TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, April 6, 2014

The Next Offshore Tax Target: Cayman Islands

Wall Street Journal Tax Report:  The Next Offfshore Target, by Laura Saunders:

CaymanU.S. authorities are expanding their investigation of hidden overseas assets far beyond Switzerland. The latest focus: the Cayman Islands.

Undercover agents from the IRS conducted a yearlong probe that led to the arrests in Miami last month of three financial advisers based in the Caribbean territory.

This past week, an official at the Justice Department said the sting should serve as a warning about offshore accounts. "The Cayman case illustrates that we have ways of getting information that people don't know about," Assistant Attorney General Kathryn Keneally of the department's Tax Division said at a news conference in New York. "The days of waiting for a warning sign, such as a letter from a bank, are over."

Ms. Keneally said that the government receives account information from many sources, including whistleblowers hoping for monetary rewards. She declined to comment on whether U.S. officials have the names of Americans who hold accounts in the Caymans or elsewhere in the Caribbean as a result of this probe.

Taxpayers are ineligible to participate in the IRS's limited-amnesty program for undeclared offshore accounts if U.S. authorities already have their names. The program imposes steep penalties but offers protection against criminal prosecution.

Experts believe U.S. authorities do have names of account holders in the Caymans.

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Soon, the only safe refuge for offshore money may be Sealand:

But first they need to open a bank.

Posted by: Michael W. Perry | Apr 6, 2014 11:52:29 AM