Frankly, I’ve written so much about the UBS mess over the last year that I am sick of it…and I’m sick of the greedy, crooked UBS bankers and staff that stupidly thought they could use Swiss bank secrecy laws to cover their illegal tax evasion advice, while running up fat fees for themselves and billions in deposits for UBS.

This thoughtless criminal activity not only added to the instability of UBS – already $50 billion in the hole because of bad investments exposed by the global recession – but their conduct needlessly called into question the admirable privacy policies and bank secrecy laws of the Swiss government.

Asking for it

UBS tarnished not only its own reputation, but also that of a major nation and its people.

But worst of all, what UBS did allowed the tax bullies at the IRS to:

1) smear thousands of honest Americans who bank offshore;
2) attempt to scare away thousands more who could benefit by doing so;
3) pretend to extend U.S. tax law jurisdiction to the entire world;
4) use blatant economic blackmail against not only an errant bank, but against a friendly country that has long been a faithful ally and against its 7.6 million people.

The agreement lifts the threat of U.S. criminal prosecution against UBS, the world’s number two wealth manager by assets.

The IRS was not only willing to risk endangering the bank’s existence, but it could have dealt a major blow to the Swiss and U.S. economies. (UBS has 20,000 American employees).

The Anti-Offshore PR Campaign Rages On

You can expect that the left wing, anti-tax haven crowd will play this as the death, not only of Swiss bank secrecy, but the beginning of the end for all offshore financial centers.

Don’t they Wish!

IRS Commissioner Doug Shulman (left) crowed, “It’s a real sense that the world of bank secrecy is eroding.” According to The Times, “The agreement is likely to unnerve American customers of UBS who do not know if their names will be divulged, and could deter others from opening Swiss accounts in the future.”

On that second point, we hope not. There are still plenty of opportunities to open an offshore account with a sound financial institution…which is – sadly – is not necessarily the case in the United States.

And on the first point, I can speak for the whole of the Sovereign Society when I say that we don’t really care if illegal tax evaders are nervous. They should be.

But we certainly hope that honest, tax paying Americans (and others) who desire real financial privacy, true asset protection and expert investment advice will realize the fact that they still have the right to employ Swiss banks, investment advisors, insurance and annuity specialists – and not be scared away from the very real benefits offered by the world’s leading offshore financial center.

Swiss Banks Still Available

Whether all this will change the Swiss banking industry’s culture of secrecy based on law is doubtful in my opinion. But the IRS has made clear that their pursuit of tax evaders will not stop at UBS.

Some smaller, centuries-old private Swiss banks, however, are stepping up their efforts to attract American money, given the importance of foreign clients to the nation’s financial institutions.

Understand that the Sovereign Society does not condone tax evasion in any form, a point we have made repeatedly in our publications throughout our entire existence.

Of course there is a simple way for you to avoid personal tax troubles – file the proper IRS reports on time and pay your taxes when they’re due, as we have often explained.

We Are Prepared

To tell the truth, we at the Sovereign Society saw this coming a long time ago…

We meet regularly with Swiss and other offshore bankers, and we have agreements with reputable Swiss banks willing to accept new accounts from those who identify themselves as Sovereign Society members.

These arrangements are in full compliance with IRS and SEC rules and other U.S. laws. U.S. clients must sign an IRS Form W-9 that allows an offshore bank to report required information to the IRS.

As it has been since our founding 11 years ago, our staff is available to assist in opening a Swiss or other offshore account. Take advantage of these special Swiss banking arrangements and the advice of our Swiss advisors by visiting our member’s only website today.

We at the Sovereign Society believe that personal and financial privacy is an inherent human right, a requirement for maintaining the human condition with dignity and respect.

In all this ruckus about UBS and the IRS, the basic issues are preservation of our personal freedom and liberty versus complete government control of our lives and our fortunes.

Yours Truly,

Bob Bauman

As I’ve written before, the Obama administration has given offshore tax avoiders a chance to come clean; but for some, the door is closing quickly. At issue is the IRS crackdown on individuals holding US securities in offshore accounts who don’t pay taxes on their earnings.

It was a nice little gig until the IRS took advantage of the dire economic situation and started shaking down Swiss bank UBS. The IRS is demanding that UBS turn over the names of US citizens with fabled Swiss bank accounts.

