Asset Protection BLOG - Mark Nestmann

Offshore Centers Teeter on Brink of Financial Collapse

The mainstream media often paints a picture of offshore centers as outposts of unimaginable wealth, with their economies fueled by the proceeds of money laundering, tax fraud, and other illegal activities.

The truth, as is often the case, is very different from the news reports.  Some offshore centers—think Switzerland, Singapore, and Hong Kong—are in relatively good shape financially.  Their governments can pay bills coming due.  Business continues in a relatively "normal" fashion, or as normal as is possible in the grip of the most serious financial meltdown in nearly a century. 

Numerous offshore centers now face a perfect financial storm.  Their governments spent heavily to beef up infrastructure.  But, they also borrowed heavily to finance these expenditures.   So long as the global economy continued to grow, it was reasonable to believe they could pay the money back.  But in the midst of a global financial collapse, they can no longer afford to do so.

In addition, just as the global economy tanked, the Organization for Economic Cooperation and Development launched a renewed campaign against "harmful tax competition."  The targets, as always, were offshore financial centers.  So at the same time that offshore centers saw revenues shrinking from due to the economic downturn, the OECD forced them to eliminate bank secrecy with respect to inquiries from tax authorities in high-tax countries.  

The British overseas territory of the Cayman Islands, the world's fifth largest banking center, is a case in point.  Facing a US$82 million budget deficit, the Caymans last month appealed to its colonial masters in London for permission to borrow US$310 million from banks.  And despite the fact that banks had already approved the loans, the British Foreign Office said "no." 

The Caymans weren't asking for direct government aid from the British government.  But, because the size of the loans would result in a deficit in the government's operating budget, the Caymans had to ask for London's permission to borrow the money. 

In response to the request, Foreign Office minister Chris Bryant suggested that Cayman introduce—gasp—new taxes.  "I fear you will have no choice but to consider new taxes – perhaps payroll and property taxes," Bryant wrote to McKeeva Bush, head of the Cayman government. 

For the moment, the Caymans have rejected the idea of direct taxes.  Instead, the government will raise customs duties, licensing fees, and other indirect taxes.  It also plans to sharply cut spending.

However, the global financial crisis isn't going away.  Neither is the OECD.  That means the Caymans and other offshore centers will come under increasing pressure to balance revenues and expenditures.  For now, direct taxes on income or property are off the table.  But there's zero assurance that the governments of offshore centers may impose them in the future. 

Copyright © 2009 by Mark Nestmann

Don't Get Caught in This Estate Tax Trap

If you're not a U.S. citizen or resident, you might think you have no U.S. tax obligations.  But if you hold shares in any U.S. corporations, your heirs may face a huge tax bill when you die.

The culprit is an obscure provision (aren't they all?) in the Tax Code.  Section 2104 reads, in part:

“Shares of stock owned and held by a nonresident not a citizen of the United States shall be deemed property within the United States only if issued by a domestic corporation.”

Section 2104 is a section of the Tax Code dealing with estate tax.  And this sentence means that even if you have no connection whatsoever to the United States, the IRS can still subject your holdings of U.S. stocks to estate tax.  Similar rules apply to real estate holdings. 

The rules exempt the first US$60,000 of U.S.-based real estate or securities from tax.  But if your worldwide estate exceeds US$3.5 million at your death, then it must pay tax on the U.S.-based portion.

That's what happened to one unfortunate couple living in Belgium.  The husband accumulated 250,000 shares of stock in banking giant Citicorp.  At the time he passed away in 2002, the stock was worth nearly US$12 million. 

If the couple had been U.S. citizens, the shares could have automatically conveyed to the surviving spouse free of gift or estate tax.  That's a consequence of a concept called the "unlimited marital deduction." However, if the surviving spouse isn't a U.S. citizen, no deduction is available.

The result in this case is that the husband's estate now owes over US$4 million in estate taxes and penalties.  And because the value of Citicorp shares fell more than 90% between 2002 and 2009, the shares are worth only about US$1 million today.   In other words, the estate must shell out four times the value of the shares in taxes and penalties.

This is an outrageous result, but it's the law.  Fortunately, there's an easy solution.  If you aren't a citizen or resident of the United States, and want to own U.S. shares, don't hold them in your own name.  Instead, take possession of the shares through an entity such as a trust.  This simple step would have saved the heirs of the deceased Belgian investor over US$4 million in unnecessary taxes. 

