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November 26, 2001
Offshore Industry News

=============================================
Jacobs Report Newsletter Sponsors

Vernon K. Jacobs, CPA
http://www.vernonjacobs.com

Offshore Press, Inc.
http://www.offshorepress.com

PrimeGlobal, Inc.
http://www.offshorepro.com/index.htm

================================================
OFFSHORE INDUSTRY NEWS

* BANKING TRANSPARENCY VERSUS TAX HARMONIZATION
* BAHAMAS JOINS IN FREEZE ON TERRORIST FUNDS
* UPDATE ON FINANCIAL ACTION TASK FORCE BLACKLIST
* OFFSHORE COUNTRY LINKS
* OFFSHORE TAX SEMINAR - MAY 24 & 25, 2002 IN VEGAS
==================================================
BANKING TRANSPARENCY VERSUS TAX HARMONIZATION

It seems fairly clear that the bureaucrats of the
O.E.C.D. want to force the low or tax free countries
to eliminate banking secrecy AND to harmonize their
tax systems to eliminate tax competition. The
apparent goal of the OECD is to support their own
high tax rates by eliminating competition from the
low tax countries and by forcing low tax countries
to assist the OECD member countries to pursue their
own tax evaders through banking transparency.

While there has been a renewed effort by the OECD
to use the terrorist attacks of 9/11 to push their
agenda forward, it does not appear that the USA will
support efforts to impose uniform tax systems in
all countries of the world. The reason is because
the USA is one of the leading tax havens for residents
and citizens of other countries.

Foreign investors can invest in U.S. bonds and in
debt obligations of most types of U.S. financial
institutions free of U.S. taxes. In addition, foreign
investors are not subject to tax on any gains in any
U.S. securities. A further advantage that the U.S.
enjoys in the realm of international tax competition
is that our individual income tax rates are lower than
in many other major countries. In addition, we do not
impose a value added tax at the national level.

It therefore seems likely that that the U.S. will
support international efforts to eliminate banking
secrecy but will not support efforts to impose uniform
tax systems throughout the world.

==================================================

BAHAMAS JOINS IN FREEZE ON TERRORIST FUNDS

According to the "Bahamas Dateline" (PO Box 41599,
Arlington, VA 22204)

"The Bahamas was one of the first countries to
  promulgate the International Obligations (Afghanistan)
  Order 2001. The Order prohibits any person dealing
  with any property and/or any financial institution
  licensed in the Bahamas from transacting business with
  Osama bin Laden, the Al Qaeda organization, or any
  individuals associated with them."

==================================================

UPDATE ON FINANCIAL ACTION TASK FORCE BLACKLIST

The FATF has removed four countries from their "black-
list" of countries that do not meet their standards
for legislation to curtail money-laundering. The
four countries include the Bahamas, the Cayman Islands,
Panama and Liechtenstein. At the same time, they
added six counties to the list. The six new countries
include Egypt, Guatemala, Hungary, Indonesia, Myanmar
and Nigeria. Other countries included in the blacklist
include the Cook Islands, Dominica, Indonesia, Isreal,
Lebanon, Marshall Islands, Naura, Nevis, Niue, the
Philippines, Russia, St. Kitts and St. Vincent.

( http://www1.oecd.org/fatf/ )

Source: Offshore Finance Canada
(http://www.ofcpublications.com )
==================================================
OFFSHORE COUNTRY LINKS

If you want information about a specific country,
you can either enter the name into a search engine,
search through one of the large directories like
Yahoo or use the following resources.

The Low-Tax.net Jurisdiction Resource
http://www.lowtax.net/lowtax/html/jurhom.html

The Escape Artist Web Site
http://www.escapeartist.com/taxhavens/taxhavens.htm

U.S. State Department Travel Warnings
http://travel.state.gov/travel_warnings.html

C.I.A. Fact Book on 250 Countries
http://www.odci.gov/cia/publications/factbook/index.html

Ernst & Young - Doing Business in Series
http://www.ey.com/GLOBAL/gcr.nsf/EYPassport/Welcome-Doing_Business_In-
EYPassport

==================================================

OFFSHORE TAX SEMINAR - MAY 24 & 25, 2002 IN VEGAS

An Offshore Tax Boot Camp and Workshop will be held
at Caesar's Palace in Las Vegas next May 24 and 25,
2002. We already have three pre-paid registrations out
of the 15 that we need to proceed. Details are online at
http://www.offshorepress.com/ostaxbootcamp.htm

==================================================

Tools Available At
http://groups.yahoo.com/group/jacobsreport

CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a two
day concentrated seminar on offshore tax law
next May 24 & 25 in Las Vegas? For details,
see http://www.offshorepress.com/ostaxbootcamp.htm

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

[JR]- OFFSHORE INVESTOR NEWS - 11/21/01

by Vernon K. Jacobs

SEND THIS TO A FRIEND:
If you like this newsletter, send a copy to a friend.
==================================================
*  WHAT'S A REASONABLE RATE OF RETURN?
*  OFFSHORE TAX SEMINAR NEXT MAY IN VEGAS
*  INTERNATIONAL CURRENCY EXCHANGE SITES
*  CHECK OUT INVESTORSOFFSHORE.COM
*  SOURCES OF OFFSHORE INVESTOR NEWS
==================================================
WHAT'S A REASONABLE RATE OF RETURN?

According to Offshore Finance Canada (Sept/Oct. 2001), a survey by
David Marchant of Offshore Business News generated astounding
results. (http://www.offshorebusiness.com/ )

	 "22% of respondents expected returns of 100% or higher
	  32% of respondents expected returns of at least 50%
	  42% of respondents expected returns of at least 25%"

These expectations are seriously excessive and are the main reason
why so many people become victims of offshore frauds like the
Prime Bank Guarantee programs.

Numerous studies have concluded that less than 15% of the mutual
funds or the investment newsletters beat the market indexes and that
very few of the winners in any year are able to beat the market the
next year. Even successful businesses seldom achieve returns on
investment that are far in excess of stock market averages. Any
business that grows at the rate of 15% or more per year is an
exception. Many large and mature businesses make 5% after taxes
on their invested capital and often make less. A large insurance
company that I worked for many years ago had a target annual
rate of return of 10% on their investment in getting new customers
and a lower rate of return on their investments.

Look at the returns on home mortgages. They are down to as low
as 6% in many markets. Government bonds and high grade corporate
bonds are down to about 4%.

So what is a "reasonable" rate of return? At the most, it would be
a return equal to the market averages for each type of investment.

Any promise or claim or a potential return in excess of the market
averages over a period of many years should be looked at with
great skepticism. Speaking for myself, if anyone attempts to entice
me with promises of very high returns with low risk, I immediately
tune them out and hang up the phone or delete their email.

There are some opportunities for returns of 10% to 15% with various
investments such as some "with profit bond funds" or with well
selected tax lien certificates and some other unusual investment
opportunities. But returns of 20% or more per year are often a
big indicator of a potential rip-off or of a financial bubble like the
insane growth rates in the NASDAQ during the Internet boom.

==================================================
OFFSHORE TAX SEMINAR NEXT MAY IN VEGAS

If you have an offshore trust, offshore business or are just wanting
to invest beyond the bounds of the U.S. markets, you will be exposed
to many frustrating and complicated U.S. tax rules. Richard Duke and
I will be the instructors for an intensive two day seminar called "The
Offshore Tax Boot Camp" to be held in Las Vegas, in May 2002. I
am still working on the selection of a hotel and the exact dates but
I'm trying to get a Friday and Saturday late in May.

A $250 DISCOUNT is available for the first 15 pre-paid registrations.
For more details see http://www.offshorepress.com/ostaxbootcamp.htm

==================================================
INTERNATIONAL CURRENCY EXCHANGE SITES

The following are a few random selections of web sites that offer
multiple currency exchange comparison calculators. No attempt was
made to locate all of the web sites with similar information or to
make any assessment of which one is best. If any readers feel that
some other currency conversion web site is better than these, send
me an email and I'll mention the web site in a future issue.

----------------------------------------------------------------------
-------------------------------

The Financial Times provides an extensive table of every international
currency compared to four of the leading currencies.

http://www.marketprices.ft.com/markets/currencies/cd#c

----------------------------------------------------------------------
-------------------------------
The Central Bank of Canada offers extensive data on many currencies,
including historic rates back to 1990. The site provides a comparison
of the Canadian to most other currencies, Canada/US currency
conversions, financial rates and statistics and additional information
for investors who are interested in Canadian investments.

http://www.bankofcanada.ca/en/exchange.htm

----------------------------------------------------------------------
--------------------------------
This web site provides current currency conversions of 52 different
currencies, with any of them as the base currency. Frankly, I was
not able to find out who is sponsoring this site or why, but they
claim the currency values are derived from the Bank of Montreal.

http://www.rubicon.com/passport/currency/currency.html

----------------------------------------------------------------------
--------------------------------
This next web site provides current currency exchange
comparisons for any two of 164 different currencies.

http://www.oanda.com/convert/classic

----------------------------------------------------------------------
--------------------------------
CNN provides a comparison table of seven currencies with a two
currency comparison of most of the currencies of the world. Their
site includes an assortment of other features for investors.

http://money.cnn.com/markets/currencies/
==================================================

CHECK OUT INVESTORSOFFSHORE.COM

Here's an extensive source of articles and background information
about offshore investing for those who are beginners. This web site
includes extensive archives of articles on offshore investing.

http://www.investorsoffshore.com/html/kb/kb.html

==================================================

SOURCES OF OFFSHORE INVESTOR NEWS

I have provided a web page with links to the web sites I've found that
provide current news about offshore investing. The news on some
of these sites change daily. If you know of any good sources of
current news about offshore investing, let me know and I will add it
to this page of offshore investor news resources.

http://www.offshorepress.com/news-investor.htm

==================================================

Tools Available At http://groups.yahoo.com/group/jacobsreport

CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one
day concentrated seminar on offshore tax law
sometime next year? If you MIGHT be interested,
please take our poll and let us know what East
coast CITY would be of most interest to you.
Just link to Polls in the left section of the page.

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

For the benefit of new members since the past few
months, the Yahoo Groups service includes a way
to store web links or bookmarks relating to the
subject matter of the Jacobs Report list.

I've created a number of links that may be useful
to you and would welcome suggestions for others.

Go to http://groups.yahoo.com/group/JacobsReport

and then click on "Bookmarks" to review the links
that are already available.

Vern Jacobs

U.S. and International Tax News
by Vernon K. Jacobs

*  IRS WEB SITE EXPLAINS RELIEF FOR TERRORIST VICTIMS
*  INTERNET TAX MORATORIUM ENDED ON OCTOBER 21ST
*  FOREIGN COUNTRIES REDUCE CORPORATE TAX RATES
*  IRS F.S.A. RULES AGAINST FAMILY CORPORATION DISCOUNTS
*  U.K. TAXPAYERS GET COMPENSATION FOR ERRORS BY I.R.
==================================================

IRS WEB SITE EXPLAINS RELIEF FOR TERRORIST VICTIMS

Although the IRS is not able to alter the laws due to
the terrorist attacks on 9/11, they have adopted a variety
of policies intended to offer some relief to victims of the
attack. See http://www.irs.gov/relief/index.html
==================================================

INTERNET TAX MORATORIUM ENDED ON OCTOBER 21ST

The three year moratorium on new taxes on Internet commerce
expired on October 21st, without any legislation to extend the
freeze or to revise the laws. The various states are now free to
instigate new laws applicable to e-commerce transactions unless
the Congress is able to pass an extension of this moratorium.

According to Tax-News.Com, the House has passed a three year
moratorium but the Senate has not been able to agree on the
issue. For more on this subject see.....

http://www.tax-news.com/asp/story/story.asp?storyname=6201
==================================================

FOREIGN COUNTRIES REDUCE CORPORATE TAX RATES

An article in the July, 2001 issue of World Trade magazine
indicated that U.S. companies doing business world wide may
be facing more stringent competition from foreign companies
due to reduced tax rates on corporations domiciled in other
countries. The article by Lara Thomas and Gordon Deas (of
the Chicago office of Arthur Anderson and Company) stated
that .....

1.  The U.S. top corporate tax rate is 35%
2.  The U.K. reduced its top corporate rate to 30% in recent
     years.
3.  German corporate tax rates have been reduced to 25% this
     year.
4.  The Irish top rate on corporations will be cut to 12.55%
     by 2002.

The article focuses on how the US tax code (particularly the
section known as "sub-part F") puts US companies at a competitive
disadvantage with corporations in countries with lower corporate
tax rates.