While waving its big stick at UBS, the IRS gave individuals the opportunity to come forth with their accounts themselves – accompanied by a penalty, of course. The implied threat is that if you don’t disclose “voluntarily” and the IRS eventually gets your name, it will come after you with guns a blazing.

A big hearing on the matter was scheduled on Monday. But it didn’t go through. This increased speculation that UBS is close to caving to the IRS. This from the Wall Street Journal :

It’s a roller-coaster ride for Americans with Swiss bank accounts who are caught up in the tax-evasion case against UBS AG. Depending on what they have already told the Internal Revenue Service about their accounts, individuals are mostly at ease or deeply nervous about the prospect of civil and criminal penalties.

And, many are turning to tax advisers for help decoding the latest developments in a case that has taken dramatic turns in recent days.

Over the weekend, the U.S. Justice Department, the Swiss government and UBS said they are in talks to settle the case and asked a federal court in Miami to delay a highly anticipated hearing set for Monday. This followed a week of high-profile maneuvers by UBS and the Swiss government.

“It is King Kong versus Godzilla and they decided to take a time out,” says Bryan Skarlatos, a partner at New York law firm Kostelanetz & Fink.

The IRS crackdown, months’ long, has focused on people who hold U.S. securities in offshore accounts but don’t declare the accounts or pay taxes on income from the securities.

Scott D. Michel, an attorney at Caplin & Drysdale in Washington, D.C., says many clients are trying to sort through all the back and forth. The message to be taken from the most recent news, he adds: Any account holder who hasn’t already come forward under a voluntary disclosure program at the IRS should do so immediately.

The program, which has attracted many individuals since the tax-evasion case began months ago, can offer participants leniency.

]]> http://www.contrarianprofits.com/articles/d-day-for-us-citizens-with-swiss-bank-accounts/19136/feed 0 http://www.contrarianprofits.com/articles/us-tax-code-is-a-%e2%80%98nightmare%e2%80%99/16218 http://www.contrarianprofits.com/articles/us-tax-code-is-a-%e2%80%98nightmare%e2%80%99/16218#comments Mon, 04 May 2009 22:24:22 +0000 Contrarian Profits http://www.contrarianprofits.com/?p=16218 “The tax code is a mess, no, make that a nightmare,” says Tom Herman. The long-time tax expert is stepping down after over 40 years at the Wall Street Journal.Our own tax expert, Raife Neuman, says that although Herman’s message may be a no-brainer for any of us who have tried to navigate the labyrinth of the U.S. tax code, it’s an important reminder of the deep problems in tax law.

I [...] leave with a growing sense that our tax system is in shaky condition and needs a major overhaul. We need a system that is much simpler and less burdensome. That won’t happen with mere tinkering around the edges. Many people who have held top jobs at the IRS and…

“Broad should be a lot poorer this year. Worth $7 billion last fall, the insurance and housing maven saw his 46.6 million shares of AIG – received a decade ago when he sold his SunAmerica to the insurance giant for $18 billion – drop 70% between last summer and August 29, the day we priced the Forbes 400 (they’ve fallen much further since). That decline erased $2 billion from his personal balance sheet. But Broad’s net worth fell only $300 million. One reason: the soaring value of his 2,000-piece art collection. Comprising mostly contemporary pieces by artists like Jeff Koons, his collection was recently appraised at $1.9 billion, up 72% in a year.”

The article goes on to detail how several members of the Forbes 400 have hedged their fortunes during these volatile times by buying and selling and investing in art.

Of course, you don’t have to invest millions, or even tens of thousands, to buy contemporary art.  It is readily available, often at a fairly reasonable cost, at your local gallery or art festival.

The Secret to Investing In Art

The secret to investing in art, however, is buying right.  Most of us, myself included, are not experts at buying contemporary pieces of art below fair market value.

That’s why I often recommend that both novices and experienced art buyers use Mike Kuschmann, President of Fine Arts Limited.

Headquartered in Winter Park, FL, Fine Arts doesn’t have a gallery of artwork to sell.  In fact, it doesn’t have a gallery at all.

Kuschmann is a “buyer’s broker.” That means he works for you, not the seller. If you visit a gallery, art festival or retail store and see a print, painting, sculpture or other piece you’d like to own, don’t pay retail. Mike will contact the seller on your behalf and negotiate a dealer’s price, saving you hundreds or perhaps thousands of dollars.

