Taxes Blog

Finance Blogs » Taxes » $21 trillion hidden offshore

$21 trillion hidden offshore

By Kay Bell · Bankrate.com
Tuesday, July 24, 2012
Posted: 5 pm ET

Here in the United States, offshore accounts have received a lot of attention thanks to Republican presidential candidate Mitt Romney's decision to put some of his vast wealth into foreign institutions.

Romney is far from alone in stashing money in Swiss bank accounts and shelters in Bermuda and the Cayman Islands. And let me make an important point here. Romney has reported these holdings to Uncle Sam, so there's nothing illegal in his choice of non-U.S. financial institutions.

But such transactions still raise eyebrows, not only of political foes but of we Average Janes and Joes who are simply looking for a CD that pays more than a paltry 0.4 percent return.

That's why we take notice when we get word from the Tax Justice Network, or TJN, that worldwide, the super-rich had at least $21 trillion hidden in secret tax havens worldwide at the end of 2010.

The TJN was by created by the British Houses of Parliament to research, analyze and report on how taxation and various types of tax evasion affect economies. It touts its latest report, The Price of Offshore Revisited, as the "most detailed and rigorous study ever made of financial assets held in offshore financial centres and secrecy structures."

And the group says the $21 trillion figure, which is equal to the size of the United States and Japanese economies combined, is conservative. It represents financial wealth only and excludes a welter of real estate, yachts and other nonfinancial assets owned via offshore structures.

When those other noncash assets are added, TJN suspects there may be as much as $32 trillion in hidden worldwide financial assets held offshore by high net worth individuals.

IRS offers amnesties for offshore accounts

Locally, the Internal Revenue Service is continuing its efforts to get foreign account holders to reveal their offshore assets and pay U.S. taxes on the money.

Two previous amnesties (what the IRS prefers to call offshore voluntary disclosure programs, or OVDPs), along with results so far this year in a third such program, have brought in more than $5 billion in back taxes, interest and penalties. That money was collected from 33,000 taxpayers who confessed their holdings in order to avoid criminal charges of tax evasion.

The 2012 offshore disclosure effort is underway indefinitely. The penalty for finally reporting previously hidden offshore assets has ticked up a bit to 27.5 percent from the 25 percent in the 2011 program. But it's better than the alternative if the IRS discovers your offshore money after it ends the amnesty period.

In that case, you'll face full penalties and possibly the inside of a federal jail cell.

Stay on top of taxes and the politics that produce them, as well as get tax-saving tips by subscribing to Bankrate's free Weekly Tax Tip newsletter.

You also can follow me on Twitter @taxtweet.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
22 Comments
Charlie
August 03, 2012 at 10:00 pm

LoL - And here we were believing that it would
all trickle down.

Now, are we so stupid that we would fall for
this again?!

Stupidity gathers its own rewards and they are
far from enjoyable!

lolo
August 01, 2012 at 2:07 pm

@ Fred and True, you guys are nuts. college grades have nothing to do with not paying taxes. Besides I am sure that you just loved that S. Palin had a C average in college, and you wanted her to run for president.Is it because she was white. Also you know as well as anyone else that since President Obama has a black face, even though he is bi-racial he was vetted thoroughly. There was no way white america would have given him a chance to run for president without out being vetted. So stop with the nonsense. You need to be asking how Mitt has two degrees from Harvard and this is the best he can do. We need to see his transcripts from college, because he acts like S. Palin, but you know like I know that his daddy bought them for him, right.

Steve
July 30, 2012 at 6:22 pm

Why cannot people think? The question is not who is hiding money where, but why do they have to hide it? The government wastes FAR TOO MUCH MONEY. Period. They are all corrupt and lazy. The USPS in my town just failed to deliver a package when I was home (did not even ring bell) claims they cannot retrieve a package without a tracking number, even when I offer them my license, address, passport/WHATEVER. I could literally see the package sitting in storage. Fedex or UPS delivers it to my house without error, but accepts licenses just in case. I work for a local rec department that runs at an immense deficit, they are all engaged in time theft and still use manual payroll/time cards lol! If you try to get them to change, they will try to fire you.

mike horn
July 30, 2012 at 2:17 pm

and we told them it would trickle down........lmao....lol

haha
July 28, 2012 at 3:05 am

Do you really blame them. All you hear is "tax the rich" and "they don't pay their fair share," who in their right mind would keep their money here, just to be demonized further by working hard and smart money moves? Tax reform is desperatly needed

anja zelm
July 27, 2012 at 5:26 pm

Of course it's LEGAL... these people who use tax havens to secure wealth away from the reach of the National Treasury, are GREAT americans, entirely within their rights, hoarding trillions of dollars. The real criminal is G'ma... she's gettin' 30 bucks a week in food stamps illegally. Shame on you G'ma...!

seiko kinetic premier mens watch snl041p2
July 26, 2012 at 1:04 am

It's a nice post.we will come back again,if you like our site,we will link to you!725mvkefeng seiko kinetic premier mens watch snl041p2

Roger
July 25, 2012 at 3:54 pm

True American,
Do you know the difference between avoiding taxes (legal) and evading taxes (illegal)? You avoid taxes by claiming deductions and investing in 401k's. We all do that. You evade taxes by not reporting (like Charlie Rangel, et al) or not filing. I would be less concerned about which stocks and investment vehicles a candidate has and more concerned about transcripts and writings in college papers which give TRANSPARENCY to a candidate's views and capabilities.

fred smith
July 25, 2012 at 12:25 am

You know True, Everyone is worried about Mitts' Money... I would like to see the "Most Transparent President Ever" Disclose his Grades From College...Not to mention What He knows about "Fast And Furious"...You know, The incident involving Gun Running to Mexican Killers and Drug Kingpins..That Resulted in A Border Patrol Agent Being Gunned Down,I'm a Hellofalot more worried about that than "MItt Romney's Money"...

True American
July 24, 2012 at 9:14 pm

The writer says that Romney has declared the money he has stashed in off shore accounts, to the IRS. I ask, Is she his Accountant? How does she know this? Especially when he has refused to make his tax returns for prior years public. Offshore accounts serve the purpose of avoiding taxes to the resident country of the person. If there were no tax advantages, why not keep your money in banks in the US?