Source:  http://www.worldtrademag.com/
==================================================

IRS F.S.A. RULES AGAINST FAMILY CORPORATION DISCOUNTS

The Internal Revenue Service has issued a Field Service Advice
(which is a request by an IRS field agent for an interpretation
of a particular fact situation) relating to gift tax discounts
on the value of a family owned corporation. The IRS ruled that
discounts for minority interest and lack of marketability were
not permitted. For further details, see

FSA 200143004 (Jul. 5, 2001), see Doc 2001-27104 (24 original
pages) or 2001 TNT 209-15 from Tax Analyst. (Subscription
required.) The Tax Analyst Estate and Gift Tax Bulletin,
November 1, 2001 http://www.tax.org

Comment:  The IRS has persisted in making similar rulings in
cases involving discounts on family owned limited partnerships
and has not fared well in the courts.

==================================================

U.K. TAXPAYERS GET COMPENSATION FOR ERRORS BY I.R.

U.K. Chartered Certified Accountants are complaining that the
U.K. Revenue does not provide sufficient compensation to
taxpayers for the added work and stress that is caused by
errors caused by the Inland Revenue service. For details on
this story see,
http://www.tax-news.com/asp/story/story.asp?storyname=6253

From the perspective of U.S. tax professionals and taxpayers,
it would seem that any of level of compensation for errors
and added work caused by the IRS would be far better than
nothing -- which is what US taxpayers get under the current tax
system.

==================================================

CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

TAX SEMINAR : Would you like to attend a two
day concentrated seminar on offshore tax law
sometime next May, in Las Vegas? If you MIGHT
have any interest, please send an email to
seminars@... so we can keep you
informed about developments.

SEND THIS TO A FRIEND:  If you like this news-
letter, send a copy to a friend.

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

Copyright, 2001 Vernon K. Jacobs, All rights reserved.
Permission is granted to send a copy of this entire
article to any friends or colleagues.

==================================================
*  ASSET PROTECTION NEWS ONLINE
*  BUSH SEEKS TO DETER TRIAL LAWYERS FROM SUING
*  BANKRUPTCY "DEFORM" MAY BE OFF THE STOVE ENTIRELY
*  $882,000 FOR AN ANKLE SPRAIN
*  NEW MONEY LAUNDERING LAW HAS WIDE SPREAD IMPACT
==================================================
ASSET PROTECTION NEWS ONLINE
--------------------------------------------------

Our web site now includes a page for current online news about
various asset protection topics. The page includes links to various
web sites that provide litigation news, money laundering news,
forfeiture news and bankruptcy news. Some of these news sources
provide daily news while others provide less frequent summaries.

For sources of current asset protection news go to
http://www.offshorepress.com/news-protection.htm

==================================================
BUSH SEEKS TO DETER TRIAL LAWYERS FROM SUING
--------------------------------------------------

According to an article in the online edition of Business Week
(Nov. 12, 2001 Edition), President Bush is seeking to protect
various companies involved in the Sept. 11 terrorist attack from
huge lawsuits. The most vulnerable companies include United
Airlines, American Airlines, Boeing and the property owner of
the World Trade Center. He is also seeking to protect drug
makers of vaccines for anthrax and smallpox from potential
damages far exceeding their insurance coverages.

For details see
http://www.businessweek.com/magazine/content/01_46/b3757087.htm

Former President Clinton was reputed to have been a staunch
supporter of the Trial Lawyers Ass'n and it will be interesting to
see if Bush can make any inroads against the litigation lottery.

===========================================================
BANKRUPTCY "DEFORM" MAY BE OFF THE STOVE ENTIRELY
------------------------------------------------------------

"September 11" not only put the Bankruptcy "Deform" Act on
the back burner but appears to have taken it off the stove
entirely!

"Sources on the Hill indicate that it is not only highly
unlikely BRA 2001 will be taken up this year, but may not
get back on the calendar until Fall 2002 (it has never been
a priority for the current Senate leadership).

"There are also indications on the Hill that support for BRA
2001 may be softening substantially. Several members of
Congress, particularly on the Senate side, believe that the
current economic "recessionary period" is not the proper time
to make a drastic overhaul of the Bankruptcy Code, particularly
one that is intended to make obtaining bankruptcy relief more
difficult."

by Thomas J. Yerbich, Vice-Chair
Consumer Bankruptcy Committee, ABI
yerblaw@...

Source - Fresh Start News
http://www.bankruptcyservices.net/

==================================================
$882,000 FOR AN ANKLE SPRAIN
--------------------------------------------------

An over 30 semi-professional soccer player sprained his
ankle as a result of tripping over a board in a front of a
bank that was used "to facilitate wheeling coins into the
bank."  Despite claims by the defendant that the wooden
ramp was an obvious condition and that the ankle injuries
of the plaintiff were due to his being a soccer player, the
jury granted an award of $882,000.

http://www.verdictsearch.com/news/docs/1026ankle.jsp

==================================================
NEW MONEY LAUNDERING LAW HAS WIDE SPREAD IMPACT
--------------------------------------------------

According to Money Laundering Alert,

"The new U.S. money laundering law signed by
  President George Bush on October 26 has a great
  impact on a multitude of "trades and businesses" that
  since 1985 have reported large cash transactions and
  suspicious activity under a tax code provision. Most of
  them are unaware of the change. The landmark law
  now places these businesses, including automobile,
  airplane and boat dealers, lawyers, jewelers, real
  estate brokers and many others, under the Bank
  Secrecy Act's regulations, the same that bankers and
  other "financial institutions" confront."

Reference: http://moneylaundering.com/news.htm#1111
For details of the bill see http://thomas.gov and look for HR 3162
==================================================

CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a two
day concentrated seminar on offshore tax law
sometime next May? If you MIGHT be interested,
please send an email to seminars@...
and ask to be included on our seminar news list.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?
Try the Asset Protection and Offshore Forum -
a FREE public discussion list that is moderated
by yours truly. The Jacobs Report is a news
letter. The AP Forum is a two way discussion
list. For details, see
http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this news-
letter, send a copy to a friend.

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

The efforts of the bureacrats in high tax
countries to eliminate tax competition from
the tax havens is getting support from those
who want to "do something" to fight back
against the perpetrators of the 9/11 attack.

As an indirect consequence of the 9/11 World
Trade Center disaster, a number of politicians
and special interest groups are renewing their
efforts to eliminate banking secrecy and tax
evasion in the asset protection/tax havens.

Prior to 9/11, the Bush administation had
indicated they would not support efforts to
impose sanctions on smaller countries who were
not willing to give the OECD countries access
to banking and financial information about
alleged tax cheats in the OECD countries. But
I suspect that posistion has changed by now.
(For OECD info see www.oecd.org )

As an indication of some efforts to take
advantage of this crisis to press for greater
government cooperation in the scrutiny of
financial information, the U.S. Senate has
approved a new money laundering bill that would

"... direct Treasury to investigate and enforce
  sanctions against jurisdictions believed to
  offer special tax or regulatory advantages to
  nonresidents of that jurisdiction.... In addition
  to establishing conditions for enforcing counter-
  money-laundering laws and blocking terrorist
  finances, the bill would strengthen Treasury's
  ability to crack down on tax havens."

Source: Tax Analyst
http://www.tax.org/International/international.htm

By the way. Did you know that the U.S. offers some
very generous tax advantages to non-residents that
are not available to U.S. residents or citizens?
Does that mean the Treasury should investigate and
enforce sanctions against itself? (See
http://www.offshorepress.com/offshoretax/otnra.htm )

Of course, the fact that tax issues have little or
nothing to do with the question of counter terrorism
efforts is lost in the desire to "do something".

As long as we are engaged in a "war" (of any kind),
there will be little support and sympathy for any
effort to evade or even to avoid taxes. Therefore,
any resistence through political lobbying is likely
to be futile.

However, the Senate and House members propose a
lot more bills than they ever pass and it may be
somewhat pre-mature to assume that this one will
become law. But, when faced with a crisis, the
politicians all want to "do something", even if
it may not be the right thing to do at the time.

Those who are not willing to live in the fiscal
equivalant of a fish bowl will need to look for
ways to stash their wealth other than foreign bank
or financial accounts in tax haven countries.

Those who have non-tax reasons to go offshore will
need to be prepared for full disclosure to the U.S.
government of their foreign holdings and to be
prepared to pay taxes on their foreign source income.
(See http://www.offshorepress.com/whyoffshore.htm )

Vern Jacobs

Sometime ago, I discovered that people can
remember a person's name more easily than
they can remember a company name, so I
reserved a web domain with my own name.

In addition to the Offshorepress.com web
site, I now have a web site for my tax
services and free lance author services.

The URL is www.vernonjacobs.com

It has a lot of links to the Offshore Press
web site but it also has an extensive collection
of tax FAQs (frequently asked questions) and
links to other web sites that have extensive
tax faqs.

It also has an extensive collection of other
web sites that provide daily tax news. If you
are interested in the latest tax news, go to
http://www.vernonjacobs.com/newslinks.htm

The new web site also has a page for cross links
and I will be happy to exchange links with other
web sites - subject to our respective requirements
for link exchanges.

Vern Jacobs

It seems that to be free of terrorism, we must give up our freedom
from government intrusions into our lives.

Someone once said something to the effect that "The price of freedom
is eternal viligence." But vigilence from what or from whom?

I believe the quotation was intended to convey the argument that
some of the political leaders of any country will attempt to restrain
the populace in order to secure greater control over the populace.

Many years ago, I worked as the V.P. of a substantial life insurance
company and was the manager of a number of departments in the
company.

During that time of my life, my wife was very active in an assortment
of volunteer activities, including the PTA and later in local
politics. I firmly believe that she had a far more difficult job of
managing than I did.

Managing a group of volunteers is perhaps a lot like trying to herd a
few dozen cats. Whenever anyone in a voluteer group dislikes the
decisions of the leaders, the volunteer can simply quit. You simply
can't manipulate or intimidate a volunteer.

In a business, you have the power of coercion. When an employee
refuses to comply with your demands or orders, the ultimate recourse
for the manager is to terminate the unresponsive employee. Managing a
group of employees is infinately easier than managing a group of
volunteers.

Government offers even greater coercive power to the politician or
the bureacrat who is given the task of implementing the laws that are
enacted by the politicians. As Harry Browne has described it in his
book "How I Found Freedom in an Unfree World", government is the only
institution that has the power to impose unlimited force to enforce
it's demands.

The only sanctions against politicians in a Democracy is to vote them
out of office. One of the prime concerns of most politicians is to
get re-elected every xxx number of years. To do that, they feel they
must persuade the voters that they have somehome solved some
perceived problems. Whenever a problem emerges, the politicians are
quick to"do something about it -- anything". It's not really about
solving the problem. It's about being able to take credit for trying
to solve the problems.

So how do the politicians attempt to solve problems like terrorism?

By passing laws.

By passing laws that restrict the freedom of people to travel without
being subject to a search and seizure of their goods. By passing laws
that restrict the kind of weapons that people can carry with them --
such as guns, knives, bottle openers, nail files, nail clippers and
every other kind of pointed tool or instrument.

By passing laws that give the politicians and bureaucrats more
authority to search through the bank accounts of anyone who might be
remotely connected to the activities of any terrorist or the
authority to monitor every email message and every phone call in
order to search for any comments that might be made by a terrorist.

If those powers are granted and they don't solve the problem, the
solution is to seek more power to engage in more intrusive searches
of any residence or autombile or other property of anyone who seems to
be remotely different from some perceived profile of an innocent
citizen.

Everyone who is different in any way soon becomes a target.

Someone has recently sent out an email reminding the recipients that
the novel "1984" was based on the premise that the three major
governments of the world (the Americas, Europe and the Far East)were
colluding to be engaged in a perpetual state of war with each other.
During periods of war, the citizens can be subjected to more
restraint. Thus, the governments (in the novel) found that a constant
state of war was beneficial for each of them to maintain their power
over their own subjects.

We are rightfully concerned about being protected from the threat of
future terrorist attacks like the one on 9/11/01.

However, there will be a price to be paid for what ever solutions the
politicians and bureaucrats propose. Inevitably, those solutions will
provide greater power to the government and less freedom to the
citizens who are seeking protection from the terrorists.

To be protected from one kind of danger, we are virtually certain to
be exposed to another. To be free of terrorism, we will be asked
to give up our freedom from government intrusions into our lives.

And as each intrusion into our freedom proves to be ineffective in
dealing with the terrorist problem, the government will respond with
even more restrictions on our freedoms.

By the year 2004, we may find ourselves in a world that resembles
the one described by George Orwell in his book, "1984".

In a true Democracy (or even a Republic), the politicians must
persuade the citizens to agree with their proposals. It's as
difficult as managing a volunteer organization.

Many of those who make a career in government often prefer the easier
form of management - through the use of force.

The eternal vigilence that was mentioned earlier is the vigilenge to
not let the politicians and bureaucrats preempt our freedom in the
name of protecting us from some other threat or danger.

