{"id":11565,"date":"2016-04-07T08:02:31","date_gmt":"2016-04-07T15:02:31","guid":{"rendered":"http:\/\/spijue.wpengine.com\/news\/a-top-haven-for-tax-cheats-that-may-surprise-you-the-us\/"},"modified":"2016-04-07T08:02:31","modified_gmt":"2016-04-07T15:02:31","slug":"a-top-haven-for-tax-cheats-that-may-surprise-you-the-us","status":"publish","type":"post","link":"https:\/\/www.juneauempire.com\/news\/a-top-haven-for-tax-cheats-that-may-surprise-you-the-us\/","title":{"rendered":"A top haven for tax cheats that may surprise you: The US"},"content":{"rendered":"

WASHINGTON<\/strong> \u2014 The U.S. lambastes and strong-arms countries that help drug lords and millionaire investors hide their money from tax collectors. Critics say it should look closer to home.<\/p>\n

America itself is emerging as a top tax haven alongside the likes of Switzerland, the Cayman Islands and Panama, those seeking reform of the international tax system say. And states such as Delaware, Nevada, South Dakota and Wyoming, in particular, are competing with each other to provide foreigners with the secrecy they crave.<\/p>\n

\u201cThere\u2019s a big neon sign saying the U.S. is open to tax cheats,\u201d says John Christensen, executive director of the Tax Justice Network.<\/p>\n

America\u2019s openness to foreign tax evaders is coming under new scrutiny after the leak this week of 11.5 million confidential documents from a Panamanian law firm. The Panama Papers show how some of the world\u2019s richest people hide assets in shell companies to avoid paying taxes.<\/p>\n

Christensen\u2019s group, which campaigns for a global crackdown on tax evaders, says the United States ranks third in the world in financial secrecy, behind Switzerland and Hong Kong but ahead of notorious tax havens such as the Cayman Islands and Luxembourg.<\/p>\n

Under a 2010 law, passed after it was learned that the Swiss bank UBS helped thousands of Americans evade U.S. taxes, the United States demands that banks and other financial institutions disclose information on Americans abroad to make sure they pay their U.S. taxes.<\/p>\n

But the U.S. doesn\u2019t automatically return the favor.<\/p>\n

More than 90 countries have signed on to a 2014 information-sharing agreement set up by the Organization for Economic Cooperation and Development; the U.S. is among the few that haven\u2019t joined. American banks don\u2019t even collect the kind of information foreign countries would need to identify tax dodgers.<\/p>\n

\u201cThe banking lobby has resisted changes in the law that would allow more sharing of data,\u201d says Peter Cotorceanu, a Zurich-based lawyer who specializes in private banking.<\/p>\n

In a report last year, the Tax Justice Network complained that \u201cWashington\u2019s independent-minded approach risks tearing a giant hole in international efforts to crack down on tax evasion, money laundering and financial crime.\u201d It said foreign elites have \u201cused the United States as a bolt-hole for looted wealth.\u201d<\/p>\n

Pascal Saint-Amans, head of the OECD\u2019s Center for Tax Policy and Administration, says the U.S. often makes information available to other countries upon request. But that means countries can get details only on those they already suspect of tax evasion.<\/p>\n

Christensen says Swiss banks report that \u201cmany of their tax-dodging clients are talking about moving to the U.S. You go to Switzerland, and that\u2019s all they\u2019re talking about.\u201d<\/p>\n

Individual states, including Nevada, Wyoming and South Dakota, are making things worse, critics say.<\/p>\n

They compete with each other to make it easier to set up corporations \u2014 few questions asked about who\u2019s behind the business. \u201cWe have states that set up corporations where there\u2019s no information about ownership,\u201d says Jack Blum, a Washington lawyer who specializes in financial crime. \u201cThe states make a lot of money doing that.\u201d<\/p>\n

Nevada, for instance, makes it easy to incorporate secretly and charges a $500 annual business license fee for corporations and $200 for other businesses. Lawmakers granted business entities greater protection against lawsuits in 2001, hoping to attract more of them and use incorporation filing revenue to raise teacher salaries.<\/p>\n

