Friday, September 21, 2018
Business

Need to hide some income? You don't have to go to Panama

For wealthy Americans looking to veil their assets and shield some of their income from taxation, there is no need to go to Panama or any other offshore tax haven. It's easy to establish a shell corporation right here at home.

"In Wyoming, Nevada and Delaware, it's possible to create these shell corporations with virtually no questions asked," said Matthew Gardner, executive director of the Institute on Taxation and Economic Policy, a nonprofit research organization in Washington.

In some places, it can be more difficult to get a fishing license than to register a shell company. And it doesn't cost much more.

The Panama Papers — the cache of leaked documents from a Panama law firm, Mossack Fonseca — have revealed how thousands of the firm's clients, including an array of powerful figures around the world, stashed billions of dollars in tax havens. So far, only a tiny number of U.S. names have surfaced — although that could change as more of the documents are reviewed.

That in no way means that U.S. citizens are refraining from such practices, experts emphasized.

"This is just one firm in one place," said Gabriel Zucman, an economist and the author of The Hidden Wealth of Nations: The Scourge of Tax Havens. "So it cannot be representative of what's happening as a whole in the world."

But Zucman, who estimates that about 8 percent of the world's financial wealth — more than $7.6 trillion — is hidden in offshore accounts, said another reason was that it is so simple to create anonymous shell companies within the United States.

Wealthy individuals and businesses that want to mask their ownership can conveniently do so in the United States, and then stash those assets abroad.

Double standard

While the United States demands that financial institutions in other countries share information about Americans with accounts abroad, it has refused to reciprocate.

"You see a ton of wealth in tax havens in Switzerland and the Cayman Islands that is owned by shell companies that are incorporated in Panama or in Delaware," Zucman said. "The bulk of this wealth does not seem to be duly declared on tax returns."

A recent report by the Institute on Taxation and Economic Policy called "Delaware: An Onshore Tax Haven" noted that the state's lack of transparency combined with an enticing loophole in its tax code "makes it a magnet for people looking to create anonymous shell companies, which individuals and corporations can use to evade an inestimable amount in federal and foreign taxes."

Aside from avoiding taxes, shell companies are routinely used by terrorist organizations to hide assets, by political donors to sidestep campaign finance laws and by criminals to launder money, Gardner said.

The Treasury Department indicated this week that it planned to require financial institutions to verify the identities of customers who set up accounts in the names of shell companies, thus closing a loophole in the U.S. banking system that thwarts transparency efforts.

The Treasury also recently began a program that tracks people who use shell companies to purchase expensive real estate in New York and Miami.

But the new rules would not affect state law.

John A. Cassara, a former special agent for the Treasury Department, said that U.S. and foreign law enforcement officials conducting investigations were regularly stymied by state secrecy laws surrounding shell corporations.

"If somebody is conducting an investigation and it comes back to a Delaware company and you want to find who or what is behind that company, you basically strike out," he said. "It doesn't matter if it's the FBI, at the federal level, state or local. Even the Department of Justice can't get the information. There is nothing you can do."

He also recalled a case in which investigators ended up abandoning their inquiry of a Nevada corporation that had received more than 3,700 suspicious wire transfers totaling $81 million over two years.

After revelations came to light about Americans using Swiss bank accounts to evade taxes, the United States in 2010 passed the Foreign Account Tax Compliance Act, which requires financial firms in other countries to disclose details about U.S. clients with offshore accounts.

Yet the United States is one of the few countries that has refused to sign new international standards for exchanging similar financial information with other countries.

Another country that has failed to sign the standards? Panama.

Comments
Joe and Son's Olive Oils, a legacy Ybor business, finds new roots in Carrollwood

Joe and Son's Olive Oils, a legacy Ybor business, finds new roots in Carrollwood

Andrea Gebbia grew up in Carrollwood, and now she is bringing the family business to the neighborhood of her youth.In late fall, Joe and Son’s Olive Oils is slated to open a second location."I feel so blessed having the ability to grow my...
Updated: 1 hour ago
Tampa General nurses record the last heartbeats of dying patients, making a family memory

Tampa General nurses record the last heartbeats of dying patients, making a family memory

TAMPA — As John Reisinger waited with family at Tampa General Hospital, grief settled in like a fog. So some of the details are hazy.But he remembers the moment when three women in white lab coats approached him.The day before, his niece, Jessica Rau...
Published: 09/21/18
Retro Fitness sets first of several area locations in Citrus Park

Retro Fitness sets first of several area locations in Citrus Park

In early fall, Retro Fitness will open a 17,000 square foot fitness facility in Citrus Park, and it plans for more Tampa Bay area locations.Founded in 2005, Retro Fitness has 153 clubs throughout the United States and is the official fitness center o...
Published: 09/21/18
The guys who brought you Tampa’s Armature Works plan high-end offices next door, and they’ve already signed a lease with med-tech company AxoGen

The guys who brought you Tampa’s Armature Works plan high-end offices next door, and they’ve already signed a lease with med-tech company AxoGen

TAMPA — Coming soon from the developers who brought you the Armature Works: Heights Union, two high-end office buildings next door to the trendy food hall, event space and co-working complex overlooking the Hillsborough River.Developers said Friday t...
Published: 09/21/18
Chi Chop + Kung Fu Tea looks to succeed where others failed

Chi Chop + Kung Fu Tea looks to succeed where others failed

RIVEVIEW – Amy Lin knows that her newest Chi Chop + Kung Fu Tea store is in a location where previous businesses have not lasted.The short-lived Tap’s Brewhouse & Deli and even shorter-lived Top Shelf Sports Bar and Grill tried to r...
Published: 09/21/18
Walmart is teaming with a Seminole Heights chef to promote locally grown mushrooms

Walmart is teaming with a Seminole Heights chef to promote locally grown mushrooms

TAMPA — It might seem like an unlikely match from the outside: A distinguished chef with a restaurant known for inventive plates using produce shoppers can find at… Walmart?Walmart, the country’s largest grocer, is known for having a core consumer wh...
Published: 09/21/18
Federal loans open to Pinellas businesses struggling against Red Tide

Federal loans open to Pinellas businesses struggling against Red Tide

The U.S. Small Business Administration has extended its disaster loan program to include Pinellas and Pasco county businesses affected by Red Tide.Already, the Pinellas County Economic Development Office was taking applications for bridge loans to he...
Published: 09/21/18
Watch: A southern white rhinoceros calf just a week after being born at ZooTampa

Watch: A southern white rhinoceros calf just a week after being born at ZooTampa

TAMPA — A southern white rhinoceros gave birth to a calf at ZooTampa on Sept. 12, marking the sixth successful birth of the species in the zoo's history. In a news release, ZooTampa said southern white rhinoceroses are a nearly threatened spec...
Published: 09/21/18
Baggers, cashiers soon can grow beards at Publix

Baggers, cashiers soon can grow beards at Publix

ORLANDO — The faces of baggers, cashiers and stockers at a Florida-based grocery chain may look slightly different in the near future.That's because Publix said Friday that it would start allowing workers to grow beards and other facial hair b...
Published: 09/21/18
They spent $15,000 adding a driveway to their St. Pete House. Now the city says they can’t park on it

They spent $15,000 adding a driveway to their St. Pete House. Now the city says they can’t park on it

ST. PETERSBURG — One day in January, Dana Cremo was on her front porch hanging a vintage screen door when two city employees walked up. "You can’t park on your driveway," they said. "Why?" she asked. "Because somebody filed a complaint," they said. F...
Published: 09/21/18