If you're a non-resident investor, be sure to obtain advice from a tax professional before investing in U.S. shares—or any U.S. property.  Don't make the same mistake as this unfortunate Belgian family. 

Copyright © 2009 by Mark Nestmann

The Garage Sale Police are Coming!

Do you anticipate that your next garage sale will bring in at least US$100,000?  If you don't think your children's old toys and collection of obsolete electronics is worth at least that amount, you might want to take these items to a toxic waste dump instead of selling them. 

Our friends at the Consumer Product Safety Commission (CFTC) recently informed thrift stores that it's now illegal to sell used products that have been recalled or don't otherwise comply with government safety standards.  The penalty is up to US$100,000 per violation and up to $15 million for a related series of infractions.  But the CFTC regulations don't just apply to retail stores.  They also apply to anyone selling used goods—flea markets, charities, even garage sales. 

To find out if your next garage sale might result in a US$100,000 fine, the CFTC has helpfully published a "Handbook for Resale Stores and Product Resellers." After reading the long list of banned products, you might want to reconsider that garage sale.  But, if you're still determined to have it, you'll want to begin by disassembling every item you want to sell and testing each part for the various hazardous chemicals that the CFTC rules ban in resold goods. 

For instance, here's what the CFTC says you'll need to test for "phthalates," a class of now-prohibited chemicals.  Many types of plastic toys contain phthalates.

1. Tetrahydrofuran (C₄H₈O, THF), GC grade or higher
2. Hexane (C₆H₁₂), GC grade or higher
3. Cyclohexane (C₆H₁₂), GC grade or higher
4. Sealable glass vials with PTFE or silicone liner. Size 20 ml or larger
5. Cryogenic-mill (or suitable alternative to grind samples to powder)
6. 0.45 μm PTFE filters
7. Gas Chromatograph-Mass Spectrometer (GC-MS) with an auto-sampler, split/splitless inlet, programmable GC oven, and capable of selective ion monitoring
8. CRMs containing phthalates (such as NIST SRM 3074)
9. Benzyl Benzoate (C₁₄H₁₂O₂, BB), Analytical grade
10. Dibutyl Phthalate (C₁₆H₂₂O₄, DBP), CAS No. 84-74-2. Analytical grade
11. Di-(2-ethylhexyl) phthalate (C₂₄H₃₈O₄ , DEHP), CAS No. 117-81-7. Analytical grade or higher

Got that?  I don't know about you, but I've got several Gas Chromatograph-Mass Spectrometers (GC-MSs) lying around the house.  Not to mention a cryogenic mill or two.  Guess I just have to fire them up next time I want to have a garage sale.

You might be wondering how these regulations came into being.  As usual, you can blame Congress.  In 2008, Congress enacted the Consumer Product Safety Improvement Act of 2008 (CPSIA).  You may remember the brouhaha that erupted in 2007 over imported toys—primarily from China—that contained lead and other toxic substances.  The CPSIA was the congressional reaction.  Thanks, guys!  Nothing like overkill.

The CFTC, in a rare display of candor, states in its "Handbook" that. "The implementation of the CPSIA will have dramatic changes for the marketplace."  You can say that again!

To enforce the law, I suggest that the next Wall Street bailout package Congress enacts include a provision to send every family in the United States a GC-MS, just in case they don't have one sitting on the dining room table.  Of course, since you need to be conversant in chemistry to use one, the bailout should include a voucher for a chemistry class at a local community college. 

A cheap GC-MS costs about US$50,000, but since the government will be making a bulk purchase, it should be possible to get the costs down to, say, US$30,000 each, including the cost of a chemistry class. Total cost for 100 million households?  About US$3 trillion.

Now, before you criticize the cost, consider that if this initiative saves just one child's life, it will be worth every penny.  Plus, it will stimulate the economy, not to mention keeping garage sales CFTC compliant.  And, the money won't be going to fat-cat executives on Wall Street. Sure, there might be small safety problems--Tetrahydrofuran tends to explode, for instance--but hey, the CFTC can just issue some more rules, right?

That's a win-win situation all around.  Congress, are you listening?

Copyright © 2009 by Mark Nestmann

If You Have any Connection to an Offshore Trust, You Need This Book

Type the phrase "offshore trust" into a search engine, and you'll get a lot of hits.  When I did so a few minutes ago, I found 109,000 matches on Google. 

