Articles Posted in Tax Shelter Fraud

tax evasionAccording to a list by Oxfam, a charitable organization that works to alleviate global poverty, Bermuda is the worst corporate tax haven in the world. Joining Bermuda on this list are fourteen other tax havens, which include the Cayman Islands and British Virgin Islands. But, what makes Bermuda stand out among the others noted on this list?

Creating The List

Oxfam did not take the creation of this list lightly. In order to determine the tax havens that belonged on the list, Oxfam carefully researched numerous factors, including the presence of exceptionally low or nonexistent corporate tax rates and unfair tax incentives. Oxfam also took into consideration the cooperation, or lack of cooperation, of these tax havens in regards to international regulations designed to combat tax evasion. During its extensive research, Oxfam found that Bermuda and other British territories were among the worst tax havens in the world. This is especially true when considering the United State’s use of these tax havens.

Recently Switzerland and Singapore agreed to share tax information about American tax evaders. On May 6, 34 members of the Organization for Economic Cooperation and Development (OECD) and 13 other nations signed an agreement on gathering tax-related information from financial institutions and will exchange it every year.

This means that for those trying to evade taxes, nations like Switzerland and Singapore will not longer allow them to hide behind secrecy laws.

However, certain countries in Central Asia and Africa will not abide by such agreements and some experts feel that tax evaders will shift their moneys to banks in those nations in order to keep from paying the tax man. This may include major international corporations.

A new plan released by financial chiefs from the United states, Canada and other leading world economies will make it a lot tougher for multinational companies to stash their profits offshore to evade taxes. There will be two beneficiaries to this. First, the countries will benefit because the companies will pay more in taxes. In addition, there will be new programs for whistleblowers to reveal tax evasion, allowing them to collect rewards for revealing the location of the moneys, similar to the  whistleblower programs in the Securities and Exchange Commission and the False Claims Act.  Major global companies have been paying low taxes, including Google, Apple, Facebook and Starbucks by setting up offshore operations where they keep the moneys protected from tax authorities.  The Organization for Economic Co-operation and Development (OECD) based in Paris, has created a 15-point plan to close loopholes and allow countries to tax profits held in offshore subsidiaries.  The plan also includes rules preventing companies from escaping taxes by putting patent rights into shell companies, taking interest deductions in one country without reporting taxable profits in another and also by forcing them to disclose to regulators where they put their income around the world. A whistleblower, even if living outside the United States can report tax evaders and receive a reward of up to 30% of the moneys recovered. Jeffrey Newman represents whistleblowers. (free consultation)

The IRS and Securities and Exchange Commission are finding unusual sources of information–international financial whistleblowers who are revealing enormous amounts of sensitive information about banks and large corporations that are evading taxes and defrauding investors and stock holders. The new breed of whistleblowers are sophisticated enough to know that they can reveal information under the SEC or IRS whistleblower programs and still remain anonymous, a new twist to these whistleblower programs expected to make all the difference to these individuals. It allows them to continue working without the fear of reprisals. It also allows them to collect the rewards of up to 30% of what the government recovers and in many of these cases, especially with regard to bank insiders in Switzerland, the Isle of Man, Cayman Islands as well as other major tax havens in the Caribbean, the fraud is massive. The Government Accounting Office estimates that trillions of dollars in taxes are lost to foreign tax havens which allow individuals and corporations to illegally secrete their moneys from Uncle Same because they money is kept outside the U.S. . Up until now, that has worked, for the most part. But as there is a significant incentive for whistleblowers to reveal this fraud,the jog may be up. One whistleblower was awarded $104 million last year as his share of the recovered moneys. That award generated significant press and since then, calls have come from the whistleblowers. If you are aware of financial fraud, tax evasion or fraudulent financial statements filed by publicly traded companies, contact Jeffrey Newman who represents whistleblowers. 1-800-682-7157. free consultations.

When you start with knowledge that every dollar of tax evasion is borne on the backs of the rest of the United States citizens, the issue of tax evasion becomes more prominent. As time passes and budget belts tighten perhaps then the IRS will awaken to the need to energize its whistleblower program to collect what is really owed by US companies. John Mackey, co-founder and co-CEO of Whole Foods Market has a different spin on things. He says we should not blame Apple because it seeks to avoid paying taxes. “They are just following the rules.” That may be one way to put it. Another is that Apple and General Electric and scores of other multi-national companies have taken a very narrow perspective on the definition of good citizenship. As consumers, we hold the cards. If we gather together and say in unison, by our buying power: “Apple, when you decide to pay your fair share of taxes like we do, we will buy your products,” that would make a difference. Nothing like a truly capitalist Democracy, with a capital D. In his interview with the Financial Times, Mackey distinguished between Apple and General Electric. He says GE gets tax breaks because of crony capitalistic favors from the government in the form of tax credits because they are investing in alternative energy. None of this relates to some of the larger forms of tax fraud such as transfer pricing and the use of tax havens to evade US taxes. Those efforts are shameful, as are the meager efforts of the IRS to pursue them. Whistleblowers even the playing field and when they come forward with primary data which cannot be ignored, the IRS has no choice. Jeffrey Newman represents whistleblowers.

Now that the new IRS whistleblower program has ramped up and is issuing rewards to whistleblowers who reveal major fraud, including one $104 million reward last year, people are coming forward to reveal efforts to evade taxes through tax shelters. Indeed, this may be the most fertile ground for whistleblowers. An illegal tax shelter reduces the amount of tax a taxpayer (including corporations) must pay but it makes it hard to get at the money. Offshore tax havens are generally used in this fashion: companies form corporations and park their moneys in banks and trust providers in foreign countries. These entities make it difficult to trace ownership. Some of the most popular tax havens include Panama, Belize, the Cayman Islands, St. Kitts, Nevis, the British Virgin Islands and the Isle of Man. While not all offshore accounts are illegal, if they do not meet with the IRS regulations and they are evading taxes, the owner may be liable to the government. Whistleblowers may recover up to 30% of what the government recovers including penalties. If you are aware of tax evasion and wish to become a whistleblower, contact Jeffrey Newman at He represents whistleblowers.

NOT ALL TAX SHELTERS ARE LEGITIMATE and tax fraud does exist. Here are a few ways in which tax shelters can be fraudulent:

1. Tax shelters that hide money to avoid paying taxes are fraudulent

2. Buying or selling assets, goods or services at far below market value to chelter income in illegal