Vern Jacobs

Dear Friends:

When the full import of the attack on America was obvious, one of my
many different thoughts was to ask "Why?" What have we done as a
country to engender such enormous and irrational hatred? We certainly
have made many enemies around the world and we seem to have engaged
in some heavy handed imperialism in many parts of the world. My
thoughts also went to a book I read many years ago called "The Ugly
American", which detailed how our travelers often abuse and insult
the citizens of their host countries.

But then it occured to me that there is nothing that we could have
done to justify such apalling carnage of civilians. Shortly
thereafter, I received the first of three emails with this
encouraging and supportive tribute to the USA by Gordon Sinclair, a
Canadian t.v. commentator.

Feel free to pass it on, with or without my comments.

What follows is  the full text of his remarks as printed in the
Congressional Record.

Vern Jacobs

--------------------------------------------------
America: The Good Neighbor.

by Gordon Sinclair

"This Canadian thinks it is time to speak up for the Americans as the
most generous and possibly the least appreciated people on all the
earth. Germany, Japan and, to a lesser extent, Britain and Italy were
lifted out of the debris of war by the Americans who poured in
billions of dollars and forgave other billions in debts. None of
these countries is today paying even the interest on its remaining
debts to the United States.

When France was in danger of collapsing in 1956, it was the Americans
who propped it up, and their reward was to be insulted and swindled
on the streets of Paris. I was there.  I saw it.

When earthquakes hit distant cities, it is the United States that
hurries in to help. This spring, 59 American communities were
flattened by tornadoes. Nobody helped.

The Marshall Plan and the Truman Policy pumped billions of dollars
into discouraged countries.  Now newspapers in  those countries are
writing about the decadent, war mongering Americans.

I'd like to see just one of those countries that is gloating over the
erosion of the United States dollar build its own  airplane. Does any
other country in the world have a plane to equal the Boeing Jumbo
Jet, the Lockheed Tri-Star, or the Douglas DC10?  If so, why don't
they fly them? Why do all the International lines  except Russia fly
American Planes?

Why does no other land on earth even consider putting a man or woman
on the moon? You talk about Japanese technocracy, and you get radios.
You talk about German technocracy, and you get automobiles.  You talk
about American technocracy, and you find men on the moon-not once,
but several times-and safely home again.

You talk about scandals, and the Americans put theirs right in the
store window for everybody to look at. Even their draft-dodgers are
not pursued and hounded. They are here on our streets, and most of
them, unless they are breaking Canadian laws, are getting American
dollars from ma and pa at home to spend here.

When the railways of France, Germany and India were breaking down
through age, it was the Americans who rebuilt them. When the
Pennsylvania Railroad and the New York Central went broke, nobody
loaned them an old caboose. Both are still broke.

I can name you 5000 times when the Americans raced to the help of
other people in trouble. Can you name me even  one time when someone
else raced to the Americans in trouble? I don't think there was
outside help even during the San Francisco earthquake.

Our neighbors have faced it alone, and I'm one Canadian who is damned
tired of hearing them get kicked around. They will come out of this
thing with their flag high. And when they do, they are entitled to
thumb their nose at the lands that are gloating over their present
troubles. I hope Canada is not one of those."

Stand proud, America!"
------------------------------------------
Forwarded by Vernon Jacobs
http://groups.yahoo.com/group/JacobsReport/

I wish to express sincere sympathy to anyone affected by the recent
World Trade Center, Pentagon and Pittsburgh Tragedies. For those
receiving this note, I hope you are well and safely with your loved
ones.

As a concerned citizen, you may be asking how you can help the
victims of the recent disaster. The answer is simple: Please give to
the American Red Cross.

Your donation will help thousands of people in a time of great need.
American Red Cross resources are strained during emergencies of this
magnitude. Please read the following official message from the
American Red Cross and respond in this time of need.

Another way that you can help is to forward this (or a similar) note
to your own friends and colleagues.

Sincerely,

Vern Jacobs
Offshore Press, Inc.
------------

American Red Cross

World Trade Center, Pentagon and Pittsburgh Tragedies

The American Red Cross has immediately responded to the explosions at
the World Trade Center in New York City and in the Pentagon and on
the National Mall in Washington, D.C. that occurred early in the
morning on September 11, 2001. The Red Cross has activated its
Aviation Incident Response (AIR) Team to respond in New York City and
trained disaster workers from the American Red Cross are providing
relief in the affected areas.

80,000 blood donations in the American Red Cross blood inventory are
ready to ship to affected areas and will ensure that patients' lives
are saved. In the wake of these traumatic events lies a wide path of
catastrophic physical and psychological destruction in which
countless victims will require assistance. In addition to meeting the
physical needs of the affected regions, the American Red Cross will
be providing crisis mental health counseling.

"The American Red Cross is doing everything we can to ensure the
immediate availability of the safest possible blood," said Dr.
Bernadine Healy, president and CEO of the American Red Cross. "We are
also dispatching hundreds of trained disaster workers and mental
health counselors to New York, Washington D.C. and elsewhere," she
added.

The fastest and most effective way to help the victims of this
disaster is through cash and blood donations, which allow for the
best use of resources. All Red Cross disaster assistance is free,
made possible by voluntary donations of time and money from the
American people.

To make a blood donation, please call 1-800-GIVE-LIFE or contact your
local blood service organization. To help the victims of this and
other disasters through a financial contribution, call 1-800-
HELP-NOW to make a credit card donation or Internet users can make a
secure online credit card contribution by clicking here.

You can also mail a donation to the American Red Cross, designating
"Disaster Relief Fund" on the memo line of the check, at the American
Red Cross, PO Box 37243 Washington DC 20013.

The following is an Editorial About The Social
Security Trust Fund and the So-Called "Lock box"
-----------------------------------------------

Sometimes I wonder if I'm Alice and living in
a "Wonderland" of byzarre behaviors and beliefs.

A couple of days ago, some talking heads on t.v.
were commenting on how the Bush Administration
was going to have to "invade" the Social Security
trust fund to cover some budget shortfall that was
allegedly caused by the tax cuts and the checks
that are currently being sent to taxpayers.

Then, this morning, I got a fax from the Senior
Citizens League with the headline, "Social Security
Trust Fund Lock Box Picked". The first line in
their press release states, "The government may
have to tap the Social Security Trust Fund to pay
for other government spending despite the adminis-
tration's claims to the contrary."

Pardon me, but why is this big news? And what is
this nonsense about a "lock box" for trust funds?

The U.S. government does not invest or save money
they way the rest of us do -- for a variety of
reasons. One of the best reasons is that government
bonds are deemed by most investors to be the safest
kind of investment. There are no other investments
available to the government that provide a comparable
level of safety. After all, government bonds are
backed by the full taxing power of the government.
Another reason is that if the government were to
invest it's excess trust funds in the stock or bond
markets, they would greatly inflate the value of
the securities they bought and their huge transac-
tions would cause tidal waves in the markets. (While
I personally favor some kind of arrangement whereby
individuals can decide how to invest their own share
of the Social Security taxes they have paid, that's
another controversial topic for another day.)

Excess Social Security taxes over the benefits that
are being paid each year are "invested" in non
negotiable government bonds. The general fund issues
an IOU to the trust fund and then spends the Social
Security taxes on an assortment of "other government
spending". Right now, I've read that a lot of the
excess Social Security taxes are being used to pay
down some of the government debt.

The same basic principle applies to other trust
funds like the highway tax trust fund. The money is
not put into a bank savings account or a money
market fund or a mutual fund. It's "loaned" to the
general fund and spent.

If the government can't -- or won't -- invest the
excess Social Security taxes in some private bank,
money market fund, corporate bond or mutual fund,
then it has to spend the money or pay off debts.
Either way -- the money is gone.

In plain language, it's a lot like taking money out
of one pocket and putting it into another and then
using the money to buy dinner or go to a movie or
perhaps to make an extra payment on a credit card.

All of the billions of dollars that we have paid
for Social Security taxes in excess of the benefits
that are paid each year are GONE! The only way we
will get those dollars back is by generating more
revenue with more taxes.

Excess taxes collected today do NOT reduce the taxes
that must be collected in the future to pay for the
benefits that will be due to future retirees.

A good agrument can be made that the tax reductions
are only a very small part of the current excess
Social Security taxes that are being returned to
the taxpayers. Those who argue otherwise are trying
to persuade you to let them spend your money on
their favorite programs.

Those who are retired today are getting benefits
from taxes collected from those who are working. (In
some cases the same person is drawing benefits and
is also paying back into the system.) Those who are
working and not yet retired will get their benefits
from taxes collected from those who are still working.

If the predictions of fiscal disaster when the baby
boomers retire are true (and I suspect they are),
then it will be difficult for the government to collect
enough taxes from the working population to pay the
benefits promised to the baby boomer generation. I
expect we will gradually see a number of devious
political gimmicks to result in paying less benefits
for those who have other sources of income. In time,
Social Security will become "means tested" and will
become a safety net for those who have not been
frugal enough to provide for their own retirement.

As far as this "lock box" nonsense is concerned, it's
just a lot of political "smoke and mirrors". I suspect
that a lot of less experienced politicians in Washington
don't really know or understand the accounting fiction
that we call the "trust funds". But I have to believe
that any politician who has been in office for more than
one term knows the truth and is afraid to tell the rest
of us that there is no trust fund. There certainly
isn't any silly "lock-box" in which billions of excess
Social Security and highway trust funds are being kept.

Anytime I hear any politician speak of a lock-box, I will
immediately conclude that he is either seriously
uniformed or is a liar. Either way, I have little regard
for any politician or special interest group that
perpetuates this non-sense.

Vern Jacobs

If you feel this editorial would be of some interest
to any friends or relatives, you may forward it to
them with my compliments.

http://groups.yahoo.com/group/JacobsReport

If you are seriously interested in international
trade or if you are getting business from over-
seas buyers through your web site, you should
consider reading World Trade Magazine.

This is not a paid advertisement. It's a
personal endorsement of an excellent source of
current news about international trade for those
of you who have any interest in that topic.

Their September, 2001 issue included an
article called "Which Countries are Best
Positioned in the E-Business Race" - which
included a ranking of 30 different countries.
Tax havens were not included. It's not clear if
the exclusion was because the offshore centers
are not yet up to par on their e-commerce
capability or because the author chose not to
include any low tax countries. (Switzerland,
Hong Kong and Isreal were included.)

The same issue included an article by Anthony
Zuckerman about the legal problems that face
businesses with web sites that are accessible
to residents of other countries. A few of the
problems include inconsistent rules regarding
jurisdiction, obscenity, contracts, warranties,
trademarks, copyright, the obligations of an ISP
regarding content, privacy duties of a vendor and
digital signatures. The author did not mention the
diversity of tax laws relating to the taxation of
e-commerce, but that is another obvious source of
inconsistency.

Another article in the same issue discussed how
Japan is "considering requiring that individuals
'opt-in' (with respect to providing private data)
or (the individual's) data cannot be used for any
purpose except that for which it was obtained."

A fourth short article in that issue discussed
the status of the dispute between the European
Union and the U.S. over our export trade subsidy
resulting from the new "Extra-territorial Income
Exclusion Act of 2000" that took the place of the
Foreign Sales Corporation income exemption. At
stake is a potential $4 billion of trade sanctions
and a potential for retailiation by the U.S.

World Trade Magazine now includes a special section
in each issue called "Global Online" - which focuses
on international e-commerce. You can order a subscrip-
tion at their web site at - http://www.worldtrademag.com.

Some additional information about offshore e-commerce
is available on my own web site at
http://www.offshorepress.com/ecommerce/ and further
information is on our subscriber's restricted web
site. I'm still in the process of writing an extensive
article about the income tax treatment of e-commerce,
which will also be available on our subscriber's
provate web site.

Vern Jacobs

===================================================
CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one
day concentrated seminar on offshore tax law
sometime next year? If you MIGHT be interested,
please take our poll and let us know what East
coast CITY would be of most interest to you.
Just link to Polls in the left section of the
page.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?
Try the Asset Protection and Offshore Forum -
a FREE public discussion list that is moderated
by yours truly. The Jacobs Report is a news
letter. The AP Forum is a two way discussion
list. For details, see
http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this news-
letter, send a copy to a friend.

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

[JR] 8/27

The U.S. Expatriation Tax
==================================================

A recent article in the Dow-Jones Newswire (8/9/0001)that was sent to
me by Bob Bauman ( liberty@... ) made a statement that
needs to be corrected. According to Anita Jain - the author,

"Strictly speaking, what the Dutchman did was illegal since it is
a crime to renounce U.S. citizenship or residency for tax evasion
purposes."

(The complete article is available online at
http://interactive.wsj.com/archive/retrieve.cgi?id=DI-CO-20010809-0052
15.djm )

The article was discussing a Dutch person who was a U.S. resident and
green card holder who wanted to relinquish his residency in the U.S.
in order to avoid future U.S. taxes on non U.S. source income. What he
did was not illegal and it was not tax "evasion" unless or until he
failed to comply with the U.S. tax laws regarding taxes on his U.S.
source income for the next ten years.

