Global High Net Worth Investors: US Investments, Immigration & Tax Planning

May 01, 2017  |   Posted by :   |   International Investors   |   0 Comments

For Global High Net Worth Investors who elect to immigrate to the United States, the pre-immigration planning is essential to minimize their tax implications. Under the current alternatives, an investor may gain a green card by an investment ($500k-$1m) and application for an EB5 Visa (which if in a regional center is a $500k investment, if in private business is $1m and the creation of 10 new jobs).

The EB5 Visa however subjects the investor to worldwide US income tax; US gift tax on gifts, and US estate tax on their death. In addition, the US income tax rules requires disclosure of foreign bank and financial accounts over $10k (FinCEN form 114 known as an FBAR filing  and foreign financial assets over $50k (Form 8938 attached annually to Form 1040, known as a “FATCA Filing”). Failure to file the FinCEN form 114 has both civil and criminal penalties (as does Form 8938). In addition the incomplete tax filings suspend the IRS civil statute of limitations for IRS tax audit of taxpayer tax returns (normally 3 years from the date of filing).

A less expensive alternative may be an E-2 Visa which may require a minimum investment of $150,000 and creation of 3 jobs. However, the Investor’s home country must have an E-2 Treaty with the US (which includes approximately 80 countries who have US E-2 Treaties). Major countries: Israel, Brazil, Russia, India, China do not have E-2 treaties (although Israel’s E-2 Treaty is currently pending).

Given the complexities of US civil and criminal tax issues for failures of tax compliance, a Global High Net Worth Investor should consider an L-1 Visa as an alternative. The L-1 Visa requires a foreign company (or its majority owner) to make an investment in a US business with no minimum or maximum investment required. If the L-l Visa holder engages international tax advisors who are experts in US tax law they may prepare a tax planning strategy for their world wide assets which exempts them from US world-wide income, estate and gift tax.

The important tax issues are whether the investor is in the United States annually for less than 183 days per year, or 122 days per year over the current and two preceding tax years. These tests of physical presence known as the “substantial presence test” if properly complied will shield the investor from US worldwide income tax annually. The investor will then be subject to tax on income from US made investments which tax may be ameliorated or eliminated by internationally tax planning. For more on this please see my recent book, published on Amazon as an e-book “International Tax Planning and Asset Protection for High Net Worth Investors”.

Mark Ivener, a pre-eminent world renowned immigration expert who is my co-author on books and articles has prepared the following summary of the requirements for L-1 Visas.

L-1A Visas For Intracompany Transferees can lead to a Green Card

Who is Eligible

Employees being transferred from a foreign company to a U.S. company require an L-1 visa.  The employee must be an executive, manager or a person with specialized knowledge with at least one year of experience with a foreign company.  The requirements for an L-1 visa include proof of continuous foreign employment for one year in the previous three years immediately prior to the application.  The foreign employment requirement is satisfied even if there is a valid interruption in the performance of duties for the foreign company.  If an L-1 beneficiary enters in the U.S. in his or her capacity as an employee of the organization on some other type of visa, the time spent working in the U.S. under a valid visa will not be counted as applicable to the one-year previous foreign employment.

L-1A Executives and Managers

An executive is one who directs the management of an organization or a major component or function of the organization.  He or she establishes goals and policies and exercises wide latitude in discretionary decision making, receiving only general supervision or direction from higher level executives, the board of directors, or stockholders of the organization.  A manager is one who has supervision and control over the work of other supervisors, professionals or managerial employees, or who manages an essential function, department or subdivision of an organization.  A manager has the authority to execute or recommend personnel actions if others are directly supervised.  If no other employees are supervised, he or she must function at a senior level within the organization or with respect to the function managed, and must exercise discretion over the day-to-day operations of the organization or function managed.  An L-1A employee can apply for an Intracompany Transferee Green Card (EB-1) after the US business has been operating with sufficient employees for at least 1 year.  An EB-1 case takes approximately 1- ½ years to process for a Green Card.

The L-1 Employer

The petitioning employer must be a subsidiary, affiliate or branch office, and there must be a relationship between the foreign and U.S. companies in which there is either more than 50% stock control, or a 50/50 joint venture with joint veto power, or the same person owns over 50% of both companies.  The relationship between companies is demonstrated either by showing that the corporations are the same or that one is a subsidiary, affiliate or branch office of the other.