When I pulled up three of the first 20 matches, I found a lot about the benefits of an offshore trust.  But I found very little about the rather onerous reporting requirements that apply to offshore trusts a U.S. person creates, or with U.S. beneficiaries.  Or, for that matter, about the draconian penalties that apply for non-compliance with these requirements. 

Don't get me wrong.  Offshore trusts can be immensely useful instruments for asset protection, estate planning, and other uses.  But when an offshore trust has any connection whatsoever to the United States, it's important to understand the legal, tax, and regulatory implications.

That's why I was delighted to receive an e-mail message last week from my old friend and colleague, CPA Vernon Jacobs.  Vern and international tax attorney Richard Duke have written the first edition of a new tax guide for the U.S. grantors and beneficiaries of an offshore trust.  It's called The U.S. Tax Guide for Foreign Trusts.  And it's the only practical guide to the compliance rules for the U.S. grantors and beneficiaries of a foreign trust I've found. 

If you're a U.S. citizen or U.S. resident alien who has (or wants to have) an offshore trust, you need this book.  If you're the U.S. beneficiary of an offshore trust, you also need this book.  Indeed, if you have any connection whatsoever to an offshore trust with a U.S. grantor or beneficiaries, you need this book.  That includes trustees for offshore trusts, professional advisors who facilitate the formation of offshore trusts, asset manager for offshore trusts, and accountants who keeps the books for offshore trusts.

For years, I've been trying to get Vern to increase the price he charges for his excellent work.  Unfortunately for Vern—but fortunately for you—I haven't convinced him to do so.  You can purchase a digital copy of The U.S. Tax Guide for Foreign Trusts for only US$65, or a printed copy for only US$87. 

To learn more about this book, see http://www.offshorepress.com/faptax.htm.  Again, if you have any involvement whatsoever in an offshore trust with a U.S. connection, you need a copy of it in your library.

Update to Billionaires Loophole report…and Other Stuff

I recently made some mostly minor updates and corrections to this report dealing with exit taxes, but expanded the discussion of "renunciation" verses "relinquishment" of U.S. citizenship. If you purchased this report in the last year, you can download the update by logging on to your account at Nestmann.com (instructions below).

Other News

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Is Expatriation for You?

The United States is one of only two countries that imposes tax on a citizen's worldwide income, no matter where that citizen lives.  (The other country is, of all places, Eritrea.)

For citizens of most high-tax countries, it's easy to legally avoid the obligation to pay tax on your worldwide income.  You simply relocate to a lower-tax jurisdiction, or one that only taxes local income.  After an extended period—normally 1-2 years—you become "non-resident" for tax purposes.  You no longer have the obligation to pay tax on your worldwide income to the country that issued your passport.  You may, however, still be subject to gift and estate taxes. 

But not the USA.  To permanently disconnect from the obligation to pay U.S. income tax, U.S. citizens must not only leave the United States.  They must also take the radical step of giving up U.S. citizenship and passport.  This process (from a U.S. standpoint) is called expatriation.  Before giving up U.S. citizenship, they must acquire citizenship and a passport from another country. 

If you're wealthy, expatriating could result in big tax savings.  The total combined state-federal income tax burden for most high earners is close to 50%.  And President Obama promises to hike that burden to pay for his spending plans.  If you anticipate earning US$2 million over the next five years, expatriation could save you a cool US$1 million in income tax during that period.  Not to mention millions more in the years ahead, and millions more again in estate tax savings. 

Expatriation also eliminates the increasing difficulties that U.S. citizens face when they invest or do business overseas.  Most non-U.S. banks and brokers now prohibit anyone with any connection to the United States from opening an account.  This is a result of the U.S. government's intensifying crackdown against anything "offshore."  Foreign entrepreneurs may avoid joint ventures with U.S. citizens, for fear of U.S. tax or regulatory entanglements.  If you give up your U.S. citizenship and passport, you eliminate these problems.

Only a few hundred people, many of whom are not wealthy, give up their U.S. citizenship annually.  But despite this reality, expatriates remain vulnerable to political bombast.  The image of wealthy former U.S. citizens living tax-free in tropical paradises is an irresistible populist target.  Former Congressman Sam Gibbons, a Florida Democrat, once spoke of  "the despicable act of renouncing allegiance to the United States."  Former Congressman Martin Frost, a Texas Democrat, supported tax penalties on expatriates on the basis of "basic patriotism and basic fairness."  The result has been a series of increasingly stringent laws penalizing expatriate Americans. 