If you are not a citizen of the U.S. but are a long term U.S. resident
or green card holder, you are taxed as if you are a U.S. citizen. A
U.S. citizen is taxed on their world wide income regardless of where
they reside in the world or where their income is earned. (There is a
limited exclusion of $76,000 a year for earned income if you meet
various conditions.) But investment income and earned income in
excess of the exclusion is subject to U.S. taxation even if you reside
outside the U.S. and the income is not from U.S. sources.

However, if a U.S. citizen or long term resident expatriates, any
future earned income from non U.S. sources is not subject to U.S.
taxes and any future investment income from non U.S. sources is
not subject to U.S. taxes. What is subject to U.S. taxes (for up to
ten years after expatriating) is any income from U.S. source assets.
U.S. source assets include U.S. stocks or other securities, U.S.
retirement savings plans, installment sales of U.S. property, assets
in a controlled foreign corporation held by a U.S. person at the time
they expatriate, deferred income from a U.S. deferred annuity and some
other kinds of tax deferred income.

If a U.S. citizen elects to expatriate by giving up their citizenship,
they must go through some extensive hurdles and are likely to
be subject to the long arm of the IRS for up to ten more years after
expatriating. The objective of this law (Tax code section 877) is to
ensure that any income from U.S. sources is subject to tax. If a U.S.
citizen or long term resident were to convert all their assets to cash
and pay any taxes that might be due, there would be no deferred taxes
and therefore no future income tax obligation to the IRS.

If a foreign person becomes a long term U.S. resident or green
card holder, and then want to return home, they must also go through
the same extensive procedures as a U.S. citizen in order to return to
their country of origin.

I have recently completed the first phase of a project to help an
Australian citizen who became a U.S. green card holder to
"expatriate" by ceasing to be a permanent U.S. resident. This
client married an Australian person and decided to move back
to Australia -- where he had retained Australian citizenship.
But he had to go through a time consuming and expensive
process to cease to be a U.S. taxpayer.

The process is virtually the same as for U.S. citizens who
choose to give up their citizenship and residence in the U.S.
He had to file a form 1040-C as a final U.S. income tax return
and a Form 8854 to disclose the value and unrealized gains
on his U.S. source assets. Because his assets at the time
he left the U.S. exceeded the $500,000 level (explained below),
he elected to file a request with the IRS to determine that U.S.
tax avoidance was not a principal purpose of his expatriation.
That request required him to make extensive disclosures of
his personal and financial circumstances and to prepare an
estimate of his income and his taxes for the next ten years,
based on Australian tax law and on U.S. tax law.

If the IRS does not approve his request, he will be required to
file a U.S. non resident tax return for ten years or until he
sells all his U.S. source assets and pays taxes on them.

In 1996, the U.S. tax law was changed to provide that if a
"U.S. person" (citizen or permanent resident) relinquishes their
citizenship or resident status, they will be subject to U.S. tax
on any gains or income from their U.S. source assets for up to
ten years after they expatriate unless they meet an exception.

The exception is that their total assets (not net worth) are less
than $500,000 and that they have had an average U.S. income
tax liability of less than $100,000 a year for the past five years.
(These numbers are indexed for inflation and change each year.)

Those who have less assets and a lower tax bill may still be
subject to the ten year tax, but the IRS has the burden of proof
to show that such people had a principal purpose of avoiding
U.S. taxes by expatriating. Those who have more assets or
a larger average tax bill are presumed to have tax avoidance
as a principal purpose of their expatriation and they must
either pay taxes to the U.S. for up to ten years on income
from their U.S. source assets -- or they must file a detailed
request with the IRS to get a waiver of the ten year tax.

While many U.S. citizens may agree with this procedure, it
will give many foreign persons some reason to think twice before
they apply for a U.S. green card or become a long term U.S.
resident. Basically, a long term resident is a non citizen who has
lived in the U.S. for any 8 of the last 15 years.

For those who do choose to work in the U.S., this tax problem
can be solved if the long term resident chooses to invest in
assets outside the U.S. while working here. One way to do that
is to establish a foreign limited liability company and elect to have
it taxed as a dis-regarded entity. Another alternative is for the
long term resident to invest in foreign annuities or foreign variable
life insurance policies. Then, when the non U.S. citizen
chooses to return home, he or she will not have any U.S. source
assets on which the U.S. can impose a tax after he or she leaves.

If a resident alien is a green card holder and is
seriously thinking about leaving the U.S., they need to consult with
a U.S. tax professional who is familiar with these issues before
they leave the U.S. The same suggestion would apply for any U.S.
citizen who is fed up with the insanely complicated  U.S. tax laws
and the growing trend toward asset forfeitures for a growing list of
varied offenses. (Did you notice that our new Attorney-General wants
to expand on the list of "crimes" that are subject to forfeitures?)

The author of the Dow-Jones article apparently isn't aware of the
difference between tax avoidance and tax evasion and she clearly
is not aware of the U.S. rules regarding expatriation. However, the
rules are confusing and even a lot of U.S. tax professionals are not
aware of the tax rules that apply to expatriation.

Vern Jacobs

P.S. The terms "expat" and "expatriate" are widely used to refer to
U.S. persons who live and work outside the U.S. but have not
relinquished their citizenship or permanent residence status. In this
article, the process of "expatriation" is intended to refer to those
who relinquish their citizenship or residency.

P.P.S.  This article is not intended to be a complete explanation of
the applicable U.S. tax laws that apply to those who wish to
expatriate on a permanent basis.

======================================================
(C) Copyright, 2001 Vernon Jacobs, All rights reserved
======================================================

CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one
day concentrated seminar on offshore tax law
sometime next year? If you MIGHT be interested,
please take our poll and let us know what East
coast CITY would be of most interest to you.
Just link to Polls in the left section of the
page.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?
Try the Asset Protection and Offshore Forum -
a FREE public discussion list that is moderated
by yours truly. The Jacobs Report is a news
letter. The AP Forum is a two way discussion
list. For details, see
http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this news-
letter, send a copy to a friend.

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

Noise, International Planning & XYZ

(C) Copyright, 2001 V. Jacobs
All rights reserved

[JR] 8/14

*  WHEN "NOISE" IS THE NEWS
*  INTERNATIONAL OR DOMESTIC FINANCIAL PLANNING
*  AMERICAN INSTITUTE OF CPAS PUSH NEW GLOBAL CERTIFICATION
==================================================
WHEN "NOISE" IS THE NEWS

The April 30, 2001 issue of Forbes had an interesting
editorial by the Editor, William Baldwin, called "Lies,
Damned Lies and Statistical Noise"

He reminded readers why a lot of the news is really
little more than statistical aberrations or deviations
from the norm. "Noise is the (term that statisticians
use to refer to) the random fluctuations of numbers
lacking any meaningful pattern". As Baldwin put it,
"Extreme weather, cancer clusters, stock market
fluctuations, winning streaks in sports -- all can be
turned into screaming headlines, best sellers about
power lines killing children or segments on the evening
news."

It's like the cliche' that when a dog bits a man it
isn't news, but if a man bites a dog, it is news. We have
thousands of deaths every year from automobile accidents,
but a plane crash gets top billing in the papers, the
television and the radio. Millions of people die early
due to disease caused by bad eating habits, but a drive
by shooting gets the headlines. One author speculates
that far more people are killed due to interactions of
prescription drugs than from illicit drugs, but the
misuse of cocaine gets the headlines. We are shocked
when we read or hear about children being killed in a
school shooting, but we should also be encouraged that
such events are so rare that they do rate a headline.

The good news is that what we see in the newspaper or
magazine headlines is the offbeat, the rare, the noise
of an unusual event. When the "talking heads" on t.v.
are discussing the sexual behavior of our politicians,
we should be glad they aren't talking about wars or riots.

And let's not rush to fix the problems in the headlines
when there are other problems that are so common that
they don't make the news.

By way of example, asset forfeitures are not so rare
as to get any space in the news. Lawsuits that destroy
a person's life's savings due to a remote connection
to an incident that causes harm to another is also so
common that it no longer generates any headlines.

==================================================

INTERNATIONAL OR DOMESTIC FINANCIAL PLANNING

Someone has said that "If you don't know where you are
going, any road will take you there". Another commentator
has said that "Those who fail to plan are sure to fail."

Financial planning can be described as the process of
defining where you want to go in terms of your financial
affairs, determining where you are and then choosing a way
to get from here to there.

An organized process of financial planning will usually
include
* defining your goals and priorities at different stages of life
* an analysis of your present net worth, income and expenses
* an estimate of your future income, expenses, taxes and savings
* a review of your investments and retirement savings or benefits
* an analysis of your risk exposure and insurance coverage
* business continuation or disposition planning for business owners
* family wealth (estate) preservation planning for your family
* social capital planning to leave a legacy

International financial planning includes all of these
elements but with a broader perspective. Goals and
priorities may include having a retirement home or
vacation home in another country. Expense estimates
may include international travel or even working abroad.
Business planning may include international business
ventures.  Risk assessment may include a concern about
political changes that could result in excessive
confiscation of a family's wealth or the potential for
a devastating lawsuit or a predatory law enforcement
official. Investment planning may include having
investments in other countries for asset protection
or even for political diversification.

Wealth preservation planning may encompass planning to
protect some of the family wealth from government
confiscation. Tax planning would include the tax issues
that arise from having any cross border investment or
business interests, or from working in other countries.

==================================================

AMERICAN INSTITUTE OF CPAS PUSH NEW GLOBAL CERTIFICATION

If you haven't heard about the "XYZ" certificate yet,
you will.

The AICPA has been promoting the idea of a new "global
business credential (certification) being developed by
an international consortium of accounting organizations
that include the AICPA. Currently dubbed the "XYZ"
certification, "credential holders would be broad-based
business professionals who help people and organizations
achieve their objectives through the strategic use of
knowledge."

As I try to sort through the convoluted explanations
of the AICPA, it seems that the new certification
program would be something like a certified business
consultant with an international perspective. Unlike
the CPA certification, the XYZ credential would be a
multi-discipline concept that would include accounting,
business law, information technology, human resources,
marketing and change management in a world economy.

(If I could qualify based on work experience I'd be an
XYZ right away.)

In some ways, it's a little bit like the multi-
discipline approach of the Certified Financial Planner
(CFP), but it does not appear that this new program
would be focused on personal financial planning.

Part of the idea behind the new certification program
is that the new designation would be recognized the
same in most major countries and it would be administered
by an independent, international group.

For more information on this new program, see
http://www.globalcredential.aicpa.org/index.htm

==================================================

CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one
day concentrated seminar on offshore tax law
sometime next year? If you MIGHT be interested,
please take our poll and let us know what East
coast CITY would be of most interest to you.
Just link to Polls in the left section of the
page.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?
Try the Asset Protection and Offshore Forum -
a FREE public discussion list that is moderated
by yours truly. The Jacobs Report is a news
letter. The AP Forum is a two way discussion
list. For details, see
http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this news-
letter, send a copy to a friend.

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

The Jacobs Report
On International Financial Planning
August 10, 2001,
Copyright, 2001, Vernon K. Jacobs
All rights reserved

TABLE OF CONTENTS

*  BUSH FAVORS BANKRUPTCY BILL SANS HOMESTEAD CAP
*  EX-PARTE MAREVA ORDER IN COOK ISLANDS
*  WHY GO OFFSHORE?
*  A TAX TIP FOR OFFSHORE INVESTORS
*  BOOKS AVAILABLE FROM OFFSHORE PRESS
==================================================

BUSH FAVORS BANKRUPTCY BILL SANS HOMESTEAD CAP

According to Dan Stanley, Author of "Fresh Start
News" (http://www.bankruptcyservices.net) ....

"President Bush presumably has no problem making it
harder for people who desperately need bankruptcy
relief to get it.

"He is anxious to sign the Bankruptcy Reform Act
into law but this week he announced that he "strongly
opposes" the Senate version which places a hard
$125,000 cap on all homestead exemptions and "strongly
urges" the (House/Senate) conferees to instead adopt
the homestead provisions included in the House
bill.

"The House imposes no limit and requires only that
value in excess of $100,000 added to the homestead
during the two years preceding the bankruptcy filing
be deducted from the exemption unless it was
transferred from another homestead in the same state.
Texas is one of a handful of states that currently
provides an unlimited homestead exemption."

Details about the proposed bankruptcy bill are on
the subscriber's web site in a 27 page summary.
(http://www.offshorepress.com/subscribers/jrspecial.htm)

==================================================
EX-PARTE MAREVA ORDER IN COOK ISLANDS

This significant news item was passed on to me by
Richard Duke (http://www.assetlaw.com), who received
it from Jim Bennett (http://www.offshoreprotection.com)

It's about an approval by the Cook Islands Court to
grant a world-wide freeze on the assets of a defendant
with a foreign trust. In addition, the order was
"ex-parte", meaning it was granted without any
participation by the defendant or his counsel.

