Some American investors have concocted a scheme to evade U.S. taxes by sending their money offshore and then investing from there in U.S. stocks or bonds. A recent study says that this is costing our country billions in unpaid taxes.
In order to do the round tripping, an American citizen will set up a bank account in a foreign tax haven like the Cayman Islands. Then they place their moneys into those accounts and use it to purchase stocks and bonds back in the states.
Normally an individual who invests in the U.S. is supposed to pay taxes on any profits they make on those investments. However, as they pretend they are foreign they don’t report that they are U.S. residents and as such don’t report that income. It is almost impossible for tax authorities to learn about the scheme, unless there is a whistleblower who reveals it.
If reported by a whistleblower, the law allows a reward of up to 30% of what Uncle Sam recovers to the whistleblower and reporting can be done anonymously through counsel. Collecting billions in unpaid taxes could help our economy recover more quickly.