Duration of the Visa

For a business that is just starting, an L-1 visa is valid for one year; for a business that has been doing business in the United States for a year or longer, the visa is valid for three years with two-year extensions available for a total of up to 7 years for an executive or manager.  Any time out of the U.S. maybe added to extensions to get more than 7 years.  For example, if the L-1 executive is out of the U.S. for 3 years out of the 7, he can apply for 10 years. L-1 extensions have to be filed in the U.S. at the USCIS Regional Center serving the area where the business is located.

Where to Apply

An L-1 visa application for foreign nationals must be filed through an USCIS Regional Service Center except for Canadians who may file through an immigration Class A port of entry airport or land border a U.S. or pre-flight inspection airport in Canada.  The USCIS for everyone except Canadians then sends the approval notice to a U.S. Consulate where the applicant obtains the L-1 visa.

Status of Spouse and Minor Children

The foreign national spouse or unmarried minor children of a foreign national with an L-1 visa are entitled to the same nonimmigrant classification, for the same length of stay, as the employee.  The foreign national’s spouse and children are admitted with L-2 visas.  The employee’s spouse may seek employment authorization from USCIS.  Minor children cannot accept employment in the United States, but can attend school.  Domestic workers of an L-1 visa holder can receive a B-1 visa with work authorization.

Make yourself at home.

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Antioch Attorney Disbarred Following Tax Evasion Charges

April 19, 2017  |   Posted by :   |   Tax Evasion   |   0 Comments

By Olivia Olsen, Northern California Record

Mary Alice Nolan, an attorney practicing in Antioch, has been disbarred from the practice of law by the State Bar Court of California.

The recommendation for disbarment was made by the Office of the Chief Trial Counsel (OCTC) in lieu of Nolan’s felony conviction of intercepting communications and tax evasion, according to court documents.

Court documents state the the attorney was charged with one count of felony interception of communication as she and her staff were allegedly found to have accessed a listening device to eavesdrop on several conversations in August and September 2007. Four additional felony charges were for tax evasion between the years of 2005 and 2008, during which Nolan allegedly filed false tax documents.

Nolan pleaded guilty to all five charges in 2014. She was ordered to serve 24 months in federal prison and pay restitutions to the Internal Revenue Service in the amount of $468,918.01. The California State Bar initially placed the attorney on an interim suspension to provide adequate time for Nolan and her counsel to file an appeal. No appeal was submitted, and a default was entered on Nolan’s behalf in the disciplinary proceedings.

Nolan is required to comply with the California Rules of Court Rule 9.20 subsections (a) and (c) in regards to her disbarment. The rules require her to notify all of her clients of the ruling, deliver any papers necessary to clients about their cases, return any fees that remain unearned and alert opposing counsel in any pending litigation of her disbarment. Nolan must then alert the Clerk of the State Bar Court that she has complied with the provisions of her disbarment.

The California State Bar was established in 1927 by the state’s legislature and is governed by nineteen trustees. The State Bar Court added appointed full-time judges in 1989. Court documents for all State Bar Court of California cases can be located online at

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The Wolfe Law Group Press Kit

April 13, 2017  |   Posted by :   |   International Tax Planning   |   0 Comments

The Wolfe Law Group is an international array of legal and tax experts providing collaborative services for Global High Net Worth Investors on a per client basis.

Gary S. Wolfe, A Professional Law Corporation has over 35 years of experience providing clients with expertise for IRS Civil and Criminal Tax Audits, International Tax Planning, and International Asset Protection.


Since 2015 Gary has been the recipient of 29 separate international tax awards from 10 different global expert societies in London/UK including:

International Tax Planning Law Firm of the Year Award (2017) – International Advisory Experts.

International Tax Advisor of the Year (2017) – Global Business Magazine/Prof. Sector Network.

Click here for complete list.


To date Gary has written 18 e-books (available on Amazon) regarding the IRS, International Tax Planning and Asset Protection. Click here for complete list.


To date Gary has published or been interviewed in 100+ separate articles published by 15 different US and International magazines. Click here for complete list.


In December 2016 Gary was interviewed by California CEO Magazine and on the subject of Criminal Tax Evasion and IRS Tax Audits: Civil and Criminal Issues. This 4 part series, which has been published by Lorman Education, can be viewed below:

Criminal Tax Evasion – Part 1

Criminal Tax Evasion – Part 2

Criminal Tax Evasion – Part 3

Criminal Tax Evasion – Part 4

Gary S. Wolfe, Esq.
Tel: 323-782-9139

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Tax Planning and Legal Authority

April 10, 2017  |   Posted by :   |   IRS Tax Audits,Tax Evasion   |   0 Comments

The US Supreme Court has a long history of supporting legal tax planning while disavowing illegal tax evasion (which has both civil and criminal consequences). Please see the authorities cited below.