        ***********************************
An order in BANK OF AMERICA V. WEESE,
NO. 03-C-01-001892, (Baltimore County, MD Circuit
Court, 7/30/01):

... [T]he Bank had filed a lawsuit in the Cook
Islands which mirrors the lawsuit filed in this
Court. in addition, on July 2, 2001, the Bank sought
and obtained exparte from the Cook Islands Court
what is termed a "Mareva Injunction." The Mareva
Injunction requires the Trustee (not the Weeses)
to transfer all Trust assets held at Bank Sarasin,
a Swiss bank, to a bank within the jurisdiction
of the Cook Islands Court. The Mareva Injunction
also prohibits the Trustee and the other Defendants
in that action, the Weeses and Alex Grass,
(i) from taking action that may have the effect of
"disposing of, transferring, charging, assigning,
pledging, diminishing, using or dealing in any way
whatsoever with Trust assets, which includes the
Weese residence at 6413 Pratt Avenue, Baltimore
County, Maryland (the "Residence");
(ii) from changing the governing or proper law of
the Trust from that of the Cook Islands to any
other jurisdiction;
(iii) from removing the administration or management
of the Trust from within the Cook lslands to any
other jurisdiction;
(iv) from appointing or permitting to be appointed
any successor trustee of the Trust;
(v) from the removal or resignation of the Trustee; and
(vi) from removing or substituting any beneficiary of the Trust.

More info at:
http://www.mddailyrecord.com/archives/2_28_friday/businessnews/48370-1
.html (opinion and order)
        *********************************************

My thanks to Bennett and Duke for passing this on.
It seems likely that this will become a widely
discussed issue among asset protection advisors in
the coming months.

==================================================
WHY GO OFFSHORE?

When people first read one of the many books or
web sites that promote "going offshore" they often
get excited about the alleged tax savings. But when
they dig a bit deeper and learn that U.S. persons
are subject to tax on their world-wide income, they
get discouraged and wonder why anyone would want
to "go offshore". Some of the answers are available
at http://www.offshorepress.com/whyoffshore.htm

==================================================
A TAX TIP FOR OFFSHORE INVESTORS

A lot of the tax preparation work that I have been
doing the past two years has involved U.S. persons
who have been talked (duped?) into forming a foreign
corporation (aka IBC) through which to invest some
of their savings. When they create a foreign corp-
oration, they become obligated to file a Form 926 to
report any transfers to the foreign corporation, a
Form 5471 to report the transactions and the balance
sheet of the corporation and a Form TD F 90-22.1
to disclose their authority or control over a foreign
bank account. If those reports have not been filed,
the next best option is to file them late and to
pay any interest and penalties that may be due. (If
you need some help with that you can call me.)

However, if you have not yet formed a foreign corp-
oration or IBC and plan to do so, you can avoid a
lot of these problems by asking your U.S. tax
advisor to help you file a Form 8832 within 75 days
of forming your foreign corporation or foreign
limited liability company. This will turn your
offshore company or LLC into a tax transparent
entity. If it is a single owner entity, it will be
disregarded for tax purposes. If it has two or
more owners, it will need to file as a foreign
partnership, which requires an annual Form 8865.

From "Tax Angles for Offshore Investors"
http://www.offshorepress.com/os-investortax.htm
==================================================

BOOKS AVAILABLE FROM OFFSHORE PRESS

I have made some recent changes in my web site at
http://www.offshorepress.com which includes the
promotion of six books. The  Controlled Foreign
Corporation Tax Guide was co-written by Richard
Duke and myself. The Offshore Tax Boot Camp Manual
was written by Richard Duke, Richard LeVine and
myself. The Offshore Money Manual was written by
Robert Bauman, Esq., - a former member of the U.S.
House of Representatives. Two other books were
written by Mark Nestmann, the Editor of the
Sovereign Individual newsletter. The sixth book
is "Freedom, Asset Protection & You", written by
William Comer. Details about each book are available
from links at the homne page.

==================================================

CALENDAR: Check the calendar link on this web
site for upcoming tax due dates and seminar
dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the book-
marks on this site. If you have a suggestion
for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one
day concentrated seminar on offshore tax law
sometime next year? If you MIGHT be interested,
please take our poll and let us know what East
coast CITY would be of most interest to you.
Just link to Polls in the left section of the
page.

SEND THIS TO A FRIEND:  If you like this news-
letter, send a copy to a friend.

FREE TAX SAVING TIPS:
Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION/IBC TAX GUIDE:
http://www.offshorepress.com/cfc-ibc-tax.htm
THE OFFSHORE MONEY MANUAL
http://www.offshorepress.com/osmm2000.htm
INTERNATIONAL ADVISORS:
http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

Here's an article I just received from WebProNews
(http://www.webpronews.com)about a Microsoft
project that will have far more impact on our
privacy than any of the intrusions of government.

I don't presume that there is any solution other
than to refrain from buying through this kind of
consortium, but while many of us are complaining
about the government, big businesses are moving
to gather as much data about us as they can.

And ... I'm not suggesting that this is new by
any means. I used to work for a company that had
a computer database of more than 50 million people
over the age of 40, with birthdates and related
information. They also created a computer simulation
of buying habits by doing statistical studies of
the buying habits of people by zip code.

By the way. The source given for this article is
ZDNET, but when I visited their web site and
entered "super cookies" in their search tool,
I got a zero response.

Vern Jacobs

---------------------------------------------------
Those Super Cookies

Cookies, by nature, are common text files sent to
your hard drive by a website. These cookies contains
a code number for you which can then be used to track
your activities at that one site. However, this is not
enough for the big boys like Microsoft and AOL. They
want to know where and how you spend your money across
hundreds of sites. Microsoft has implemented this
practice through their Passport services, which is
critical to their new HailStorm web services.

Microsoft has over 200 companies which are a part of
this service, including RadioShack, Office Depot,
Victoria's Secret, Starbucks, 1-800-Flowers.com, etc..
So, when you go to one of these sites and shop, your
information is going into Microsoft's database. They
promote it like they are doing you a favor saving you
from having to put your credit card number into each
website but they are getting your interests from your
spending habits. These are valuable pieces of
information especially when it contains the preferences
of tens or hundreds of millions of people. It shouldn't
be a big jump to program their code to offer each user
individualized products depending on what you have
bought across the member sites.

AOL, with their 33 million subscribers, is also trying
to compete with Microsoft insofar as getting your credit
card number(s) and how you spend your money. They have
just invested 100 million dollars into Amazon.com in
order to get their superior ecommerce software and
tracking features. They have already tried to competed
with Microsoft in other arenas of Web technology. For
example, earlier they teamed with Netscape to compete
on the browser level and later with RealNetworks to
compete in the digital media field.

Source:
Zdnet.com
by WebProNews

The Jacobs Report on International Financial Planning

Table of Contents:
*  MIXED NEWS ABOUT TAX HAVENS VERSUS OECD & U.S.
*  LOSS OF PRIVACY WILL BE CAUSED BY INTERNET BUSINESSES
*  BANKRUPTCY REFORM'S CHIEF SPONSOR IS NOT OPTIMISTIC
*  FIRST QUARTER 2001 BANKRUPTCY FILINGS ARE UP
*  SUPREME COURT PERMITS ARREST FOR TRAFFIC OFFENSES
*  SSA TAX AGREEMENT WITH SOUTH KOREA
==================================================
MIXED NEWS ABOUT TAX HAVENS VERSUS OECD & US

Someone once said that if you ask the same question of three
economists you can expect to get at least six different answers.

I receive at least half a dozen different email newsletters about
offshore issues and I seem to be getting more than a dozen
different "spins" on the controversy regarding the FATF, OECD
and U.S., versus the offshore financial centers (aka tax havens).
Here is my assessment of the varied and sometimes conflicting news.

First, the Bush administration is not going to continue the push for
tax "harmonization" (equalization) as did the Clinton administration.

Second, the Bush administration will support the OECD/FATF, etc.
in trying to expand on the concept of "fiscal transparency" so the
high tax countries can get information with which to pursue their
own tax evaders who are hiding assets in secret accounts.

Third, the FATF (on behalf of the OECD) will continue to seek ways
to pursue a policy of tax harmonization in spite of the lack of U.S.
support for that policy objective.

Fourth, it's unrealistic to expect the high tax, welfare states to
just give up their power to enforce the collection of taxes by
meekly letting their residents or citizens use the Internet and
various offshore financial havens to move money offshore and to
hide the income from their offshore assets. Those with power do
not give it up easily.

Fifth, in spite of the Bush administration decision to not support
a goal of tax harmonization, I don't believe this administration
is going to stand by and allow US persons to avoid/evade taxes
offshore.

When the "dust settles", I expect most of the offshore financial
centers will agree to share financial and banking information
with the US and/or the OECD but will not agree to tax equalization.

==================================================

LOSS OF PRIVACY WILL BE CAUSED BY INTERNET BUSINESSES

A lot of us are fond of blaming the government for the growing
loss of personal and financial privacy in the U.S. and the world,
but a very interesting book I'm now reading lays a lot of the
blame on the businesses that develop software for other businesses.
If you want to see a vision of the future (not necessarily good
news), I encourage you to get a copy of "CODE and Other Laws of
Cyberspace", by Lawrence Lessig. (Published by Basic Books - ISBN
0-465-03913-8)

The primary thesis of this book is that businesses want more and
more information about their customers and potential customers in
order to fine tune and refine their marketing efforts. (It's very
costly to spend marketing dollars in media that reaches the wrong
market.)

More and more information about each of us will be built into newer
versions of computer software - including software that supports our
Internet activities. A related thesis is that the government will then
"tap into" the data systems of the businesses rather than by making
overt attempts to monitor the activities of each of us.

A curious oversight from the book is a discussion of the huge impact
that the Extended Markup Language (XML) will have in enabling
businesses to exchange information without re-keying the data. Just
as the HTML language permits web designers to format text in terms
of font style, font size, color, bold, italics, etc., XML will enable
the organization that transmits information to identify the nature
or type of information such as whether the data is a name, address,
zip code, asset, liability, income, expense, vendor, customer, etc.,
etc., etc.

Organizations with compatible XML systems will then be able to
enter this data into their own computers without the time and cost
of re-keying the data. And, the government will then be able to
easily tap into any of that data by exerting pressure on the
businesses that have the information the government wants.

My thanks for Richard Duke for encouraging me to read this book.
==================================================

BANKRUPTCY REFORM'S CHIEF SPONSOR IS NOT OPTIMISTIC

From Dan Stanley's Fresh Start News (June 14, 2001) .........

The Senate's chief sponsor of the bankruptcy reform legislation,
Senate Finance Committee ranking member Charles Grassley (R-Iowa),
yesterday commented that he is not optimistic about the prospects of
the bankruptcy reform legislation, according to Congress Daily. The
bill is going into conference, "with a majority of conferees
against the bill," said Grassley. So the final product could be
hard for the credit industry and House Republicans to swallow. And
Grassley said that House Republicans remain adamant about not
accepting the Senate's language on a homestead cap and abortion
clinic violence. Ergo his pessimism.

(Practically everyone except the big credit card companies are
against this bill, so this news is good news for the rest of us.)
For info on Dan Stanley's free newsletter, see
http://www.bankruptcyservices.net/

==================================================

FIRST QUARTER 2001 BANKRUPTCY FILINGS ARE UP

According to "Fresh Start News", the number of bankruptcies filed
during the first quarter of calendar year 2001 rose 17.5 percent
over the same period a year ago according to data released by the
Administrative Office of the U.S. Courts. The figure is the
highest-ever for a first quarter and is surpassed only by the
second quarter of 1998.

To subscribe to the newsletter go to
http://www.bankruptcyservices.net/

==================================================

SUPREME COURT PERMITS ARREST FOR TRAFFIC OFFENSES

While this is a few months old, I felt it was an important news
item that was sent to me by Richard Duke.

According to the Associated Press (April 24, 2001) "Police can
arrest and handcuff people even for minor offenses punishable
only by a fine, the U.S. Supreme Court said ...in the case of
a motorist arrested and jailed for not wearing a seat belt.
Ruling 5-4 in a case that could affect anyone who drives a car,
the justices said such an arrest does not violate the
Constitution's Fourth Amendment protection against unreasonable
seizures." The case is Atwater v. Lago Vista, 99-1408.

==================================================

NEW LEGAL PORTAL - http://www.lawidea.com/

LawIDEA.COM is an extensive directory containing links to over
15,000 legal related Internet resources. This site is based on a
customized "slice" of data from the Open Directory Project.
Lawyers or others with web sites that serve the legal community
can get listed in this new directory from the "Submit a Site"
link found in the appropriate sub-category. However, if your
web site is already listed in the Open Directory Project
(www.domz.com), this would cause a duplicate listing and would
most likely be rejected by the DMOZ directory editors.