Until 2008, it was relatively easy to circumvent these anti-expatriation rules.  But last June, Congress replaced the existing law in its entirety with an "exit tax."  The exit tax establishes a legal fiction that you sell all your worldwide property the day before expatriation.  If you're a "covered expatriate" (which I'll define momentarily), you must then pay tax on this fictional gain.  Unrealized gains in non-grantor trusts and some retirement and pension plans are exempt from the exit tax.  Instead, payouts that would taxable to a U.S. person are subject to a 30% withholding tax. 

Only certain dual citizens and minors with few ties to the United States are exempted from these requirements.  Long-term green-card holders must also pay the exit tax, if they've lived in the United States for at least eight of the 15 years preceding expatriation. 

How are you supposed to pay the tax without selling your assets?  That's your problem!  However, the law permits deferral by posting acceptable security with the U.S. Treasury and paying an interest charge on the amount deferred.

Fortunately, the first US$600,000 of unrealized gain isn't subject to the exit tax.  This amount is adjusted annually for inflation, and for 2009 the exemption is US$626,000.  The exemption doubles for a married couple, both of whom expatriate. In addition, even if your unrealized gains exceed US$626,000, the exit tax only applies to you if you're a "covered expatriate."  This means you:

• Have a global net worth exceeding US$2 million (US$4 million for a married couple); and/or
• An average annual net income tax liability for the five preceding years ending before the date of expatriation the loss of U.S. citizenship or residence exceeding US$124,000 (adjusted for inflation, US$136,000); and/or
• Fail to certify under penalties of perjury that they have complied with all U.S. federal tax obligations for the preceding five years or fail to submit evidence of compliance as required by regulation.

There's also a very sneaky substitute estate tax provision in the exit tax law.  Let's say you expatriate, and then 20 years in the future make a gift to family members remaining in the United States.  If you're a "covered expatriate" at the time you make the gift, U.S. recipients must pay a tax when they receive it.  And not at ordinary income tax rates, but on the highest estate tax rate existing at the time!  However, a covered expatriate can make annual gifts up to US$13,000 to any U.S. person without a tax consequence to the recipient.  The US$13,000 exclusion is adjusted annually for inflation. 

The best that can be said about the exit tax is that it offers a relatively clean break with the U.S. tax system as of the date of expatriation.  Unlike prior law, there is no longer a 10-year period after expatriation during which punitive tax and immigration rules apply. 

Is expatriation for you?  The decision to give up U.S. citizenship is a serious one.  It also requires substantial advance planning, including the acquisition of a second passport, if you don't already have one.  It's a step you should take only after consulting with your family and professional advisors.  But it's the only way that U.S. citizens and long-term residents can eliminate U.S. tax liability on their non-U.S. income, wherever they live.  And it's a tax avoidance option that Congress may eventually eliminate altogether.

(The Nestmann Group can provide consultation on every aspect of expatriation, from acquisition of a second passport to the actual loss of U.S. nationality.  For more information, contact Mark Nestmann at info@nestmann.com.)

Copyright © 2009 by Mark Nestmann

Global Tax Wackos at it Again

You have to admit they never give up.  Even if the ideas they're pushing have been thoroughly discredited for decades.

I'm speaking of an idea that even the economist who originally proposed the idea now rejects: a global tax on foreign exchange transactions.

Last week, The New York Times published an article by former French foreign minister Dr. Philippe Douste-Blazy.  It proposes a "tiny levy" of 0.005% on transactions involving the world’s most traded currencies: the dollar, euro, pound sterling and yen.  This tax, Douste-Blazy says, will raise US$33 billion annually to fight poverty and disease in the world's poorest countries.

Imposing tax on forex transactions isn't a new idea.  Back in 1978, economics professor (and Nobel Laureate) Dr. James Tobin suggested that such a tax could potentially help curb volatility in emerging market economies.  This type of tax has come to be called a "Tobin Tax"—over Dr. Tobin's objections.

Dr. Tobin proposed the tax to inhibit speculation in third-world countries, allowing them to pursue more independent economic policies.  But the United Nations hijacked his idea, primarily because the tax offered the agency a funding source independent of individual donor governments.