Mike has also saved his clients quite a bit in taxes, as well…

Investing in Art – Donating to IRS-Approved Charities

The 1995 Tax Act allows you to donate to any IRS-approved charity works of art at their fair market value, not at their cost basis. (Moreover, you can deduct the charitable gift’s fair market value on your return without being subject to the dreaded alternative minimum tax.)

As Mike explains, “I work closely with published artists and sometimes acquire limited edition prints or serigraphs at a substantial discount to the current market value. Clients of mine purchase them far below their published cost – often for just a few thousand dollars – and later donated them to a local hospital or university at their appraised value, allowing them to save thousands of dollars in federal taxes.”

The IRS requires you to hold these art investments for one year in order to donate them at their fair market value. And, of course, they’re beautiful. You may decide to just keep them.

However, most of his clients donate them to a local hospital or their old alma mater – and get a tax deduction for the charitable contribution. (Or Mike can handle the donation for you.)

For more information, feel free to contact Mike Kuschman at 800.229.4322 or 407.702.6638.  He’ll send you a complimentary brochure packet, detailing his services and the tax savings available.

Over the next few weeks, I’ll be highlighting several other year-end tips for reducing your federal tax liabilities.

At the rate Uncle Sam has been spending money lately, you can bank on taxes going up soon.

It pays to plan today to keep your taxes low tomorrow.

Source: Investing in Art: One Asset That Has Increased in Value Lately

Every year, a few hundred Americans take the fateful step of surrendering their U.S. citizenship to avoid paying U.S. taxes. Many of them already live abroad, and are subject to U.S. law which — almost alone among the world’s nations — taxes the income of its citizens no matter where they live or where they earn that income.

Now, buried within a bill furnishing tax benefits for soldiers and veterans is a provision that amounts to an “exit tax.” As explained by the Wall Street Journal, the law will “that will tax the assets of those who leave for good on their way out the door, as if they were selling those assets.”

But wait, there’s more! In what looks like a hideous application of retroactive law, ex-U.S. citizens who die and leave their assets to heirs who retain their citizenship will find those assets taxed at 45% — the gift-tax rate.

And it gets still worse. The law applies not only to U.S. citizens, but also anyone who’s been a permanent resident longer than eight years. (Call this one the Foreign Investment Discouragement Clause.)

Given how this is buried in a popular bill that “supports the troops,” it’s sure to gain a presidential signature.

So, in effect, your only hope for preserving your wealth now is to grow it — grow it so large that you’ll be OK no matter how high our confiscatory tax rates end up looking like in the years ahead. (FDR maxed it out at 94%. Who says it can’t happen again?)

One possibility worth considering is something we call the “Chaffee Royalty Program.” On its first go-round, it turned every $1 invested into $50 — until it was closed in 2002. Now it’s open again… but be aware this offer expires at midnight EDT tonight.

Sources: Exit Tax Passes Congress

That is, they were concerned Washington bureaucrats might restrict the free flow of the dollar and other currencies in and out of the United States.

I raised the issue during my Panama presentation last week because frankly, I’m also concerned about the decidedly anti-free market, anti-offshore statements and actions of both of the Democrat Party presidential candidates.

Failures at Economics 101

That dynamic novice economist and statesman, Sen. Barack Obama (D-Ill), has proposed inane legislation in the U.S. Senate that could disrupt American trade and business. His legislation would blacklist 30 or so foreign jurisdictions (Switzerland and Panama included) for the manufactured sin of imposing little or no taxes.

He would also require Americans to report offshore financial activity of every kind and give the U.S. Treasury unprecedented power to set new rules over such activity.

In 2004, Hillary Clinton, as New York senator, made offshore an issue claiming she wanted to close “loopholes” for “…people who create a mailbox, or a drop, or send one person to sit on the beach in some island paradise and claim that it is their offshore headquarters.” (She announced this while her husband was raking in millions from cozy offshore investments his rich, new cronies handed him.)

Indeed both wannabe presidents, Clinton and Obama have denounced offshore investments and financial activity. They’re trying to imply that the millions of Americans who freely do business offshore are engaged in tax evasion and hiding cash from the IRS.

That is simply untrue.

Thus the serious question: If, God forbid, either wins the White House, can currency controls be next? In fact, under emergency laws still in effect, a president can impose such controls by executive decree.

“Currency Controls” – What Are Those Again?

As you read this, keep in mind that we are not talking peanuts here – nearly US$4 trillion in foreign exchange moves in the global economy every 24 hours.

