July 2001 Selected News Clips

I.R.S. NON-RESIDENT RULES OPPOSED

WASHINGTON. Witnesses at an IRS hearing demand withdrawal of proposed requirements that U.S. banks report to foreign tax collectors interest payments made to non-US residents.

HEAL THY SELF

Most of the G-7 nations that back the OECD are themselves found highly deficient in fighting dirty money by FATF.

GLOBAL TAX RAGE

The movement to limit taxes is gaining ground around the world.

TAX SHELTERS WORK

On Tuesday we reported that, against IRS objections, a US federal appeals court had upheld the validity of an offshore tax shelters that saved $1.8 billion for UPS, the major US delivery service.

For more about this and a companion court decision upholding tax shelters, see,

STARVE THE BEAST

WASHINGTON. The real reason the BUSH tax cut was needed; to keep the politicians from spending any and all surpluses.

ECHELON PROBE POSSIBLE

WASHINGTON. New reports that Echelon spies on Japanese business creates more pressure for the US Congress to investigate.

I.R.S. NON-RESIDENT RULES MAY DIE

WASHINGTON. Last Friday we told you about growing opposition to IRS proposals that US banks be forced report to foreign tax collectors interest payments made to non-US residents.

Yesterday the Wall Street Journal reported that direct intervention by BUSH White House economic guru Lawrence LINDSEY may kill the rules altogether. US banks could lose billions.

U.S. ESTATE TAX CHANGES

Noted asset protection attorney Gideon ROTHSCHILD explains the complex, contradictory provisions of the US estate tax "repeal."

IRS HITS TAX PROTESTERS

The feel good IRS goes after US tax protesters.

U.S. TREASURY COMMENDS FATF

Following the recent announcement made by the FATF updating its international blacklist, the U.S. Treasury has issued a press release stating its support for the multilateral countermeasures approved against Russia, The Philippines and Nauru over their lack of cooperation in the global fight against tax fraud and money laundering.

“The Treasury Department supports countermeasures against countries refusing to implement constructive legal reforms to address ongoing money laundering concerns,” said the release. However, Treasury Secretary Paul O’Neill was full of praise for the Bahamas, the Cayman Islands, Liechtenstein, and Panama, all of which had successfully worked to have themselves removed from the blacklist, and called the results achieved by the effort “dramatic”.“qWe applaud the legal reforms made by these countries,” he said on Friday. “These improvements are a testament to the effectiveness of international cooperation in combating money laundering, and I’m optimistic that the FATF process will generate further progress.”

The Treasury urged all of the seventeen countries which remain on the blacklist (which contains six new additions) to act swiftly to implement reform, and said that the US intended to update its advice to financial institutions as necessary to reflect the FATF findings. It added that no measures would be taken against Russia, the Philippines and Nauru if they adopted reforms by September 30th. However, if the blacklisted countries fail to make improvements to their regulatory regimes by the deadline, they could face sanctions including enhanced surveillance and reporting.

HAPPY U.K. EXPATS

LONDON. Globalization creates expatriates. Expat Brits are doing better these days, says the Financial Times.

I.R.S. NON-RESIDENT INVESTORS RULES

WASHINGTON. Tuesday we told you of a Wall Street Journal report that White House intervention may kill proposed rules that would force US banks to report to foreign tax collectors interest payments made to non-US residents. Full text of the article at,

U.S. TAX HAVEN UPSETS THE W.T.O.

A good explanation of how US tax laws allow American corporations to benefit from offshore tax havens, and why the WTO is upset.

U.S BANK PRIVACY HYPOCRISY

Lew ROCKWELL lays bare the US hypocrisy in telling other nations to end banking and financial privacy.

E.U. PROTESTS ECHELON, DOES NOTHING

A committee of the European Parliament concludes the US-led Echelon international surveillance system spies on the continent, but the EU can do nothing about it.

O.E.C.D. SANCTION THREAT DEFLATED

Former Ronald REAGAN advisor Peter HANNAFORD explains how the OECD's high tax campaign imploded,

TAX FUGITIVE IN BELIZE

Last week we reported on an American tax fugitive living on the lam in Belize. Here's more about how he does it.