So beginning in the mid-1990s, the UN made the Tobin Tax the centerpiece of its funding proposals to redistribute wealth and income.  Only it would be imposed at 0.05%, a rate 10 times higher than Douste-Blazy now proposes.   According to a 2001 report from the UN's "High-Level Panel on Financing for Development," such a tax would generate up US$400 billion annually. 

(And just to prove there's nothing new in current efforts by global tax authorities to end bank secrecy in tax matters…there's not.  The same 2001 report proposed that all governments collect private financial data on individual taxpayers and share it with other governments.  It also suggested that governments should have the permanent right to tax individuals who exercise their right to emigrate from their homeland. An "International Tax Organization" would oversee these efforts and "take a lead role in restraining tax competition.") 

It remains to be seen if the countries issuing the currencies Douste-Blazy wants to tax will go along with this idea.  If they do, it will be one more blow against freedom of movement, tax competition, and financial privacy.  But a Tobin Tax, if imposed, will not have the effect its proponents claim.

To understand why, consider how forex markets operate.  Investors risk trillions of dollars in these markets daily, but someone has to take the other side of every trade.  The broker-dealers that do so immediate try to off-load the risks they've assumed to other brokers.  If speculators are short U.S. dollars, brokers may have an oversupply of yen.  The brokers try to sell the excess yen to other dealers.  This practice encourages hedging, increases liquidity, and helps reduce currency volatility. 

Now it's time for a little Economics 101, directed to our former French foreign minister.  Anytime the cost of something increases, people tend to buy less of it.  So if governments impose a tax on foreign exchange, even a tiny one, transaction costs will increase.  That will discourage trading, decrease liquidity, and increase volatility.  It will also lead to a much smaller revenues than Douste-Blazy —much less the United Nations—suggests.

So what's the real purpose of his suggestion?  The only reason I can come up with to resurrect this thoroughly discredited idea is because it presents an opportunity to impose a truly global tax.  And to construct a foundation over which to enforce other global tax initiatives.

Are you ready for a global tax agency that can levy tax payments anywhere in the world?  For global restrictions on emigration?  Or for globally enforced capital controls? 

If you are, then you should love the idea of the Tobin Tax.  But if not, you at least have some intellectual ammunition to take on your friends, business associates, and family members when they suggest that it might be a good idea.  It's not. 

Copyright © 2009 by Mark Nestmann

IRS Demands Super-Invasive Tax Exchange Agreements with Smaller Offshore Jurisdictions

The devil is in the details.  My father, who practiced medicine for nearly four decades, often repeated this truism when confronting a difficult diagnosis.  And the same truism applies in other areas—including "tax information exchange agreements" (TIEAs).

If you have mercifully avoided TIEAs thus far in your life, you may not be able to avoid them much longer.  That's especially true if you invest or do business offshore.  The reason: purportedly to establish a "level playing field" for international investment, high tax countries have forced low tax jurisdictions to sign dozens of TIEAs in recent months.  These agreements make it much easier for revenue authorities in high tax countries to obtain banking records and other financial records in numerous low-tax jurisdictions.

The Organization for Economic Cooperation and Development (OECD) leads this ongoing jihad against low tax jurisdictions.  As they labor in a sumptuous palace in Paris, OECD bureaucrats enjoy diplomatic status.  Unlike most of us, they receive a tax-free salary and benefits.  And while working tax-free, they prepare lists of countries they deem insufficiently cooperative with revenue authorities in OECD—and mostly high-tax—countries. 

Earlier this year, the OECD issued its latest "grey list" of countries that have promised to boost cooperation in tax investigations, but have not yet done so.  One of the most important demands the OECD made to countries on this list is to ratify at least a dozen TIEAs.  Countries that fail to do so may eventually find themselves on an OECD "black list."  And that could result, according to the OECD, in potential isolation from the global financial system.  (Think North Korea or Iran.)  Not surprisingly, countries on the grey list are trying to get off of it as quickly as they can.

OECD efforts to end what it calls "harmful tax competition" began in the 1990s.  But it wasn't until 2009 their efforts came to fruition.  Citing the need to uphold OECD "standards," several high-tax countries pressured Switzerland and other offshore havens on the grey list to amend their laws to require information exchange with foreign revenue authorities.

The United States led this effort.  And the results have been a spectacular success, at least from the U.S. Treasury's perspective.  First, U.S. prosecutors persuaded the Swiss government to release the names and account records of nearly 5,000 alleged tax evaders from Swiss banking giant UBS.  But that was just the beginning.  The United States also forced Switzerland to sign a TIEA. 

