Jerome Schneider was finally indicted recently. Remember, he was the “International Financial Expert” and author of "Hiding Your Money" who peered at you from the pages of nearly every in-flight magazine, promising to legally eliminate US taxes using sophisticated offshore tax structures: Normally Banks in Nauru. For this service he charged fees in the $60,000 range.

Well, this “Financial Expert” was indicted on 1 count of conspiracy to defraud the Internal Revenue Service, 14 counts of wire fraud and 8 counts of mail fraud. His partner in crime, Los Angeles lawyer Eric Witmeyer, was also indicted. Each man faces up to 115 years in prison if convicted on all counts.

It is not important that these crooks are finally gone (clones and even cleverer crooks are replacing them as we speak). What is important is that you take this moment to recognize that tax scamming is a major industry; and, if you follow 4 very simple rules you will never be the victim of one of the many scams which are promoted every year.

Four Simple Rules to Spot a Tax Scammer

1. If it sounds too good to be true it probably is. Remember, US Citizens and Residents are taxed on their world wide income. The tax scammers play on your greed and natural desire to pay less tax. Pigs do get eaten. Even the best tax planning always leaves something on the table for the IRS; and, always involves full disclosure.

2. Asset Protection alone will never save you taxes. If somebody promises you that their "Special Asset Protection Plan" will save you taxes: RUN. You are in the hands of a scammer.

3. Always involve your personal attorney and accountant in whatever offshore tax planning you do. "Offshore" is a dangerous world if you go it alone or with an unknown "expert." Always check a person's references; and, even after this is done, use your accountant and lawyer as an additional filter. I will not assist with offshore tax planning unless the client's attorney and accountant are fully involved. If the "expert" wants you to work just with him: Run.

4. If they tout "Bank Secrecy" as part of the process then, again: RUN. You are once again in the hands of a scammer. Readers of this newsletter know that bank secrecy is DEAD. Period. The IRS knows everything you are doing abroad; and, if you are relying on stealth then you are a fool. Proper tax planning (and it is possible to save some serious taxes using foreign structures if you actually do business abroad) always involves full disclosure to the IRS. If the promoter of some structure is advocating stealth instead of full disclosure: RUN.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.