LIVING OFFSHORE

All about the advantages of living in a foreign country. A new and refreshing way to look at life "offshore."

UK expatriate describes living and working in BERMUDA.

OFFSHORE WITHHOLDING TAXES

If you have offshore investments, read this FT article on custodial withholding taxes, one of the best explanations we've seen.

HEDGE FUND BUBBLE?

A mania has gripped the US and Europe that could have unpleasant consequences for investors, warns Barton Biggs.

HNWI’S HIT BY U.S. ALTERNATIVE MIN TAX

American high net worth investors suffer from the alternative minimum tax, especially those in tax free municipal bond funds.

U.S. ESTATE TAX GOING UP?

The top US estate tax rate may be going up, not down, based on the state in which you live. It peaks at 47% in 2005, up from 39% now.

UPDATE YOUR ESTATE PLAN

With all those US tax law changes, some suggestions for updated estate planning, including a new, flexible bypass trust.

NUPTIAL AGREEMENTS: POST & PRE

American couples are now signing post nuptial agreements.

ALTERNATIVE CASH

CAMELIAS, COLUMBIA. Where US demand and local supply makes coca paste as good, if not better than, gold.

CANADA-U.S. TRUST TAX QUESTIONED

OTTAWA. Under court review: secret agreement between Revenue Canada and Bronfman family (Seagrams Distillery ) US trusts that avoided $700 million in capital gains taxes.

COLORADO “OFFSHORE” BANK IN TROUBLE

DENVER. A so-called “offshore US bank” aimed at foreign depositors is in trouble for false claims hinting at tax evasion.

IS AMERICA REALLY THE LAND OF THE FREE?

Just as Americans finish celebrating the 225th anniversary of the nation’s birth by belting out the "Star Spangled Banner" and singing praise to the Declaration of Independence and Bill of Rights, reminders of Americans’ diminishing freedoms are everywhere.

In New York City’s Washington Square Park, cameras hidden behind trees and perched atop poles monitor the movements of skateboarders and sun-seekers. In Texas, roadside cameras catch the license plates of anyone crossing state lines and report back to government officials. And in Tampa, Fla., officials keep a close eye, some say too close an eye, on revelers partying it up in the popular Ybor City nightclub district.

It’s all too much for some.

"What’s happening in Tampa is troubling," says civil liberties advocate Norman Siegel, the former director of the New York chapter of the American Civil Liberties Union. "It indicates that the technology is outpacing the civil rights and civil liberties along with the right of anonymity and privacy."

And it’s not just cameras that are causing an uproar.

State and local officials, as well as countless other agencies, can easily monitor people’s movements, lifestyle, personal habits and shopping trends by accessing credit card statements and tracking cell phone records, toll booth payments and e-mail.

But Tampa’s effort to keep tabs on criminals and an eye out for suspicious activity is entering previously uncharted territory. The city has installed a handful of state-of-the-art security cameras that scan crowds of people and in seconds based on facial characteristics can tell whether someone is wanted by the law by comparing the data with mug shots on file.

In a statement released last Friday, Det. D.W. Bill Todd Jr. of the Tampa Police Department refuted the notion that the cameras are an invasion of privacy, saying, "Face-recognition technology is a powerful tool to assist in maximizing public safety."

Besides, he added, on an Ybor City street of restaurants, nightclubs and stores crowded with 20,000 people, "your expectation of privacy is somewhat diminished anyway."

The face-printing system is not uncommon, it has been used by casinos, federal government offices and at Super Bowl XXXV, but it is fueling an incendiary debate over the line between privacy and public safety.

Already, a national law enforcement organization is calling on the Tampa Police Department to take down the cameras, calling the system an unconstitutional, Big Brother-like invasion of privacy.

Kevin H. Watson, a spokesman for The Law Enforcement Alliance of America, says, "We’re calling for the cameras to be removed simply because there is the potential violation of the Fourth Amendment and the rights of privacy," he says. "The cameras also create a sense of distrust between the community and the law enforcement officers that are there to protect the people, especially when they are perceived as being a part of this Big-Brother scheme."