In 1864, in the case of US v. Isham 84 US 496 (1864) the US Supreme Court considered the Stamp Duty (Tax) and stated their seminal proposition which is the foundation for tax planning: “(the court declared) if a device to avoid the payment of a stamp duty…is carried out by the means of legal forms, it is subject to no legal censure”.

In the Isham case, the Court gave their ruling citing the case of an individual whose tax planning circumvented the Stamp Act of 1862 (which imposed a “duty”(i.e. tax) upon bank-checks for an amount of $20 or more); the Court noted: “A careful individual… who pays no stamp duty (by paying a creditor $20 by two $10 checks not one $20 check) (their) practice and this system he pursues habitually and persistently… while his operations deprive the government of the duties it might reasonably expect to receive, it is not perceived that the practice is open to the charge of fraud (upon the revenue).”

In the landmark 1916 Supreme Court Case of Bullen v. Wisconsin 240 US 625, 630 (1916), the issue was whether the State of Wisconsin could impose an inheritance tax on funds belonging to a resident of Wisconsin, which were held in a revocable trust in Chicago. Justice Holmes, in his opinion, declared that the fund was subject to the tax but he used a clear-cut explanation to explain the difference between legal tax planning and illegal tax evasion:

“We do not speak of evasion, because when the law draws a line, a case is on one side of it or the other, and if on the safe side is none the worse legally that a party has availed himself to the full of what the law permits” (at p. 630).

In the 1923 case of US v. Merriam 263 US 179,187 (1923) upheld the Taxpayer’s rights to minimize taxes thru tax planning rejecting the US Government argument that “taxation is a practical matter and concerns itself with the substance of the thing upon which the tax is imposed rather than with the legal forms or expressions”. This “tax planning legal right” was upheld by both lower federal courts and the Board of Tax Appeals (now US Tax Court) in the following cases:

Weeks v. Sibley, 269 F. 155, 158 (1920) (D. N.D. Tex.) where the court held that planning to “avoid tax” is legitimate and is altogether different from tax dodging, the hiding of taxable property, or the doing of some unlawful or illegal thing in order to avoid taxation”.

Appeal of Peterson and Pegau Banking Co. 2 B.T.A. 637, 639 (1925) which affirmed the “right of any taxpayer to minimize its taxes by legitimate devices”.

Since the US Constitution, nor any express Congressional statutory provision, recognizes any legal right for “tax planning” these rights are based on common law i.e. court rulings. The court rulings on “substance over form” and the US taxpayer right to minimize their taxes by “legal tax planning” is best expressed in two cases:

Appeal of W.C. Bradley, 1 B.T.A. 111, 117 (1924) which stated that “the law… deals not alone with the form but with the substance of transactions, looks if necessary through the form to the substance, and predicates its findings upon realities rather than upon fictions”…

U.S. v. Barwin Realty Co. 25 F.2d 1003 (1928) (D. E.D. N.Y.), aff’d 29 f. (2d) 1019 (where the corporate form is used for the purpose of evading the law, the court will not permit the legal entity to be interposed so as to defeat justice”).

In the realm of legal tax planning (as contrasted to illegal tax evasion) the US Supreme Court has issued numerous pro-taxpayer opinions, including:

So. Pacific Co. v. Lowe 247 US 330 (1918), which applied substance over form to prevent taxation of dividends issued prior to the enactment of the 1913 Income Tax Act (so the dividends could not be taxed by the 1913 income tax act);

Gulf Oil Corp. v. Llewellyn 248 U.S. 71 (1918) in which Justice Holmes declared substance over form should be the rule declaring
“that one should ignore forms when analyzing the taxable nature of earnings transferred for bookkeeping purposes from subsidiaries to a holding company”;

Weiss v. Stearn 265 U.S. 242 (1924) held that a reorganization exempted the stock distributed as taxable income subject to tax;

Prairie Oil & Gas v. Motter 66 F.2d 309 (C.C.A. 10th, 1933) “taxation is an intensely practical matter and that the substance of the thing done, and not the form it took, must govern). See: Arctic Ice Machine Co. v. Commr 23 B.T.A. 1223 (1931) in which the court rejected the taxpayer’s attempt to designate a sale as a tax-free reorganization, basing the decision on “the substance of the transaction rather than its mere form”.

