Pasquantino

The use of the US banking system or other infrastructure to hide funds and deprive a foreign country of its tax revenues could lead to a wire fraud violation under the US criminal code. he use of the US banking system or other infrastructure to hide funds and deprive a foreign country of its tax revenues could lead to a wire fraud violation under the US criminal code. Even a plot to use US infrastructure to defraud a foreign government of tax revenues violates the US Federal wire fraud laws. Under the 2005 Pasquantino ruling of the US Supreme Court, Case (03-725)544 U.S.349, using American facilities such as the US banking system to hide assets and evade taxes in a foreign country may constitute a wire fraud violation under the US Criminal Code. This statute prohibits the use of interstate wires to effect any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses. Details of the case: In the USA, the Pasquantino brothers devised and carried out a smuggling operation, which constituted a scheme to evade Canadas import taxes. The scheme to defraud generally operated as follows: 1) they would place an order for liquor by wire (telephone) with a liquor store in Maryland; 2) a driver used a rented truck to pick up the liquor from the liquor store in Maryland and transport it to New York for storage; and 3) over many trips, a driver smuggled a lesser quantity of the liquor across the Canadian border in the trunk of a vehicle. Therefore, it was the objective to sell the liquor at a higher profit by not paying any Canadian excise tax. Thus, US infrastructure was used to deprive Canada from its tax revenues! Consequently, the Pasquantino brothers were charged for a violation of U.S. wire fraud regulations. The defendants argued that the common law revenue rule, the doctrine under which courts in common law countries such as the United States do not enforce the tax laws of other nations, would prevent the U.S. court from enforcing the tax laws of a foreign country and they were therefore innocent. However, the Supreme Court argued that Canadas right to collect the duties was considered a property right, which was sufficient to ascertain a plot to defraudand a guilty verdict.The Pasquantino case made it clear that being involved in a scheme to evade non-US taxes may be considered a predicate offense in the US, which could lead to assets forfeiture, fines, and even imprisonment. Because, under common provisions of international (tax) laws such as the revenue rule, sovereign countries in the absence of special enforcement treaties do not enforce the revenue laws of other sovereign countries, to supersede this rule many countries enter into bilateral treaties for exchange of information and mutual enforcement and assistance in order to counter tax evasion. www.sadekya.com

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In fact, any use of the US financial system (transactions involving US currency and/or shares) will entail some form of wire transmission into the US. In addition, under the US Patriot Act, all financial institutions with correspondent banking relationships in the US have submitted themselves to US jurisdiction for money laundering purposes. The above implies that using a US bank account to hold undeclared funds from taxation in a foreign country could lead to a wire fraud violation in the US. Depending upon the circumstances, transactions that are typically viewed as customary investment and banking activities could arouse suspicion of wire fraud and as a consequence, exposureand especially if it appears that the principal purpose of the activityis to illegally evade the proper reporting of taxable income in another jurisdiction. There is no need to expose oneself to these above described risks. Fortunately, there are ways to keep your accounts and investment in the U.S in a legally compliant way.There are means within the law that one can use to legally, defer or pay lower taxes. In almost all countries, the law provides for means to legally lower your tax bill. Tax avoidance, also called tax mitigation, is the art doing everything possible within the law to reduce your tax bill and pay fewer taxes. Tax evasion means paying less tax than what you are legally obliged to; this is usually accomplished by deliberate concealment of true facts by filing fraudulent tax returns. Tax evasion is a criminal act and should always be avoided. By using a blend of offshore companies, life insurance contacts, offshore trusts, and private foundations, one is able to create offshore structures that legitimately and legally defer and lower the tax bill in the taxpayers home country.

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Sadekya is specialized in the provision of cross-border structuring and asset protection services

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