Viewpoint: Tax Evasion and Money Laundering: US Real Estate

We recently posted an article by one of our guest contributor’s from The Wolfe Law Group. Please find my thoughts on the subject below:

“I agree with Mr. Wolfe’s assessment of the situation. Only I believe the US Treasury Department and congress will go one step further and will more than likely start requiring full disclosure of foreign nationals behind foreign structures holding US bank, brokerage, etc. accounts as well. We do a lot of FATCA work here in Switzerland with banks, law firms and trust companies. There seems to be a trend ofUS advisors telling their foreign clients, that you can always hide your money in the USA…through an offshore structure with no US tax consequence and no FATCA reciprocal reporting requirements to their home countries.

I believe it is merely a matter of time before US legislation is passed that puts some teeth behind the US IGA’s that have been signed and information on foreign nationals holding assets in the USA will be shared with the respective governments. Looks like they are starting with Real Estate and the Treasury Department is the arm with the big stick.

Think about it, the US saw major abuse with foreign nationals setting up US LLC’s in Delaware, Nevada and other locations, using those US corporate structures to hide assets from the home countries of the foreign nationals setting them up. In 2011 FinCEN (Financial Crimes Enforcement) passed legislation that changed the definition of a ‘US Person’ from just an individual to include legal entities, including but not limited to Limited Liability company, corporations, trusts, partnerships and estates and they made it retroactive back to Jan 1, 2010. In order for the US LLC’s to file FBAR’s they needed to obtain US Employer Identification numbers, in order for them to obtain a US EIN, they needed the owners or the director of the corporation to sign and give specific information about the LLC to the US government. All of this information can now be shared with foreign governments, should they wish to do so.

Funny, but you would be surprised at the number of US LLC’s that have been closed down during 2013, 2014 and 2015. Working here in Switzerland, it was common practice for foreign advisors to set up US LLC’s for their foreign clients, to hold all types of foreign assets. There were no US income or estate tax issues and no reporting requirements until the law changed, so it was a perfect vehicle for a number of foreign nationals to hide foreign assets from their respective governments.

As of Jan 2016, it appears the US Treasury is now looking at foreign structures which hold US real estate, I cannot imagine that they will stop at just reviewing foreign structures holding US real estate.”

If you would like to discuss your tax situation, please contact us.

About Darlene Hart

Darlene Hart is Founder/CEO of US Tax & Financial Services (USTAXFS), a European based global tax professional services firm (with primary offices in London, Zurich andGeneva) with over 25 years of experience in international tax matters, clients in more than 32 countries, with staff who speak more than 15 languages.

Darlene started USTAXFS in 1986 in London. She has nearly 40 years of tax, accounting, financial and retirement planning experience working with Big 4 firms (Deloitte, PWC, others). Her firm is an integrated firm of attorneys and CPAs from KPMG, E&Y, PWC, Deloitte and Anderson.

Darlene provides tax, accounting, financial and retirement planning for clients. She holds a BS in Accounting, an MS in tax from University of Houston. She is an IRS enrolled agent and a member of the Association of International Accountant. She is an acknowledged international tax expert and one of the leading IRS practitioners in the world today.


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