Due to the US Supreme Court rulings, lower courts have enforced a taxpayer’s right to minimize taxes by “legal tax planning”:

Iowa Bridge Co. v. Commr, 39 F.2d 777 (1930) where the court held “unless fraud exists, the fact that a corporation attempts to avoid its taxes is not a reason to recharacterize the transaction”;

Jones v. Helvering 63 App. D.C. 204 (1934) stating that “it has been the invariable holding that a taxpayer may resort to any legal method available to him to diminish the amount of his tax liability”;

Satwell v. Commr 82 F.2d 221 (1st Cir. 1936) stating that “nothing is better settled than that persons are free to arrange their affairs to the best advantage for themselves under the law as it stands. A purpose to avoid taxation is not an illicit motive”.

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US Tax Planning for High Net Worth Investors​

March 28, 2017  |   Posted by :   |   Asset Protection,High Net Worth Investor,International Tax Planning   |   0 Comments

Helvering v. Gregory

In the landmark case, Helvering v. Gregory 69 F.2d 809, 810 (2d. Circuit Court of Appeals, 1934), reversed a decision of The Board Of Tax Appeals (precursor to US Tax Court) see: Gregory v. Commr. 27 B.T.A. 223 (1932), and found against the taxpayer (Mrs. Gregory); Hand’s decision was affirmed by the US Supreme Court in the case: Gregory v. Helvering 293 U.S. 465, 469 (1935).

In Helvering v. Gregory, Judge Hand stated two tax rules:

1) ”a transaction does not lose its immunity, because it is actuated by a desire to avoid, or, if one choose, to evade, taxation. Anyone may so arrange (their) affairs that (their) taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”

2) The purpose of a business transaction (in this case a business reorganization and a dividend distribution) was to “exempt transactions (from tax) undertaken for “reasons germane to the conduct of a business” not when the sole purpose of a transaction was tax avoidance”… (the purpose of the transaction should be) to “exempt (from tax) the gain from exchanges (i.e. in this case a “reorganization”) made in connection with a transaction (reorganization) in order that the “ordinary business transactions will not be prevented”.

At the time of the US Supreme Court decision in Helvering v. Gregory, the Internal Revenue Code (adopted in 1913) was barely 20 years old, so the case had far reaching implications on the rule of law and tax planning to minimize allowable taxes due to be paid.

Several major cases followed in which lower courts (Federal Courts of Appeal and the Tax Court) expounded:

1) Asiatic Petroleum Co. (Delaware) Limited v. Commr. 79 F.2d 234 (1935) (Swan J. citing Gregory in support of the proposition that taxpayers can legitimately decrease their taxes);

2) Commr. V. Eldridge 79 F.2d 629 (1935), citing Gregory in support of the proposition that a “taxpayer may resort to any legal method available to him to diminish the amount of his tax liability”);

3) Rands v. Commr 34 B.T.A. 1094 (1936) citing Gregory for the proposition that “the purpose to save income taxes is now legally above reproach”).

Regarding tax planning and the intricacies involved, it is left best to Judge Learned Hand who stated:

“The words of such an act as the Income Tax… merely dance before my eyes in an meaningless procession: cross-reference to cross-reference, exception upon exception- couched in abstract terms that offer no handle to seize hold of-leave in my mind only a confused state of some vitally important, but successfully concealed purport which it is my duty to extract, but which is within my power, if at all, only after the most inordinate expenditure of time. I know that these monsters are the result of fabulous industry and ingenuity, plugging up this hole and casting out that net, against all possible evasion; yet at times I cannot help a saying of William James about certain passages in Hegel: that they were no doubt written with a passion of rationality; but that one cannot held wondering whether to the reader they have any significance save the words are strung together with syntactical correctness.” (Learned Hand, Thomas Walter Swan, 57 YALE L.J. 167,169 (1947).

Or more clearly, as Hand stated in Helvering v. Gregory 69 F.2d 809, 810 (2d. Cir. 1934) “just as a melody is more than the notes (so the) meaning of a sentence may be more than the of the separate words”.

