IRS Makes Bogus Offer

by Jim Davidson

Recently, the Immigration and Naturalization Service (INS) claimed that visitors from several Asian and African countries should come by the INS office nearest them for some new paperwork.  Presuming this matter was routine, many hundreds did so, and a great many were summarily arrested.  It proved to be the old "we're with the government and here to help" lie. 

Previously, for a great many years, American visitors to Cuba were told it was okay to visit there, but you had to check in before going and check in after returning, and you could spend no money there (or fall afoul with the "trading with the enemy" laws).  Americans who ignored this rule did so with impunity; those who obeyed found out about the Catch 22--you tell the Feds you went to Cuba and they will insist you must have spent money while there.

Now the IRS is trying a similar ploy.  It has offered a fake sort of "amnesty" for holders of offshore credit cards with the ostensible "benefit" that the IRS won't prosecute such card holders for "hiding income" offshore.  Naturally, those who disclose offshore credit cards to the IRS are going to be in worse trouble than if they had remained silent.  (There is an affirmative right or freedom to remain silent, and there is nothing wrong about exercising it.  You are innocent until proven guilty in a court of competent jurisdiction, despite all the attempts by those in power to deceive you into accepting the "judgment" of an administrative hearing.)

Several dozen offshore countries have banks which offer private or anonymous banking services, including credit cards and ATM cards.  Moreover, nearly three dozen tax havens have no treaty with the USA obligating disclosure about income earned in those locations.  About a dozen new countries are under development offering similar advantages, and there is every expectation of dozens more to come.

The IRS is basically unable to do anything about offshore earned income and offshore assets.  In their typically fairly sly way, they now seek to trick Americans into making disclosures about their offshore accounts.  Since most Americans have no actual tax obligation under the law, the IRS is perpetrating a massive fraud of historic proportions.  (The law defines taxpayers and income in ways that make "compliance" voluntary and exclude most Americans.)  This latest effort at "tax farming" to find hidden assets and income is just the current cunning addition to the bag of tricks.

You might ask: How can I use a credit card issued by an offshore bank to hide income?  Well, you can't.  You use the credit card to make purchases.  With major brands of credit card and point of sale card, such as Visa or Maestro, you can also use the card as an ATM card to get at your money in cash. 

So, how does one use offshore facilities to generate income?  Simple.  Place assets with a bank offshore to earn interest, especially in certificates of deposit.  Place them in a EU euro or British pounds or Swiss francs account to benefit from the declining dollar.

Go for the gusto and open an offshore brokerage account to make investments, even in US securities, from abroad.  Take advantage of the limited disclosures available in places like Britain, Switzerland, or Holland to do business and earn income which you may avoid reporting to the IRS.  Or make use of the more thorough privacy and tax freedom available in Malta, Panama, or the Channel Islands to keep all that you earn.  It also helps to have a second passport, as you are at a disadvantage identifying as an American in these transactions.  (Banks and brokerage firms do not want the hassles.)

Of course, avoiding taxes is perfectly legal.  Evading them, or defrauding the government, is not legal.  You should only pay taxes you owe.  At the same time, of course, you should pay all the taxes you actually owe, in order to avoid trouble from the state.  (It is better to starve the state, so you don't want to get caught illegally evading taxes, as they'll take down all your property and that starves them less.)

The IRS and fedgov have insurmountable problems.  Access to offshore asset holding services is one click away.  For example http://goldmoney.com/ will store gold for you in a private vault in London.  Gold is currently going up nicely, and is expected to go up further.  You would earn capital appreciation on the change in gold's price, which might be viewed as "income."  Because the asset is held offshore, the capital gain is not reported as it would be with a US company stock or bond.

The insurmountable problems are getting ever tougher.  More services are available, more exchanges are done without government oversight, and the number of tax havens is increasing.  These difficulties make it ever harder to collect taxes.  Since the economy is now cratering, tax collections are down anyway.  Most empires fail when they are unable to pay for the military to hold their distant provinces.

Some months back, the Congress decided that Internet casinos were all money laundries.  Nothing could be further from the truth.  That decision was simply an attempt to protect the physical casinos and state lotteries from online gambling--which in 2001 was a billion dollar industry compared to the three trillion dollars in casino gaming worldwide.  Of course, people do prefer to experience adult entertainment, gambling, and other private activities in the comfort of their own homes.  So, online gaming will pick up.

It won't operate with Citibank credit cards.  And, the fedgov is going to try to shut it down.  But, it will survive, mostly on gold currencies and the like, which will be operated from offshore (as e-Bullion.com is) and which make transactions harder to trace.  People are beginning to see that credit cards severely hamper their privacy. 

So, should you tell the IRS about your offshore credit cards?  I doubt it.  Are you a taxpayer?  I doubt it.  Do you owe any taxes to anyone?  I don't find any evidence for it.

Do you have an obligation to live for the sake of others?  Probably not.  If you choose to do so, then living for the sake of a spouse or children makes some sense; living for the sake of the sort of incompetent trolls in government is a very bad choice.  The state depends on you to pay for its bad policies.  The state also depends on finding soldiers for its agencies and armies to put its interests ahead of their own, to sacrifice their time, talent, and often their lives for its benefit.

Striking at the root comes easier if you have more of what you earn.  You are now entering an era when you'll have greater access to "jurisdictional arbitrage."  You should think seriously about living in one country, earning money in a second, placing your assets in two others, and having a passport from a fifth.  (The quality of access to the world with a USA passport is best, so begin there and work backward.  But, be sure to own a secondary or camouflage passport in case you find yourself in one of those situations where identifying yourself as an American will be hazardous to your health.)

In my view, striking the root means starving the state, not only of your income, but of your friends and family members.  Keep spreading the message that the state is not worth dying for, and is also not worth paying for.

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