{"id":4073,"date":"2021-10-04T17:21:00","date_gmt":"2021-10-04T17:21:00","guid":{"rendered":"https:\/\/patellawoffices.com\/blog\/?p=4073"},"modified":"2021-10-07T17:22:25","modified_gmt":"2021-10-07T17:22:25","slug":"pandoras-box-has-opened-pandora-papers","status":"publish","type":"post","link":"https:\/\/patellawoffices.com\/blog\/planning-for-tax-minimization\/pandoras-box-has-opened-pandora-papers\/","title":{"rendered":"Pandora’s Box Has Opened: Pandora Papers"},"content":{"rendered":"\n

An unprecedented leak<\/a> of financial records known as the Pandora Papers\nhas revealed the offshore financial assets of dozens of current and former\nworld leaders and hundreds of politicians from Asia and the Middle East to\nLatin America. The International\nConsortium of Investigative Journalists<\/a> (ICIJ) obtained 11.9 million\nconfidential documents from 14 separate legal and financial services firms,\nwhich the group said offered \u201ca sweeping look at an industry that helps the\nworld\u2019s ultrawealthy, powerful government officials and other elites conceal\ntrillions of dollars from tax authorities, prosecutors and others.\u201d<\/p>\n\n\n\n

Using an offshore company is legal, as long as the owner\ndeclares it to the tax authorities in the country where they reside. These\ncompanies benefit from low taxation, anonymity and the absence of records of\nthe accounts or the real owners.<\/p>\n\n\n\n

The ICIJ said the 2.94 terabytes of financial and legal\ndata, which makes this leak larger than the 2016 Panama papers release, shows\nthe \u201coffshore money machine operates in every corner of the planet, including\nthe world\u2019s largest democracies,\u201d and involves some of the world\u2019s most\nwell-known banks and legal firms.<\/p>\n\n\n\n


\nHere are some of the biggest revelations in the release:<\/p>\n\n\n\n

South Dakota, Nevada havens<\/strong><\/p>\n\n\n\n

One of the most \u201ctroubling revelations\u201d for the U.S. was the\nrole of South Dakota, Nevada and other states that have adopted financial\nsecrecy laws that \u201crival those of offshore jurisdictions\u201d and demonstrate\nAmerica\u2019s \u201cexpanding complicity in the offshore economy,\u201d said the Washington\nPost<\/em>, one of the ICIJ\u2019s media partners. A former vice president of the\nDominican Republic finalized several trusts in South Dakota to store his\npersonal wealth and shares of one of the country\u2019s largest sugar producers, the\npaper said.<\/p>\n\n\n\n

Pakistan\u2019s political elite<\/strong><\/p>\n\n\n\n

Several members of Pakistani Prime Minister Imran Khan\u2019s\ninner circle, including current and former cabinet ministers, \u201csecretly owned\nan array of companies and trusts holding millions of dollars of hidden wealth,\u201d\nthe group reported<\/a>. That could create a political headache for the\nformer cricket star, who campaigned for the South Asian country\u2019s highest\noffice as the head of a reformist party that promised a strong anti-corruption\nagenda. Before the release of the Pandora papers, a Khan spokesperson told a\nnews conference Khan had no offshore company, but ministers and advisers \u201cwill\nhave to be held accountable\u201d for their individual acts.<\/p>\n\n\n\n

Law firms: the key to accessing the offshore world<\/strong><\/p>\n\n\n\n

The offshore service providers at the center of this\ninvestigation represent the main cog in the machinery that moves money outside\nconventional circuits. Without them, it would not be so easy to hide assets\nsuch as those unearthed in the Pandora Papers: bank accounts, private jets,\nyachts, mansions and works of art by Picasso or Banksy. <\/p>\n\n\n\n

As government tax officials start reading the Pandora\nPapers, you can expect in the coming months that many new names will come out\nthat the IRS will be interested in targeting.<\/p>\n\n\n\n

Filing Requirements If You Have Foreign Accounts<\/strong><\/p>\n\n\n\n

By law, many U.S. taxpayers with foreign accounts exceeding\ncertain thresholds must file Form 114, Report of Foreign Bank and Financial\nAccounts, known as the \u201cFBAR.\u201d It is filed electronically with the Treasury\nDepartment\u2019s Financial Crimes Enforcement Network (FinCEN).  Taxpayers\nwith an interest in, or signature or other authority over, foreign financial\naccounts whose aggregate value exceeded $10,000 at any time during a calendar\nyear must file FBARs. <\/p>\n\n\n\n

Generally, U.S. persons must also report specified foreign\nfinancial assets on Form 8938 if the aggregate value of those assets exceeds\ncertain thresholds. Reporting thresholds vary based on whether a taxpayer files\na joint income tax return or lives abroad. <\/p>\n\n\n\n

The law requires U.S. citizens and resident aliens to report\nworldwide income, including income from foreign trusts and foreign bank and\nsecurities accounts. In most cases, affected taxpayers need to complete and\nattach Schedule B to their tax return. Part III of Schedule B asks about the\nexistence of foreign accounts, such as bank and securities accounts, and\nusually requires U.S. citizens to report the country in which each account is\nlocated.<\/p>\n\n\n\n

Penalties for non-compliance.<\/strong><\/p>\n\n\n\n

The penalties for FBAR noncompliance are higher than the tax\npenalties ordinarily imposed for delinquent taxes. For non-willful violations\nit is $10,000 per account per year going back as far as six years. For willful\nviolations the penalties for noncompliance which the government may impose\ninclude a fine of not more than $500,000 and imprisonment of not more than five\nyears, for failure to file a report, supply information, and for filing a false\nor fraudulent report.  Failing to file Form 8938 when required could\nresult in a $10,000 penalty, with an additional penalty up to $50,000 for\ncontinued failure to file after IRS notification. <\/p>\n\n\n\n

If your failure to file is due to fraud, the penalty is 15%\nfor each month or part of a month that your return is late, up to a maximum of\n75%. Any person who willfully attempts in any manner to evade or defeat any tax\ncan be criminally prosecuted. <\/p>\n\n\n\n

The IRS has special programs for taxpayers to come forward\nto disclose unreported foreign accounts and unreported foreign income. Affected\npersons should not delay because if the government finds out about you first,\nyou can be subject to criminal prosecution. <\/p>\n","protected":false},"excerpt":{"rendered":"

An unprecedented leak of financial records known as the Pandora Papers has revealed the offshore financial assets of dozens of current and former world leaders and hundreds of politicians from Asia and the Middle East to Latin America. The International Consortium of Investigative Journalists (ICIJ) obtained 11.9 million confidential documents from 14 separate legal and financial services firms, which […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"1","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4073","post","type-post","status-publish","format-standard","hentry","category-planning-for-tax-minimization"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4073","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=4073"}],"version-history":[{"count":2,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4073\/revisions"}],"predecessor-version":[{"id":4075,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4073\/revisions\/4075"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=4073"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=4073"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=4073"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}