While Watson agrees that the system is useful in airports where such high-tech X-ray machines as BodySearch can peer behind a person’s clothing he says the technology isn’t for Main Street.

"There are certain venues that this technology is very useful in," he says. "Folks who walk into an airport terminal are voluntarily accepting extra security. It is part of the agreement. But to put it up on Main Street, we just don’t agree with that."

Siegel agrees. "If you are not engaged in criminal activity, no American should be the subject of a database archive from the federal, state or local government," he says. "But with this new technology, it’s a daily occurrence."

Others disagree that the high-tech surveillance violates constitutional rights. "As long as you’re taking pictures, there's really not such an intrusiveness that's going to violate the Constitution," says Stephen Crawford, a Florida-based attorney.

Despite the protests, other communities are moving ahead with plans similar to Tampa’s. Colorado recently announced plans to install a system that will capture drivers' facial characteristics to help prevent people from getting multiple driver's licenses under false names.

Civil libertarians are getting more and more nervous with each such announcement.

"More and more our government is developing the capacity to find out where we are, who we are with, and where we are going," says Siegel. "This should trouble all Americans."

IDENTITY CHIP RAISES PRIVACY CONCERNS

A tiny new chip from Hitachi could have massive implications for security - and also for your privacy Hitachi has developed a chip that could be woven into paper money to help identify counterfeits, and which could also have wide ramifications for the identification and surveillance technologies.

The chip, called Mew, measures just 0.4 millimeters on a side, and stores information such as identification and security code. It includes 128 bits of read-only memory (ROM) and RF wireless circuitry that allows it to transmit over a distance of about 30cm. If inserted in money, a reader unit would be able to instantly detect authentic bills.

Most identity chips are currently several millimeters on a side.

While the chip currently requires a reader unit to work, its size carries big implications for the future of identity technology. For example, future chips could be implanted into all paper money and be connected wirelessly to the Internet, so that authorities would be able to monitor the movement of all cash.

Such chips could also be embedded in other consumer products to track them in the event of theft.

Privacy advocates say the idea of being able to seamlessly track people, money and objects might be attractive to companies and governments, but it raises concerns over how far such technology might go. "What you could achieve with a chip like this is to ensure that surveillance becomes invisible," said Simon Davies, head of Privacy International. "If you really could track things in such an unobtrusive manner than anything an individual does can theoretically be captured."

He said that the ability to track currency is unlikely to be adopted by any democratic government because of the protest it would arouse. "But lots of authorities, like banks, would love to have that facility," he said.

Hitachi says it is considering adding rewritable memory to the device, but for the moment is using ROM to prevent data falsification.

The chip will begin sampling this autumn and Hitachi will begin marketing it next spring. Mew Solutions, the venture formed by Hitachi to promote the chip, expects sales of £145m (about £98m) by 2005.

U.S. IRS PROPOSALS SLAMMED

Daniel MITCHELL lays bare the fallacies behind IRS proposals that would force US banks to report the bank deposit interest paid to nonresident foreign investors.

U.K. FORCES BERMUDA CONSTITUTION CHANGE

HAMILTON. London underscores the "dependent" status of its largest overseas territory, forcing constitutional changes without adequate consultation with many of the island's unhappy colonials.

BELIZE WONT FREEZE CASH

BELMOPAN. The Belize Supreme Court denies a US request to freeze $2 million in assets of a previously extradited US financier accused of money laundering and fraud.

E.U. ALL EUROPE TAX DEAD

BRUSSELS. Belgium stands alone in wanting to impose a multi-national layer of taxes on top of all other EU nation taxes.

ONLINE INVESTMENT WEB SITES

American stocks, http://www.fool.com, here and here.

Create your own custom monitor for your offshore shares at here.

United Kingdom, here, France, here, Germany, here, and European stocks, here.

Free wealth building strategy kit for UK expats, here.

REPORT FROM PANAMA

PANAMA CITY. Derek SAMBROOK of Trust Services SA brings us up to date on events in PANAMA and Latin America in general.

HARRIS ORGANIZATION

A list of more than 40 Harris Organization entities that Panama’s Banking Superintendent officialy says are not licensed to operate or provide fiduiciary services to clients.

