BVI Accounts Under Scrutiny in 2014
A new law will reveal more details about United States taxpayers who maintain accounts in the British Virgin Islands. Starting in 2014, the BVI will need to provide account information about US taxpayers in order to comply with the new legislation.
Offshore trusts, when structured properly, are excellent tools for protecting assets. However, some US taxpayers use them with the intention of offshore tax evasion. The BVI currently offer attractive laws that allow wealthy businesspersons to conduct business in other countries under the guise they are based in the BVI. In 2014, financial institutions will be providing information about these individuals to the US government.
International compliance requirements are not new. The Foreign Account Tax Compliance Act was enacted in 2010. The Act focuses on reporting requirements for US taxpayers about foreign financial accounts and offshore assets. Additionally, it also sets standards for financial institutions abroad who maintain accounts for US taxpayers. The Bank Secrecy Act that passed into law in 1970 requires individuals who own foreign bank or brokerage accounts, mutual funds, trusts, or other financial accounts abroad to complete a report of FBAR (Foreign Bank and Financial Accounts). A tax attorney can advise about the specific reporting requirements unique to the accounts an individual maintains.
The US is not the only country that faces tax evaders. A British tax research network, the Tax Justice Network, reported in 2012 that all countries comprehensively hold over $21 trillion in assets within secret offshore accounts.
In addition to asset protection, some individuals choose offshore accounts for confidentiality. With the new offshore account compliance requirements set to roll out in 2014, those who have offshore accounts will lose this privacy. Anyone who is concerned about not reporting their offshore accounts correctly, or who are interested in learning more about legal, tax-compliant offshore and domestic asset preservation tools should contact their tax attorney immediately.