Free currency convertibility means residents and non-residents of a country are able to exchange domestic currency for foreign currency. That means you can trade the weak dollar for the strong euro, for example. But there are many degrees of convertibility, depending on how governments want to manipulate currency.

In the extreme case government regulations might limit or prevent currency or bank deposits from being moved out of the country. Other restrictions might include banning the use of foreign currency within the country or banning residents from possessing foreign currency, restricting currency exchange to government-approved exchangers, setting official fixed exchange rates, or restricting the amount of currency that may be imported or exported.

How Politicians Make Assets Worth Less

In the past, certain politicians have claimed the need to apply exchange controls to maintain “orderly capital flows” and preventing “runs” on a currency. That happens when businesses and individuals quickly sell the currency in exchange for another currency that is seen as more stable and valuable. Of course, such trades are the essence of the free market economy.

As the late Nobel Prize winner Friedrich von Hayek wrote in his 1944 classic, The Road to Serfdom, “The imposition of exchange controls leads to an instantaneous reduction in the wealth of the country, because all assets are worth less.”

Such controls have been especially appealing to unthinking politicians in countries with large balance of payments (imports vs. exports) problems. The U.S. trade deficit at the moment is US$272 billion so far for 2008 and amounts to many trillions over recent years.

Free market advocates disapprove of exchange controls because they restrict trade and business transactions, especially in a time of beneficial globalism. Free exchange of currencies allows instant capital flows. That expands integration of the international economy through trade, foreign direct investment, migration, and the spread of technology.

This recent world boom has been largely caused by developed economies integrating with less developed economies, using foreign direct investment, the reduction of trade barriers, and the “westernization” of these developing cultures. Free currency exchange is the life blood of this growth.

Controls Destroy Freedom

It is no accident that among the few countries now enforcing currency controls are some of the most tyrannical. These include China, Cuba, Libya, Myanmar (Burma) and Venezuela – and some whose economies would fare far better without controls – The Bahamas, South Africa, Argentina.

In Hugo Chavez’ anti-free market Venezuela, currency controls have produced shortages. They’re now lacking the basic foodstuffs such as milk, eggs and chicken, impeding imports and keeping out needed goods like capital machinery and spare parts out of reach for many businesses, which are now shutting down. In South Africa, a long-time system of dual currency controls has hampered growth and sustained a 25% unemployment rate, scaring away needed foreign capital.

Czar Nicholas II first pioneered limitations on convertibility in modern times. The Czar ordered the State Bank of Russia to introduce a limited form of exchange control in 1905-06. He wanted to discourage speculative purchases of foreign exchange.

Fortunately, the free market trend since the end of World War II has been to end exchange controls. Margaret Thatcher led the way in the 1970s. France abolished controls in 1990, after 44 years. The European Union’s adoption of the euro further did away with controls.

So could the U.S. buck the trend and start imposing these controls? Honestly, it is possible. History does not mean that statist politicians in America, hungry for more taxes to finance their radical spending, would shy away from imposing such controls – just as they repeatedly vow to “tax the rich.” All that it would require is the stroke of the new president’s pen.

What can you do about all this? If you are an American, know your candidates and cast your vote wisely this November. In the meantime, take advantage of your offshore financial freedoms while you still can.

BOB BAUMAN, Legal Counsel

Source: Attack of the Control Freaks!

Yes, it is true that The Mogambo had another heart attack (the third) and is now the proud owner of 5 cardiac stents. What caused this? The health care system did this to me, as I cannot find a physician who has an actual, real license to practice medicine who will prescribe a regimen of smoking cigarettes, drinking too much coffee, eating yummy foods laden with fat and/or sugar, and saving my strength by getting no exercise except for pounding out voluminous, rabid hate mail to the Congress, the Supreme Court, the United Nations and various others, all of whom I absolutely despise for one reason or another.

So, abandoned and cast adrift by an uncaring health care system, I was thus forced to carry on, tragically and heroically, alone. So I intend to sue the medical cartel for malign neglect and make a bundle in some undisclosed settlement.

Anyway that was my original plan, but now I can’t seem to find a lawyer who has an actual, real license to practice law who will even discuss the merits of my case, and usually they laugh in my face and call me bad names whether they have a license or not. No wonder people hate lawyers!

And I hadn’t even gotten to the point in the discussions where I was going to ask them to represent me pro bono, which is where the fireworks usually start!

