summer, the Ninth Circuit Court of Appeals released an opinion that sheds some light on the level of protection granted by the California exemption for private retirement plans.

As Congress frantically looks for ways to pay for the various stimulus and other wasteful spending proposals, increasing estate and gift taxes seems like a natural solution.  Although these two transfer taxes account for a small percentage of the government’s revenues, these taxes are not on the radar screen of the middle class or its defenders.  Consequently, these taxes can be increased with little unwanted attention, especially if the taxes are increased indirectly.

On May 29 the Governor of Nevada approved Nevada Senate Bill 350 which creates a new type of limited liability companies and limited partnerships. For simplicity, we will focus on the LLCs only.

Every day more and more Swiss banks say "no" to US business. This year alone 7 Swiss banks that we regularly did business with told us that they will be kicking out all US clients and not accepting any new business.

Several years ago the Justice Department subpoenaed names of Americans who had Visa and MasterCard accounts with offshore banks. The IRS then offered these taxpayers a choice, come forward voluntarily and we will waive criminal prosecution and some monetary penalties, or wait until we get to you and then take the risk of criminal penalties.

Last week I travelled to Zurich to meet with several Swiss private banks. We do a lot of business with Swiss banks, and the past few months have brought about many changes.

Is it ever too late to protect assets? The answer is of course! How about when a lien is placed by a creditor on the debtor’s assets.

It is bad enough that most of the people who invested with Madoff will lose a significant amount of their wealth. It is also possible, in fact, likely, that many of the investors who received distributions from Madoff or pulled their money out in time may have to return the money.

There is a lot of excitement in Washington coming on the heels of the election. Change is in the air, and with this change comes the promise of higher income taxes.

The economic woes that have already impacted so many businesses are a boon for those of us who practice in the area of asset protection. About one year ago the flood gates opened and mortgage bankers, mortgage brokers and real estate developers poured in.

The UBS scandal may have had a more profound impact on asset protection planning than previously suspected.

It always surprises Americans that the U.S. banks that they have all heard about so much are not necessarily the largest banks in the world.

Following the indictment of several UBS AG (Switzerland) employees, the Justice Department requested permission from federal court to have the Internal Revenue Service issue John Doe summons to UBS AG (the Swiss parent of UBS). The John Doe summons will instruct the Swiss bank to provide to the IRS information on all U.S. taxpayer who may have bank accounts with the bank in Switzerland.

A recent Wall Street Journal has an article entitled Property Investors Fear Gains-Tax Rise, Shift 1031 Strategy.

The State of New York has passed a new law scheduled to go into effect June 1, 2008, requiring internet retailers to collect sales taxes. The new law is expected to generate an additional $78 million of revenue per year for the state. Several other states, including California, are considering similar laws.

The big tax news this month was the Justice Department’s loss in the Wesley Snipes case. Snipes has been cleared of federal tax-fraud and conspiracy charges, but was convicted on three misdemeanor counts of failing to file a tax return. He now faces up-to three years in a prison for the misdemeanor convictions.

In response to Sen. McCain’s proposed tax plan an article in today’s Washington Post (McCain’s Plan for Working Class Offers Plenty for Corporate World) blasted the tax plan as pandering to corporations and businesses. The cry was picked up by several other publications as well. What is the proposed plan and does it amount to pandering?

Following the credit crunch of August 2007, the real estate market has experienced a significant decline. Many of our clients are heavily invested in real estate or are involved in various development projects. For them, the reality of the declining market means a lot more than an interesting headline. It means that their entire estate may be facing a risk of loss. Here is a real life example.