==================================================

SSA TAX AGREEMENT WITH SOUTH KOREA

In case you missed it and in case you are connected with anyone
with employees in South Korea, or with South Korea employees in
the U.S., the Social Security Administration has recently worked
out an agreement to eliminate dual social security taxes with
South Korea.  The change is effective as of April 1, 2001. For
further details about this and similar agreements with 17 other
countries, see http://www.ssa.gov/international/

==================================================
############################################################
____________________________________________________________
CALENDAR: Check the calendar link on this web site for upcoming tax
due dates and seminar dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the bookmarks on this site. If you
have a suggestion for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one day concentrated seminar
on offshore tax law sometime this fall? If you MIGHT be interested,
please take our poll and let us know what East coast CITY would be of
most interest to you. Just link to Polls in the left section of the
page.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?:  Try the Asset
Protection and Offshore Forum - a FREE public discussion list that is
moderated by yours truly. The Jacobs Report is a news letter. The AP
Forum is a two way discussion list. For details, see
http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this newsletter, send a copy to a
friend. If you don't like it, please tell me so I can try to fix it.
eMail to JacobsReport@...

FREE TAX SAVING TIPS:    Http://www.offshorepress.com/vkjcpa/
FOREIGN CORP. TAX GUIDE:  http://www.offshorepress.com/cfc-ibc-tax.htm
INTERNATIONAL ADVISORS: http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS: http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

===========================================================
Report - July 17, 2001 * Copyright 2001, Vernon K. Jacobs
Copies of this report may be forwarded to friends or associates.
===========================================================

*  MONEY LAUNDERING NEWS
*  FREE ARTICLE ON OFFSHORE TRUSTEE DUTIES
*  "FLORIDA SUPREME COURT LEGALIZES FRAUD"
*  COMBINE OFFSHORE LLC WITH OFFSHORE TRUST
----------------------------------------------------------------
MONEY LAUNDERING NEWS

According to the New York Times (7/14/01),

"Federal and New York regulators ordered the U.S. Trust Corporation
to pay $10 million in fines to settle accusations that it violated
bank secrecy laws and failed to keep complete records in a special
trading unit."

It seems that some wealthy customers of the trust company had been
"structuring" transfers of currency to avoid the $10,000 threshhold
for filing reports. The trouble is, the government has made it a
crime to engage in such structuring in order to avoid the filing
requirements.

For more see http://www.nytimes.com/2001/07/14/business/14BANK.html

Meanwhile, the New Jersey Star Ledger reports that customs officials
have seized more than $55.9 million in cash last year from 1,351 U.S.
travelers. As explained in our recent report on Money Laundering and
Asset Protection, there is no need for them to prove that you were
guilty of any crime. They only to assert a reasonable suspicion. For
more see
http://www.nj.com/news/ledger/index.ssf?/page1/ledger/13d2401.html

Thanks to Bob Bauman, Editor of the Sovereign Society A-Letter for
bringing these articles to my attention. For info on his free
newsletter, see
http://www.sovereignsociety.com/free.html

ARTICLE ON OFFSHORE TRUSTEE DUTIES

Derek Sambrook with Trust Services, NA in Panama writes a quarterly
newsletter and commentary on the offshore world that is always "an
interesting read." His latest is an explanation of the duties of an
trustee who is managing an offshore trust. His article is recommended
and is online at http://WWW.TRUSTSERV.COM/Warts%20and%20All.htm

FLORIDA SUPREME COURT LEGALIZES FRAUD - BY DAN STANLEY

The following is reprinted with permission from Fresh Start News, a
free email newsletter about bankruptcy law, by Dan Stanley, Esq.

	 In the past Florida gained a reputation as a haven for
	 debtors who flee other states and shield their assets in
	 fabulous homes. Now the Florida Supreme Court has ruled
	 that people who owe money can shield their assets by
	 buying Florida homes even if they do it purposely to
	 cheat creditors.

	 In a 6-1 ruling last Thursday, the justices said they
	 were reluctant to suggest the constitution protected
	 wrongdoing but there was no way around the language of
	 the provision. Under the Florida "homestead exemption,"
	 people cannot be forced to sell their homes to pay
	 debts except to pay taxes or to settle debts incurred
	 to acquire or improve the property.

	 So now even people who want to cheat their creditors
	 can shield their assets by buying Florida homes. The
	 provision in the Florida Constitution that shields
	 homesteads from foreclosure and forfeiture also protects
	 homes bought by debtors "with the specific intent to
	 hinder, delay, or defraud creditors," the Florida Supreme
	 Court has said.

My thanks to Dan Stanley for this news item. For information on
his Fresh Start News, go to http://www.bankruptcyservices.net/

COMBINE OFFSHORE LLC WITH OFFSHORE TRUST

The firm of Donlevy-Rosen and Rosen publishes an online news
letter about asset protection and back issues are available on
their web site at http://www.protectyou.com. Their latest issue
discusses the combination of an offshore LLC and offshore trust
for maximum asset protection. The report is online at
http://www.protectyou.com/apn10-1.html

Offshore Press has a 20 page report on domestic and offshore
limited liability companies by Christopher Riser. It's free for our
paid subscribers.

CENTER FOR FREEDOM AND PROSPERITY VS. OECD

Lately, there has been such a flurry of news items about the
ongoing effort of the OECD to impose fiscal transparency and
tax uniformity on the financial havens of the world that it's
nearly impossible to summarize briefly. The best place to get
an update on the ongoing battle between the high tax Goliaths
and the low tax Davids of this world is at the CFP web site.
The link is http://www.freedomandprosperity.org/

###################################################
_______________________________________________________________
CALENDAR: Check the calendar link on this web site for upcoming
tax due dates and seminar dates. If you have suggestions for other
calendar/date listings, let me know.

BOOKMARKS: Check out the links at the bookmarks on this site.
If you have a suggestion for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one day concentrated
seminar on offshore tax law sometime this fall? If you MIGHT be
interested, please take our poll and let us know what East coast
CITY would be of most interest to you. Just link to Polls in
the left section of the page.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?:  Try
the Asset Protection and Offshore Forum - a FREE public
discussion list that is moderated by yours truly. The Jacobs
Report is a news letter. The AP Forum is a two way discussion
list. For details, see
http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this newsletter, send a
copy to a friend. If you don't like it, please tell me so I
can try to fix it. eMail to JacobsReport@...

FREE TAX SAVING TIPS:          Http://www.offshorepress.com/vkjcpa/
FOREIGN CORP. TAX GUIDE:  http://www.offshorepress.com/cfc-ibc-tax.htm
INTERNATIONAL ADVISORS: http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS: http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

Extensive Report on Money Laundering and Asset Protection
---------------------------------------------------------
The June and July issues of Global Asset Protection will be a
30+ page report on Money Laundering and Asset Protection,
co-authored by myself and Richard Duke. The report was prompted
by our conclusion that anyone involved in international asset
protection arrangements needs to be aware of these laws and
the severe penalties for any claims of any money laundering. In
addition, we believe this report will make it clear that the money
laundering laws have been extremely flexible and can encompass
a wide range of alleged "crimes". The complete report will be
archived on our subscriber's web site. A printed copy of the
report will also be available for $27 for non-subscribers or
$17 for our paid subscribers. [To order call (888) 516-3177
during business hours.]

The Financial Action Task Force (FATF) Issues Updated Report
------------------------------------------------------------
Last year the FATF issued a report regarding the alleged
non- compliance of various financial centers. It has not
issued an update of the countries that it had previously
identified as having inadequate procedures to deal with money
laundering. The new report is available in PDF format at
http://www.oecd.org/fatf/pdf/PR-20010622_en.pdf

US and OECD Agree on Tax Competition/Transparency Compromise
------------------------------------------------------------
An article in the Washington Post indicates that the Bush
Administration has refused to cooperate with the efforts of
the OECD to eliminate tax competition between countries, but
has agreed to work with the OECD to require banking transparency
and greater cooperation between countries to help other countries
catch their own tax evaders.
Source: Bob Bauman, Sovereign Society A-Letter
[A-Letter@...] For details, see
http://www.washingtonpost.com/wp-dyn/articles/A54124-2001Jun27.html

The Transfer Pricing Forum 2001
-------------------------------
Organized by International Tax Review in association with KPMG,
this conference will be held in Amsterdam on September 10 and 11.
Featuring high-profile speakers from the OECD, multinational
companies and professional services firms, this event is for
all in-house tax directors involved in cross-border activities.
For further details, see
http://www.legalmediagroup.com/internationaltaxreview/tpforum/default.
htm

WTO Rebuffs US Export Tax Breaks Again
--------------------------------------
The World Trade Organization has upheld an EU complaint worth
$4 billion against tax breaks the US grants its exporters,
just seven months after the US reformed its Foreign Sales
Corporations regime. [ source: www.LegalMediaGroup.com ]

The substitute rules for the exclusion of income from qualified
"Extraterritorial Income" are substantially similar to the now
repealed Foreign Sales Corp. rules and this reaction from the
WTO is expected. The next question is how the US will respond
and whether we will implement further changes in our export tax
incentives.

July Offshore Tax Strategies will Focus on Tax Deductions
---------------------------------------------------------
As the fourth in our series on "Legal Ways to Save Taxes
Onshore and Offshore", the July issue of OTS focuses on
planning strategies with various kinds of tax deductions.
The August issue will focus on ways to legally avoid the
estate and gift tax.

#########################################################
CALENDAR: Check the calendar link on this web site for
upcoming tax due dates and seminar dates. If you have
suggestions for other calendar/date listings, let me know.


BOOKMARKS: Check out the links at the bookmarks
on this site. If you have a suggestion for adding a link,
send it by email to JR-links@...


SEMINAR POLL: Would you like to attend a one day
concentrated seminar on offshore tax law sometime
this fall? If you MIGHT be interested, please take our
poll and let us know what East coast CITY would be
of most interest to you. Just link to Polls in the left
section of the page.


SEND THIS TO A FRIEND:  If you like this newsletter,
send a copy to a friend. If you don't like it, please tell
me so I can try to fix it. eMail to
JacobsReport@...

FREE TAX SAVING TIPS:
    Http://www.offshorepress.com/vkjcpa/
FOREIGN CORP. TAX GUIDE:
    http://www.offshorepress.com/cfc-ibc-tax.htm
INTERNATIONAL ADVISORS:
    http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
    http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
    http://www.offshorepress.com/ostaxbootcamp.htm

Copyright, 2001, Vernon K. Jacobs, All rights reserved.
#######################################################

The following are some of the free email news sources
that I receive that are related to asset protection,
international taxes or offshore topics. From time to
time I will share some of the news I receive from these
sources, but I won't be trying to duplicate all of the
news that they provide. The following do not include
any publications that require a subscription fee.

#############################################
The Sovereign Society A-Letter by Bob Bauman

Bob Bauman is a former U.S. Representative and
the legal counsel for the Sovereign Society. His
weekly news digest covers a major part of the news
involving the offshore havens and government activity
in the realm of privacy and related topics. Nearly
every topic includes a link to a news source on the
Internet -- so his news survey is a big time saver
for those who want to stay abreast of what's going
on offshore. To subscribe, visit this web site.

http://www.sovereignsociety.com/free.html

#############################################

Offshore Week by OffshoreFinanceUSA

This is a free weekly review and summary of ".... news
stories in the mainstream press worldwide relating to
offshore financial planning, particularly for US investors,
residents and citizens." Each summary includes a
link to the source of the news. To subscribe, go to

http://www.offshorefinanceusa.com/usanews.html

#############################################

Center for Freedom & Prosperity

This group is making a huge difference in fighting
against the efforts of the OECD and other high tax
countries to eliminate tax competition in the low tax
countries and/or tax havens. They are the news source
for what's happening in this currently HOT area of
controversy. To receive their free news memos, go to

http://www.freedomandprosperity.org/

#############################################

The Leal Media Group - Eurromoney

This is a European publication with a focus on the
legal issues involving e-commerce and related
technology issues. You can sign up at

http://www.legalmediagroup.com

#############################################

Bennett's Offshore Advisor by Jim Bennett

Jim Bennett is an attorney who provides help in
forming offshore structures for asset protection.
His web site is http://www.offshoreprotection.com/,
where you can sign up for his free newsletter. I'm
not sure how often his newsletter is issued, but
whatever he comes up with is worth reading.

#############################################

EU Business

This is a free weekly email service about events in the
Economic Union. Each news story usually includes
a web link to the source or to further details. To get
the newsletter, you must register at

http://www.eubusiness.com/profile

#############################################

CALENDAR: Check the calendar link on this web site for
upcoming tax due dates and seminar dates. If you have
suggestions for other calendar/date listings, let me know.

BOOKMARKS: Check out the links at the bookmarks
on this site. If you have a suggestion for adding a link,
send it by email to JR-links@...