\u201cNevadans will continue to see nefarious business practices like those reported in the Panama Papers if state officials don\u2019t change the laws of incorporation,\u201d says Rep. Dina Titus, D-Nevada. \u201cIt is time for the state to tighten its disclosure and liability laws and remove the sign from our front yard that says: \u2018Sleazeballs and rip-off artists welcome.\u2019\u201d<\/p>\n

Nevada\u2019s registered agent industry, which helps businesses incorporate in the state, supports about 1,000 jobs and pumps $110 million into the state economy every year, says the Nevada Registered Agents Association. The group opposed an effort last year to raise the business license fee.<\/p>\n

\u201cNevada has promoted itself for decades as a \u2018business friendly\u2019 state, and that benefit is critical to keep new entities incorporating in Nevada,\u201d says Matthew Taylor, a former association president and current board member.<\/p>\n

But doubts are rising, even in Nevada. Many of the businesses are mere shells, financial contrivances that don\u2019t employ people or make any investments.<\/p>\n

\u201cHistorically, we have marketed ourselves as kind of a Wild West, frontier sort of place,\u201d says Pat Hickey, a Republican in the Nevada Assembly. Now, Hickey wonders, \u201cDon\u2019t we want businesses that actually reside here, provide services or manufacture things? … I don\u2019t know it\u2019s necessarily an industry that we need to bend over backward to keep.\u201d<\/p>\n

South Dakota says its favorable trust laws provide an attractive place for families to park and grow their wealth, and it can all be done outside the public eye. The state imposes no tax on assets held in trust and allows the entire court file to be sealed permanently with a simple petition.<\/p>\n

In 2014, a group of academics looked at tax havens for their book \u201cGlobal Shell Games.\u201d Posing as investors who wanted to set up businesses in different places, they kept track of whether the consultants helping them incorporate asked for basic information such as photo IDs or other documents that proved who they were. In the United States, only 25 percent did; in Delaware, only 6 percent.<\/p>\n

The U.S. Treasury Department says it plans to propose regulations requiring foreign-owned \u201climited liability companies\u201d to get tax identification numbers disclosing the identities of their owners. Once the rules are in place, Treasury says in a statement, the Internal Revenue Service will be better equipped to respond to requests for help from foreign governments.<\/p>\n

Still, Treasury says, Congress needs to come up with a broader, better solution. Lawyer Cotorceanu doubts that will ever happen.<\/p>\n

American lawmakers \u201cdo not want to hurt the U.S.\u2019s banking industry,\u201d he wrote last year in the journal Trusts & Trustees. \u201cIt is no secret that U.S. banks, particularly in Miami, are awash in undeclared Latin American money. … How ironic \u2014 no, how perverse \u2014 that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour.\u201d<\/p>\n

___<\/p>\n

This story has been corrected to show that Matthew Taylor is the former, not the current, president of the Nevada Registered Agents Association.<\/p>\n

___<\/p>\n

Michelle Rindels in Las Vegas; Dirk Lammers in Sioux Falls, South Dakota; and Joshua Goodman in Bogota, Colombia, contributed to this story.<\/p>\n

Follow Paul Wiseman on Twitter at https:\/\/twitter.com\/PaulWisemanAP<\/p>\n","protected":false},"excerpt":{"rendered":"

WASHINGTON \u2014 The U.S. lambastes and strong-arms countries that help drug lords and millionaire investors hide their money from tax collectors. Critics say it should look closer to home. America itself is emerging as a top tax haven alongside the likes of Switzerland, the Cayman Islands and Panama, those seeking reform of the international tax […]<\/p>\n","protected":false},"author":107,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[65],"yst_prominent_words":[],"class_list":["post-11565","post","type-post","status-publish","format-standard","hentry","category-news","tag-nation-world"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/11565","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=11565"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/11565\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=11565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=11565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=11565"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=11565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}