So I have given up that whole legal strategy since it looks like the lawyers are in league with the doctors and everybody else to make my life miserable, and am now thinking of suing the Internal Revenue Service instead, because about this time, while I was doing my taxes, I noticed that on page 21 of the IRS’s “1040 Forms and Instructions 2007″ booklet labeled “What’s new for 2008″, it clearly says that “The 5% capital gain tax rate is reduced to zero.”

Already beset by demons of my deteriorating mental and cardiac capacity, the idea that the capital gains tax was already 5% and I hadn’t even noticed had me in a panic! What else wasn’t I aware of? I shuddered to think!

So I ran out and accused my wife of every faithlessness and infidelity I could think of, and she denied most of them, and then I grilled the kids for a few hours, but I got nothing out of them either. So at least THAT part of my life is unchanged.

Then, after getting everyone into an uproar by roughly searching their rooms for incriminating evidence of their treason, I decided that I had better re-check my facts, to keep from going off half-cocked and, you know, looking foolish or something.

So I flip to Schedule D of the tax booklet, and of course, referencing all the accompanying tables and worksheets, I am immediately as confused as always, and I suddenly remember precisely why I hate the members of the U.S. Congress who have saddled us with such an embarrassment as the U.S. Tax Code, and how I am waaAAAaaay behind on sending these losers and halfwit scumbags their fair share of vicious hate mail.

But it still looks like the capital gains tax rate is still 15% in 2007, so what in the hell is going on?

And of course, I missed my planned dinner with Chuck Butler of Everbank, which bummed me out, too.

All in all, it was a bad week. But as bad as things are, there is some good news, in that Mr. Butler has never seen my famous, “Look! There’s a UFO in the parking lot!” trick, where he ends up comically getting stuck with the check and the only thing he sees in the parking lot is me, running towards my car and laughing, laughing, laughing.

So, the good news is that I can still pull this little stunt on him in the future and get a free lunch, in case I ever find out he is going to be in town again. And so, as Groundskeeper Carl said in the movie Caddie Shack, I got that going for me!

Like the saying goes; it’s an ill wind that doesn’t blow somebody some good!

P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

But what can you do about it? How can you protect yourself? Even better – how can you make up to 910% from this sudden surge in commodities, so you can fight back the sudden price hike in your grocery bills?

Auditing the Annual IRS “Fear Campaign” 4/8/08
By Bob Bauman

Here’s the uncensored truth behind this year’s IRS-sponsored PR fear campaign – that’s designed to get you to pay your taxes, or else.

Get Set for Multi-Year Gains in the Grains and More Red Hot
Commodity Plays 4/9/08
By Eric Roseman

These two commodities will give you the greatest returns over the next 36 months – even as the world sinks into a stock bear market.

Your Best Defense Against Inflation and a Falling Dollar– that’s Even Stronger Than the Mighty Euro 4/10/08
By Eric RosemanFind out how to combat dangerous inflation and even stagflation with a handful of well-chosen commodities.

Feed the World and Your Portfolio 4/11/08
By Eric Roseman

This year is the perfect storm for commodities – especially the commodities served on your dinner table.

Until Next Weekend,
Kathlyn Von Rohr
Weekend A-Letter Editor

It was Dr. Goebbels who observed: “Propaganda has only one object; to conquer the masses. Every means that furthers this aim is good; every means that hinders it is bad.”

Fear was the Nazi stock in trade. They used fear as a potent psychological weapon in their efforts to direct and control the German masses.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

American Debt Crisis Set to Implode

Ben Bernanke is just DAYS away from unwinding the world’s biggest bet -

and his actions could spin markets into a “deflationary, global collapse.”

To learn his dirty little secret – and grab potential gains of 319% or MORE,

read Jack Crooks’ latest report.

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And each year, as dependable as the arrival of spring, the fear mongers at the IRS launch into their annual campaign to scare the American public.

IRS Loopholes: The annual campaign

The annual campaign begins with a barrage of press releases. The PR specialists at the IRS start sending them three months before the annual income tax filing date, April 15th (a week from today). The press releases are more than just friendly “please file your taxes” reminders. They announce (or you could say, “brag about”) the convictions of an assortment of alleged tax evaders. This scare tactic has become a ritual to frighten U.S. taxpayers into paying up. Read on to learn this year’s IRS propaganda tactics.

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