SEMINAR POLL: Would you like to attend a one day
concentrated seminar on offshore tax law sometime
this fall? If you MIGHT be interested, please take our
poll and let us know what East coast CITY would be
of most interest to you. Just link to Polls in the left
section of the page.

SEND THIS TO A FRIEND:  If you like this newsletter,
send a copy to a friend. If you don't like it, please tell
me so I can try to fix it. eMail to
JacobsReport@...

FREE TAX SAVING TIPS:
    Http://www.offshorepress.com/vkjcpa/
FOREIGN CORP. TAX GUIDE:
    http://www.offshorepress.com/cfc-ibc-tax.htm
INTERNATIONAL ADVISORS:
    http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS:
    http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
    http://www.offshorepress.com/ostaxbootcamp.htm

If you have requested an automatic extension of time to file your
Form 1040 and are thinking about whether to use some of the free
tax preparation services on the Internet, here are some observations
that might be useful to you.

Clearly, anything that is free on the Internet is intended to be
a magnet to attract people who may be prospects for some other
kind of product or service. It's all about advertising. Most of
us don't mind being confronted with some advertising in order to
save some money, so the free services are likely to have some
appeal. But how useful are these services?

I use a professional tax preparation program from Pro-Series, a
division of Intuit, the company that markets the Quickbooks and
Turbo-Tax software programs. Pro-Series is an excellent program
and has a lot of features that are designed to help the
professional user to avoid mistakes. But it would be very
confusing for anyone who is not intimately familiar with the
U.S. income tax system and how it works. I also think it would
be difficult to use this system if you don't' already know how
to prepare a tax return by hand. The program is easy for me
because it is so well designed that it anticipates how a
professional tax preparer works and thinks. A few years ago,
I also used the Turbo-Tax program. I found it to be somewhat
frustrating because it was designed for the consumer who needs
to taken through the tax return step-by-step. For those who
know how to prepare a tax return, it's very slow and sometimes
frustrating to use. But it's an excellent program for the novice
and the cost is negligible. (I think it's about $30.)

Every year "Money Magazine" has a contest between 50 tax
preparers -- one from each state. They give them all the same
data and the preparers use the data to prepare a tax return as
if it were for a real client. The preparers are even required
to show how much they would charge for the sample tax return.
In most years, the tax preparers all produce returns with
different results and different fees. No two are identical.

Why? Given the same data, a computer program will produce the
exact same results every time. All of these tax professionals
do use computers to prepare their returns. So why are the results
different?

It's because of the judgment and training that is still required
to prepare a tax return.

Is every source of cash taxable income? Is every expense a
deduction? When does an expense result in a tax credit instead
of a deduction? What kind of income is it or what kind of expense
is it? What tax form does it go on? When is this particular item
subject to tax as income or deductible as an expense? If a home
is used for business, which items of expense can be allocated to
the home office schedule? Can you deduct the cost of a mobile
phone if it is used for business? Is the taxpayer at risk with
respect to an investment that has lost value? Is the taxpayer
actively involved in the enterprise? When is a business a hobby
or vice versa? Can some worthless securities be deducted this
year? Are all living costs deductible for someone in a nursing
home? Can you deduct medical costs paid for an elderly parent?

Etc., etc, etc.

I'm working on a number of tax returns right now (on extension)
that other tax preparers have messed up because they didn't know
the rules for reporting income from offshore banks, mutual funds,
business ventures, etc. It isn't that they don't know how to
prepare a U.S. tax return. They just aren't familiar with obscure
sections of the law relating to offshore transactions and with
the unique forms that relate to offshore activities.

I haven't tried to count them, but someone has said there are
over 1,700 pages in the tax code. The IRS regulations are about
three times as extensive. There are thousands of court cases
that deal with tax disputes and there are many thousands of
private rulings by the IRS to answer questions that professionals
have about ambiguous issues.

There are literally hundreds of different tax forms that may be
required. Most of the various states also have an income tax and
their tax rules usually are different from the federal rules in
some respect. Many taxpayers have income from sources outside
their state of residence and they may be required to file tax
returns in multiple states. Nearly every kind of income from
outside the U.S. is subject to special rules and reporting
requirements. About 15 years ago, the Congress began phasing in
various changes in the tax law and some provisions were phased
out over time. Many of the deductions or credits are changed
(indexed) each year to adjust for inflation. Even the tax rates
change every year.

Our income tax system is so far out of control that it has become
an absurdity. There is a bill being promoted by Representative
Ron Paul for Texas to repeal the 16th Amendment to the
Constitution, which would make the income tax illegal. For
some comments on the arguments for and against repealing the
federal income tax, see
http://www.offshorepress.com/jacobsreport/repeal16.htm

For those who have very simple returns without any complicated
issues, a free tax preparation program on the Internet may be
helpful as a way to double check the accuracy of your return.
Otherwise, it could be foolish to use such a program if you
might have some complications in your return and you don't know
the answers to the kinds of questions illustrated above.

It's unlikely that anyone who needs this newsletter would have
a return that is simple enough to justify the savings from using
a free tax preparation service on the Internet. If you are
interested in some additional (free) tips about preparing your
tax return, see http://www.offshorepress.com/vkjcpa/taxtips.htm

Vern Jacobs
June 11, 2001
#################################################################

Readers who may be interested in my professional services as
a CPA can find substantial information at
www.offshorepress.com/vkjcpa/

I'm the co-author and publisher of a subscription newsletter
on Offshore Tax Strategies and information about that newsletter
is available at http://www.offshorepress.com/offshoretax/ That
web site includes a free web-book on the subject.

I'm the Editor & Publisher of Global Asset Protection, an email
newsletter about risk management. A free web-book on that subject
is available at http://www.offshorepress.com/protection/

Offshore Press, Inc. sponsors a free public forum on asset
protection and offshore topics that is moderated by yours truly.
Details are available at http://www.offshorepress.com/freeforum.htm.

Offshore Press, Inc. sponsors periodic seminars and workshops on
international and/or tax subjects. A current list of seminars is
available at http://www.offshorepress.com/seminar.htm

I just received an email warning me about a virus
that the sendor claims would wipe out all the files
and folders on my hard drive on June 1, 2001.

The email gave explicit directions about how to
locate this alleged virus file on my system. I
checked with the "Find" command and sure enough,
there the file was - in the c:\Windows\Command
folder.

The sendor's instructions told me I should delete
this file from my hard disk.

That made me suspicious, so I went to the McAfee
web site at < http://vil.mcafee.com/hoax.asp? >
This web page has information about virus HOAXES.

From the McAfee Hoax page I linked to the page
about the virus I was being warned about.

The McAfee hoax page provided instructions on how
to restore the file to my hard drive if I had
deleted it as the virus warning message told me to.

If I had followed the instructions to delete the
file from my hard disk, it could have a serious
impact on my computer.

By following the instructions in this clever hoax,
the reader is creating the damage himself. The
virus becomes a self-fullfilling prophecy.

I'm sharing this in case you receive a message
from anyone who urges you to delete a file from
your Windows command folder because of an alleged
virus. Before you ever do that, I suggest that you
check with the McAfee or the Norton hoax pages and
that you first copy the file to a backup diskette.

Please feel free to pass this on to any friends.

Vern Jacobs
http://groups.yahoo.com/group/JacobsReport

Old news dies fast in the mass media. If you are interested in
getting some information about the much ballyhooed tax cuts,
you won't find much in the newspapers, on television or even
on the web sites of the major news purveyors.

If you can get a copy of the printed edition of "USA Today"
for Tuesday, May 29th, it includes some extensive coverage
of the details of the "Tax Relief Reconciliation Act of 2001".
But don't bother to look on their web site. Nor on the web
sites of the "Wall Street Journal", the "New York Times",
"CNN" or "The Washington Post".

However, I've located a few web sites where you can get as
much of the gory details as you can stand. The trouble is
that it's mostly written in tax jargon.

But first, here's a very brief rundown on what you are
likely to find in these documents.

##################################
Effective Changes in the Year 2001
##################################

For this year (2001), almost everyone will get a small refund
check from the U.S. Treasury Dept. sometime before October
first. It will be based on 5% of your taxable income for the
year 2000, but with a cap of $300 for single taxpayers and $600
for married couples filing jointly. For those who have their
2000 returns on extension, it appears that your refund checks
will be delayed. Speaking for myself, I'm hoping I can get my
refund check before September 15th so I can use it to pay for
a small part of my third quarter estimated tax payment for this
year. I can assure you I won't be using it to stimulate the
economy, as President Bush is hoping we will all do with our
advance refund checks. In case you are wondering what the
"logic" is behind this refund, it's based on a retroactive cut
in the 15% tax bracket by introducing a new 10% bracket.
However, because it's retroactive to January 1, the folks who
wrote the tax bill decided it would be less confusing to get a
compensating refund check for this year and to initiate the 10%
rate next year.

Also, in the year 2001,

· Taxpayers who are eligible for the child tax credit may get
a $100 additional credit when they file their 2001 tax return
next year.
· Each tax rate will be reduced by 1/2 of 1% for this year and
each of the next five years for a total rate reduction of 3% for
all brackets. (The top bracket will be reduced from 39.6% to 35%)
· Taxpayers who are subject to the alternative minimum tax will
get no rate reduction, but there will be a $2,000 per taxpayer
($4,000 joint) increase in the AMT exemption amount for the years
from 2001 through 2004.

########################
Projected Future Changes
########################

Most of the tax benefits in this bill are "back-loaded" (delayed)
into the last three years of a ten year phase-in period. President
Bush had to agree to substantial modifications from his
"across-the-board" tax cuts to get part of his proposed tax
package. Features that primarily benefit the lower and middle
income taxpayers include an increase in the child tax credit,
an increase in the adoption tax credit  The much ballyhooed
relief from the "marriage tax" won't occur until 2005. Part of
the relief will be in the form of an increase in the 15% rate
bracket and part will be from an increase in the standard
deduction for married couples.

The bill includes significant changes in pension plan and other
tax qualified retirements savings plans, starting next year.
Taxpayers who want to shift income to children over the age of
13 by making gifts of income producing assets will enjoy added
tax savings because of the new 10% tax bracket. Assuming that
the rate reductions are not repealed by later law changes, there
will be some tax benefit from deferring compensation to future
years.

At first blush, there don't appear to be any significant changes
in the international tax area.

#####################
The Estate Tax Mirage
#####################

Based on a quick look at the highlights of the new estate tax
rules, it's doubtful if the estate tax will really be repealed.
Technically, it is scheduled to be repealed in the year 2010 -
BUT - it will be reinstated in the year 2011. However, the
exemption amount is scheduled to increase during that time.
That's about the only good news. Otherwise, there will be a
complicated process of repealing the "Step-up-in-basis" of
assets for income tax purposes. If the estate tax were fully
repealed, it would then be replaced by an income tax on unrealized
gains when the assets are sold by the heirs. (Exceptions or
exemptions would be available to a surviving spouse.)

##############################
Don't Memorize These Rules Yet
##############################

Although this bill passed the Congress in near record time,
I wouldn't make any bets that it will remain in the same form
by the year 2011 when it's ostensibly to be fully implemented.
There will be five more Congressional and Senate elections
between now and the year 2011 and there will be two more
Presidential elections. Despite healthy margins for passage
in both the House and Senate, the "tax and spend" group in
Congress will be pushing for change. Even the defection of a
single Senator from the Republican to the Democratic ranks will
have an impact on other legislation that will modify the tax
laws. Let's not forget that nearly every bill requires some
kind of funding and the funding requires some additional tax
or some kind of cut in other programs.

#################################################
How to Get More Information About the New Tax Law
#################################################

Here are some Internet locations where I was able to find some
details about the new tax law. However, there is no assurance
that the information will be at the same web location for long.
It's still a bit early for non government web sites to have
much detail, but as time moves on, I expect to see many web
sites with their own analysis and spin on this tax law.

Commerce Clearing House - www.cch.com (Eight page summary)
· HTML - http://tax.cch.com/free_tools/cch-tax-briefing-05-29-01.htm
· PDF - http://tax.cch.com/news/taxbrief_05-01_updated_8%20pages.pdf


US Senate Finance Committee - 186 page copy of the act
· 05-29-01 Agreed upon Legislative Language to the Conference Report
· PDF -
http://waysandmeans.house.gov/fullcomm/107cong/hr1836/legtext.pdf

US House Ways & Means Committee - Copy of the Act (186 pages)
· Statement of Managers (258 pages)
http://www.house.gov/ways_means/fullcomm/107cong/hr1836/statemgrs.pdf

Joint Committee on Taxation - http://www.house.gov/jct/


###################################################################
___________________________________________________________________
CALENDAR: Check the calendar link on this web site for upcoming
tax due dates and seminar dates. If you have suggestions for
other calendar/date listings, let me know.