US v. Wigglesworth

The United States of America, founded in 1776, has a long history of interpreting tax rules so they favor the individual citizen and not the government. In the historic 1842 case US v Wigglesworth, 28 F.Cas. 595, 596-7 (D. Mass. 1842) the Court stated: “It is, as I conceive, a general rule in the interpretation of all statutes, levying taxes or duties upon subjects or citizens, not to intend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operation as to embrace matters, not specifically pointed out, although standing upon a close analogy. In every case, therefore, of doubt, such statutes are construed most strongly against the government, and in favor of the subjects or citizens, because burdens are not to be imposed, nor presumed to be imposed, beyond what the statutes expressly and clearly import. Revenue statutes are in no just sense either remedial laws or laws founded upon any permanent public policy, and, therefore, are not to be liberally construed”.

Since this case was decided over 70 years before the adoption of the Internal Revenue Code (1913) it is a clear expression of American tax planning policy not to be found in IRS or Treasury Dept. code sections, regulations or other rulings. More to the point it is not the type of advice that the IRS or Treasury Dept. would voluntarily offer to US taxpayers. Yet, nearly 200 years later (in 2017) it is still the law of America.

The US Supreme Court echoed the decision in” Wigglesworth” in their 1917 case Gould v. Gould 245 U.S. 151,153 (1917) when they stated: “In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations as to embrace matters not specifically pointed out. In case of doubt they are construed most strongly against the government and in favor of the citizen.”(Justice McReynolds).

Since Wigglesworth, many Federal and U.S. Supreme Court Cases have profoundly supported the US Taxpayers rights to have US law applied in favor of US citizens when there is any dispute as to the rule law cited. Among these cases include:

Powers V. Barney 19 F.Cas. 1234 (S.D.N.Y. 1863) “duties are never imposed on the citizen upon vague or doubtful interpretations”;

U.S. v. Isham 84 U.S. 496 (1864) “a tax cannot be imposed without clear and express words”;

Hartfanft v. Wiegmann 121 U.S. 609 (1887) “duties are never imposed on the citizen upon vague or doubtful interpretation”;

In the Matter of Hannah Enston, Deceased 113 N.Y. 174 (Ct. App. N.Y. 1889) “it is well established rule that a citizen cannot be subjected to special burdens without the clear warrant of the law”;

American Net and Twine Co. v. Washington 141 U.S. 468 (1891) “where Congress has designated an article by a specific name and imposed a duty upon it, general terms in the same act… are not applicable to it”);

Rice v. U.S. 53 F. 910 (1893) “in cases of doubtful construction the court should refrain from imposing a tax or charge upon the citizen”;

Eidman v. Martinez 184 U.S. 578 (1901) “laws should be liberally interpreted in favor of the taxpayer(importer) and the intent of Congress to impose or increase a tax (upon imports) should be expressed in clear and unambiguous language;

Benziger v. U.S. 192 U.S. 38 (1904) “tax statutes should be liberally construed in favor of the taxpayer (importer), and if there were any fair doubt as to the true construction of the provision is question the courts should resolve the doubt in taxpayer’s favor.

In summary, in case of any doubts as to tax law interpretations, any doubts should be resolved in taxpayer’s favor.

The Gould case, decided by the US Supreme Court in 1917 (4 years after the adoption of the 1913 Internal Revenue Code) enabled both other Supreme Court justices and lower federal and state courts to decide in favor of the taxpayer, which cases include:

U.S. v. Field 255 U.S. 257, 262 (1920)(citing Gould for the proposition that “tax acts should not be extended by implication”;

U.S. v. Merriam 263 U.S, 179, 188 (1923) using Gould as the basis for deciding that sums given to the executor of a will are not to be considered “income”;

Crooks v. Harrelson 282 U.S, 55,62 (1930) “in taxing acts, adherence to the letter of the law should be applied with peculiar strictness”;

Weeks v. Sibley 269 F. 155, 158 (1920) (D. N.D. Tex.) citing Gould to support the contention “that courts must uphold transactions even when they are motivated by the desire “reduce or avoid taxation”.

Studebaker Corporation v. Gilchrist 244 N.Y. 114, 126 (1926) (Ct. App. N.Y.; J. Cardozo) citing Gould for the proposition “that a statute levying a tax will not be extended by implication by the clear import of its terms”;

Irwin v. Gavit 268 U.S. 161, 168 (1926), rejecting technicalities, J. Holmes noted that “it is said that the tax laws should be construed favorably for the taxpayers”

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