The U.S.-Switzerland TIEA isn't that bad, as TIEAs go.  It only obligates Switzerland to release information if U.S. investigators give Swiss authorities a specific name or names of suspected tax evaders.  The agreement doesn't allow the IRS to engage in "fishing expeditions" and ask, e.g., for account records of unnamed U.S. taxpayers in one or more (or all) Swiss banks.  (Earlier this year, the IRS tried, but failed, to get the account records of 52,000 unnamed UBS depositors via a so-called "John Doe" subpoena.)

To get off the OECD's most recent grey list, Switzerland signed this TIEA and 11 other TIEAs with high-tax countries.  All the TIEAs require Switzerland to lift bank secrecy laws in tax investigations of named taxpayers.  None of them permit fishing expeditions by revenue authorities.  And yesterday, Sept. 23, the Swiss government announced that it expects the OECD to promptly remove it from its latest grey list.

Austria, another country with strict bank secrecy laws, completed a similar process.  The OECD dutifully removed it from the grey list on Sept. 22. 

But the devil, again, is in the details.  Numerous smaller jurisdictions also find themselves on the grey list.  And because they lack the diplomatic clout of Switzerland or Austria, it's much harder for them to get off of it.

Case in point is a small independent low-tax jurisdiction that, for the moment, will remain nameless.  I recently had the opportunity to review internal government correspondence on its progress in meeting the OECD's demands.  This jurisdiction already has signed, or is about to sign the requisite dozen TIEAs.  But it's still on the OECD grey list, because it hasn't been able to come to terms with the U.S. Treasury Department.

In negotiations with this jurisdiction, the U.S. Treasury has demanded a super-TIEA.  The proposed agreement would allow IRS authorities to automatically enter the jurisdiction to conduct interviews and gather evidence.  It would also authorize use of John Doe subpoenas for the same purpose. 

Naturally, this jurisdiction doesn't want to sign the agreement.  However, if it fails to do so, the United States may prevent the OECD from removing this nation from the grey list.  Forget the fact that this country has complied with all the OECD's demands.  If it doesn't submit to IRS blackmail, it may stay on the grey list.  

By the way, you might be wondering: what's the world's largest tax haven with the highest degree of secrecy?  Surprise, surprise: it's the United States.  If you're a non-resident alien investor, you can arrange your U.S. investments so that you pay little if any tax.  Except in the case of Canada, the IRS won't tell your home country about the income you earn in the United States.  And you can still set up essentially anonymous banking relationships, perfectly legally. 

Why isn't the United States on the OECD grey list?  That's a no-brainer: it's a matter of might makes right.  And it shows how the game really works, behind the scenes.  The devil, after all, is in the details. 

Copyright © 2009 by Mark Nestmann

Belgium: The Easiest Route to a EU Passport?

I had an interesting conversation over the weekend with a well-connected attorney I know in Europe.  He reminded me that Belgium imposes no capital gains tax, and as a result is attracting an increasing number of wealthy tax exiles.  And not only is it relatively easy to qualify for residence there, after three years you qualify for Belgian citizenship and passport.  That gives you the right to live and work in any of the other 26 EU countries.  You can also keep your current passport. 

The biggest drawback is that you have to learn French, although no one expects you to speak it perfectly.  You also have to show some degree of integration in Belgium.  But if you learn some French, rent an apartment, and appear to be settling down in Belgium, you'll probably qualify for a Belgian passport.  Especially if you're willing to live there most of the time, Belgian residence might be worth considering.

Copyright © 2009 by Mark Nestmann

IRS Extends Deadline for Reporting Unacknowledged Offshore Accounts

It couldn't have happened at a better time.  The IRS today announced an extension of time for "voluntary disclosures" by taxpayers with unreported offshore accounts.  It extended the previous Sept. 23 deadline three weeks, until Oct. 15, 2009.   (I've written previously about this program here.)

Given the overwhelming response to this initiative, the extension couldn't come at a better time.  The IRS has already processed more than 3,000 applications under the program, with many coming in just the last few days, compared to 88 for all of 2008. 

If you're a U.S. taxpayer with unreported offshore income and/or accounts, I highly recommend you consider enrolling in the program.  But speak to a tax advisor first, because there are numerous issues to consider before putting yourself at the mercy of the IRS. 

Copyright © 2009 by Mark Nestmann