BOOKMARKS: Check out the links at the bookmarks on this site.
If you have a suggestion for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one day concentrated
seminar on offshore tax law sometime this fall? If you MIGHT be
interested, please take our poll and let us know what East coast
CITY would be of most interest to you. Just link to Polls in
the left section of the page.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?:  Try the Asset
Protection and Offshore Forum - a FREE public discussion list
that is moderated by yours truly. The Jacobs Report is a news
letter. The AP Forum is a two way discussion list. For details,
see http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this newsletter, or this
issue, send a copy to a friend. If you don't like it, please
tell me so I can improve it. eMail to JacobsReport@...

FREE TAX SAVING TIPS:    http://www.offshorepress.com/vkjcpa/
FOREIGN CORP. TAX GUIDE: http://www.offshorepress.com/cfc-ibc-tax.htm
INTERNATIONAL ADVISORS: http://www.offshorepress.com/experts.htm
INTERNATIONAL SEMINARS: http://www.offshorepress.com/seminar.htm
OFFSHORE TAX SEMINARS:
http://www.offshorepress.com/ostaxbootcamp.htm

Maybe we should require promoters of international tax benefits to
put detailed warning labels on their materials like the labels
required by drug companies.

In spite of my strong belief in the benefits of a free market system
compared to a managed economy, there are some disadvantages with a
free market. One of them is the propensity of entrepreneurs to
promote and sell products or services to people who don't need the
product or shouldn't use it. There is a tendency for promoters of tax
information or services to overstate the benefits of their product or
service.

They assume that the buyer should beware and should exercise caution
about the claims of marketers or promoters. They view the marketplace
as a battlefield and the buyers as opponents who should be vanquished
and consumed.

Some buyers do exercise caution and do investigate the claims of
promoters, but many don't. Others perceive the promoter to be a
professional advisor who is offering objective advice and get taken.
Those who don't question the promoter are the victims of the
promoters who are willing to exaggerate or to even lie about their
product or service.

In the context of international tax services, most promoters over
simplify some concepts and often ignore critical information in order
to sell their bargain package to as many people as possible. They
avoid lying by telling half truths and by not telling about the
disadvantages or restrictions of their packaged services.

A conscientious professional is exemplified by the medical doctor who
is asked for advice by a patient suffering from some illness or
disease. Even when the disease is obvious, the doctor will usually
want to be sure about other medical conditions that could interact
with the obvious disease or injury. So the doctor takes the time to
ask enough questions to be familiar with the patient's general
medical history. The doctor examines the patient for a variety of
symptoms and takes blood and other samples to test for various
problems. Only when a thorough diagnosis has been made does the
doctor make a prescription. This may not be true of all doctors, but
it describes most of the ones I've known.

Unless insurance or some government program pays for the doctor's
services, some people don't want to pay for that degree of medical
care. Instead, they seek relief in the form of over-the-counter drugs
or even from prescription drugs that were prescribed for a relative
or a close friend. The danger is that the person may not make an
accurate diagnosis of what is wrong and may seek relief from the wrong
packaged drug. In some cases, the packaged drug may have an adverse
reaction with the illness or disease or with other drugs the person
is taking.

The same process describes the true professional in any field --
including tax advisors. A tax professional can answer a generic
question about the law, but can't make a responsible recommendation
to someone about how to solve some tax problem without the benefit of
a detailed diagnosis. Lawyers, financial planners and other
conscientious advisors need to have a detailed understanding of the
financial and tax circumstances of the client in order to prescribe
some specific solution. In many cases, a taxpayer may not even know
what their "problem" is or how to describe it. They just have a vague
sense of unease. The professional helps the client to think through
his or her financial and tax priorities and to set goals. The
professional does a thorough study of the client's financial
situation in order to avoid unsuitable recommendations.

One size does not fit all in medicine or in financial and tax
matters. The promoter is only concerned about selling his packaged
solutions to as many people as possible, whether they need it or not.
The promoter's attitude is "buyer beware". The professional's proper
attitude is "do no harm" to the client. The promoter will sell the
benefits of a concept or service regardless of whether it's suitable
for the buyer. The professional seeks to determine what is suitable
to prescribe a solution that is correct for the specific client.

In a free market system, it is the responsibility of the buyer to get
enough information to make an informed judgement about the
suitability of a product or service. The problem is that some
promoters take advantage of the people who are not sophisticated
buyers and those who are seeking easy and cheap solutions. In the
context of international tax advice, those who seek easy and cheap
answers are likely to find themselves buying empty promises. Even
worse, the packaged solution may be fraudulent in relation to the
U.S. tax law, but without the help of a genuine professional, the
client won't know until the IRS is knocking on the door - or knocking
it down.

Will the client have redress against the promoter? Legally, they
probably will. But more likely than not, the promoter will either be
gone or will be broke or will even be in jail. If the promoter is
outside the U.S. any chance of legal redress is virtually nil.

At the risk of seeming to be self serving, I hope that readers of
this report will seek help from a qualified U.S. tax professional
before buying any tax saving promises that are being promoted on the
Internet, at seminars or in books about "going offshore".

A number of well qualified international tax professionals are listed
on my web site at http://www.offshorepress.com/experts.htm  This page
provides links to a summary page for each advisor with further links
to their respective web sites.

Vern Jacobs

CALENDAR: Check the calendar link on this web site for upcoming tax
due dates and seminar dates. If you have suggestions for other
calendar listings, let me know.

BOOKMARKS: Check out the links at the bookmarks on this site. If you
have a suggestion for adding a link, send it by email to
JR-links@...

SEMINAR POLL: Would you like to attend a one day concentrated seminar
on offshore tax law sometime this fall? If you MIGHT be interested,
please take our poll and let us know what East coast CITY would be of
most interest to you. Just go to
http://groups.yahoo.com/group/JacobsReport/, sign in and then link to
Polls in the left section of the page.

DO YOU WANT TO CONVERSE ABOUT OFFSHORE TOPICS?

Try the Asset Protection and Offshore Forum - a FREE public
discussion list that is moderated by yours truly. The Jacobs Report
is a news letter. The AP Forum is a two way discussion list. For
details, see http://www.offshorepress.com/freeforum.htm

SEND THIS TO A FRIEND:  If you like this newsletter send a copy to a
friend. If you don't like it, please tell me so I can try to fix it.
FREE TAX TIPS: Http://www.offshorepress.com/vkjcpa/
FOREIGN CORPORATION TAX GUIDE:
     http://www.offshorepress.com/cfc-ibc-tax.htm
INTERNATIONAL SEMINARS: http://www.offshorepress.com/seminars.htm

Enter your vote today!  A new poll has been created for the
JacobsReport group:

What East Coast City Would Appeal to
You For an Offshore Tax Boot Camp
seminar?

   o Boston
   o New York
   o Baltimore/Washington
   o Atlanta
   o Miami


To vote, please visit the following web page:

http://groups.yahoo.com/group/JacobsReport/polls

Note: Please do not reply to this message. Poll votes are
not collected via email. To vote, you must go to the Yahoo! Groups
web site listed above.

Thanks!

As part of my ongoing effort to get familir with the Yahoo:Groups
email service, I just tried out their calendar function by posting a
notice of our offshore tax seminar on May 12th and the due date for
the filing of Form TD F 90-22.1 on or before 6/30. I believe this
will generate email reminders but I don't know for sure until I try
it.

Vern

I decided to take a few minutes to see how the "bookmarks" feature
works and I added a few web site links to try it out. As time permits,
I will add additional links and folder topics about subjects relating
to international financial planning.

To view the links and brief description, go to
http://groups.yahoo.com/group/JacobsReport/ and then link to
"Bookmarks" in the left panel.

Vern Jacobs

Offshore Investing & Due Diligence

      U.S. persons are not prohibited from buying investments from
foreign securities dealers or investments issued by foreign
companies.

      However, the U.S. Securities & Exchange Commission does not
permit foreign security dealers or issuers to sell securities to U.S.
persons in the U.S. In addition, if a foreign issuer or dealer wants
to sell securities in the U.S., they must also satisfy the state
securities department in each state where they may offer their
securities. Thus, a U.S. investor must go offshore to secure access
to foreign investments that are not registered with the S.E.C. and the
applicable state security departments for distribution within the
U.S.

      Foreign dealers or issuers who do not want to become embroiled
in a dispute with the U.S. SEC or various state securities
departments will refuse to sell their securities to any U.S. person
or entity. Thus, the U.S. investor who wants access to foreign
securities must physically go offshore and place an order offshore.
For many foreign dealers, even that is not enough. They will not sell
securities to a U.S. person at all. The U.S. investor must therefore
establish an offshore trust or an offshore corporation in order to
purchase foreign securities. The problem is that this leads to some
unpleasant tax consequences for the U.S. investor.

      The IRS does not really care if U.S. taxpayers buy stocks, bonds
or other securities from foreign issuers -- or at least there is
nothing in the U.S. tax code to specifically discourage such
purchases. But, when a U.S. investor creates a foreign trust or
foreign corporation in order to purchase foreign securities, the
investor is suddenly subject to a host of very dismal and confusing
tax rules.

      If the U.S. investor decides to buy foreign securities through a
foreign trust, the taxpayer must be prepared to comply with some very
onerous and complicated tax reporting requirements. The grantor who
puts money into a foreign trust will be treated as the owner of the
assets of the trust and will be subject to tax on the income of the
trust, the same as with a domestic revocable trust. If the trust
grantor dies and the assets are left to a US beneficiary, there can
be some unpleasant tax consequences if the trust income is not
distributed each year.

      When a U.S. investor utilizes a foreign corporation or
international business company (IBC) to purchase and hold foreign
investments, different sections of the U.S. tax law apply and often
have the effect of converting any capital gains into ordinary income.
This can be avoided by making an election to treat a single owner
foreign corporation or IBC as a "disregarded entity". The election is
made with Form 8832 and must be made within 75 days of the beginning
of the entities tax year.

      Further details about this subject are available at
http://www.offshorepress.com/offshoretax/

      ###############################################################

                       Due Diligence for Offshore Investors

      One of the more difficult tasks for the offshore investor is to
investigate potential service providers outside the U.S. U.S.
investors are accustomed to being able to get a wealth of information
about companies and even individuals with little cost or effort. This
is largely due to the virtual absence of any privacy in the U.S.

      Outside the U.S. privacy is more valued and sought. The greater
privacy results in greater difficulty in doing "due diligence" to
investigate potential investments and service providers. But, the
conditions that make it more difficult to investigate offshore
vendors make it more appealing to crooks and scoundrels.

      I haven't found a totally satisfactory solution yet, but there
are some resources on the Internet that provide varying degrees of
information about international companies. An extensive article on
the subject is available online at
http://www.offshorepress.com/duediligence.htm

Vern Jacobs
April 25, 2001

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There are a host of newsletters and magazines about financial
planning.

There are also a lot of periodicals about international or
"offshore" subjects.

As far as I know, there are none that focus on the international
aspects of financial planning. That will be the editorial purpose of
The Jacobs Report on International Financial Planning. (The choice of
the name is to avoid disputes over tradmarks or copyrights.)

This email newsletter will provide selected news and commentary on
international investing, doing business on a global basis,
international asset protection and international taxation. My
subscription newsletters will have less news coverage and will
provide more of an in-depth analysis of various risk management and
tax issues. As a journalist, I will seek to locate useful information
on the topics listed below and will supplement that news with my own
views on the subject.

Most financial planners view the financial planning process as having
the following seven elements or sub-sets. (Some planners don't get
involved with any business planning issues.)

1.  Financial analysis and budgeting
2.  Investing
3.  Business planning
4.  Insurance or risk management
5.  Retirement planning
6.  Income taxes
7.  Estate planning and taxation

The focus of this newsletter will be items 2 through 7, where there
is some connection to cross border investing or business, offshore
insurance or asset protection, international retirement issues and
global income or death tax issues.

From time to time, I may invite various financial planners or
other experts to contribute some commentary or news that is germane
to the focus of this publication.

I will also include occasional political or economic news or comments
on subjects relating to international financial planning.

From time to time, I will try to lighten your day a bit with some
humor that I found to be amusing or entertaining.

This newsletter will not provide any long articles or reports. At
most, these reports will be no more than two or three printed pages.
In many cases, I will include web page links to sources of
information on the news that I provide.

Rather than send an assortment of single topic news items to you, I
will issue this newsletter weekly -- usually on the weekend or the
first of the week.

As time permits, I also plan to use the survey feature on Yahoo
Groups to ask your opinion on various international topics.

For those of you who want a dialog, I sponsor a free public forum
(email discussion list) called the Asset Protection and Offshore
Forum. Details on this forum are at
http://www.offshorepress.com/freeforum.htm

If you are wondering why this newsletter is free, it's because I will
be using it to advertise my seminars, books, reports, newsletters and
any business partners. I may even include some occasional paid
advertising.

Copies of this newsletter will be archived on the Yahoo Groups web
site and I will also archive it (as time permits) on my own web site.

Vern Jacobs
April 24, 2001