A pirate bank is an offshore bank account updated for the digital age. It's a virtual banking system that allows anyone with enough cash to hide as much as they want from the prying eyes of the IRS and law enforcement.
There's nothing illegal about establishing an offshore account unless you do it with the intent of tax evasion. The Foreign Account Tax Compliance Act (FATCA) requires banks around the world to report balances and any activity of American citizens to the IRS or face fines.
Maximize Privacy and Asset Protection
Keep in mind, an offshore bank account opened in one's personal name is only protected by one jurisdiction's privacy laws. ... That way, the first transfer is traceable from a domestic account to an offshore account.
Although FATCA may have reduced US citizens' options when opening offshore bank accounts, it's always been perfectly legal – and possible – for US citizens to bank overseas. ... In fact, many national governments have taken it upon themselves to ensure that their banking systems are FATCA-compliant.
In this article, we'll explore some of the best offshore banking countries – and what they're best at.
Millionaires put their money in a variety of places, including their primary residence, mutual funds, stocks and retirement accounts. Millionaires focus on putting their money where it is going to grow. They are careful not to put a large amount of money into items that will depreciate.
Any US person (that is, any person considered a US tax resident) with a foreign account balance of $10,000 or more at any point during the tax year will need to file. And this is triggered even if the balance hit $10,000 for just one day (or one minute!).
Federal law requires a person to report cash transactions of more than $10,000 by filing IRS Form 8300 PDF, Report of Cash Payments Over $10,000 Received in a Trade or Business.
Any U.S. citizen with foreign bank accounts totaling more than $10,000 must declare them to the IRS and the U.S. Treasury, both on income tax returns and on FinCEN Form 114.
Despite what you may hear, offshore banking is completely legal. It's not about tax evasion or other illegal activities. It's simply about legally diversifying your political risk by putting your liquid savings in sound, well-capitalized institutions where they are treated best.
Selling assets at strategic times
Taxes on assets such as stocks and real estate investments aren't owed until they are sold. That helps people such as Jeff Bezos, the Amazon CEO, founder and richest person in the world, grow their wealth rapidly while avoiding a huge tax bill.
Yes, the IRS can levy your foreign bank account. ... With that said, the IRS can issue a levy to any bank with a branch in the United States. So, if your bank in Mexico has a branch in the U.S., the IRS can issue a levy notice to that U.S. office and empty your account in Mexico.
On the flipside, this is something that you and many other people may not know about most offshore banks: They don't loan out your funds to make money. Instead, they make money by charging transactional fees, as well as monthly fees to clients.
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