U.S. EXPATS GET THE BOOT

US companies are cutting costs by firing offshore employees.

ULTIMATE WEB HOSTING OFFSHORE

"Web Host Industry Review" takes a serious look at SEALAND.

HOW TO PROFIT ON OFFSHORE REAL ESTATE

Roger GALLO of Escape Artist fame explains how to make a killing in foreign real estate using foreign currency fluctuations.

FUTURE OF “CASH”

SINGAPORE may pioneer in mass distributed digital cash cards for every day expenses.

NIGERIAN SCAM GOES WEST

The NEVADA attorney general warns the infamous NIGERIAN bank account scam is making the rounds there.

IRS LESS WRONG THAN BEFORE

IRS agents give U.S. taxpayers wrong tax advice 73% of the time, an improvement over last year’s 81% error rate.

And the BUSH administration is considering a major reform and simplification of the US Internal Revenue Code.

LEVIN CHARGES OFFSHORE TAX EVASION

WASHINGTON. As a demagogic prelude to his anti-haven hearing (above), Sen. Levin claimed US taxpayers fail to report their offshore financial activities in violation of US disclosure laws.

COUNTER “TRANSPARENCY” TASK FORCE

WASHINGTON. The Prosperity Institute announces formation of a "Task Force on Information Exchange and Financial Privacy" to counter the OECD's demands for world financial information exchange.

OFFSHORE AMERICAN INDIAN BANK?

BROWNING, MONTANA, USA. "Offshore" banking has come to the Blackfeet Indian Reservation, or so they claim.

BUDAPEST. Under OECD pressure, Hungary will abolish all remaining anonymous bank accounts after 2002.

U.S. BACKS MONEY LAUNDERING FIGHT

WASHINGTON. The Bush administration will aggressively crack down on money laundering but wants a better return on the funds spent to combat the problem, Treas. Sec. O'Neill says.

TAX CUTS ARE GOOD

History proves the lasting value of tax cuts. Three US rate cuts of the postwar period each stimulated growth and tax receipts.

GLOBAL TAX SLAVERY

What does the OECD's demand for global tax reporting have to do with slavery? Columnist Paul Craig ROBERTS explains.

BUSH S.E.C. HEAD’S BAD IDEA

The new SEC chairman wants to discourage Americans from offshore investments where, he claims, they "often lack protection of the laws the [SEC] enforces." That's the best reason to invest offshore!

$500 BILLION HEDGE FUND FOLLY

FORBES asks: “What’s so alluring about unregulated investment partnerships? They soak you with high fees and underperform the market.”

EVERGREEN FUND LOST $214 MILLION

ORLANDO, Florida. State regulators having difficulty finding 2000 investors who lost millions in the collapse of the Evergreen Fund.

BANKS IGNORE WARNINGS

Identity thieves and information brokers regularly trick bank clerks into giving them access to individuals' financial information.

U.S. INCOME TAX HEARINGS

The US Justice Dept. says the IRS will hold public hearings on the legality and constitutionality of the US income tax.

MOVE INTELLECTUAL PROPERTY OFFSHORE

How to save taxes by transferring intellectual property rights to legal entities in low tax jurisdictions.

IRS FRAUDS SITE

The US IRS has a new web site designed to alert taxpayers and tax practitioners to tax scams and fraud schemes.

IRS fraud web site, here.

GOVERNMENT SPIES ON YOUR CASH

Short, succinct and to the point; a devastating indictment of the US-FATF money laundering attack on your financial privacy.

OXFAM’S BOGUS OFFSHORE STUDY

With perfect OECD timing last year, the liberal UK think tank charged that tax havens deprive developing nations of $50 billion annually in tax revenue. The Oxfam lie is now exposed.

O’NEILL MISSED HIS CHANCE

The Treasury Sec. could have told all the truth; Sen. Levin and the OECD bureaucrats want to round up the runaway tax slaves and send them back to their masters. A scorching assessment.

Here is the official Treasury version of O’NEILL’s words.

U.S. OFFSHORE TAX SHELTER VETOED

WASHINGTON. An offshore tax shelter used by wealthy Americans and corporations to avoid capital gains taxes by using foreign investment rules is shut down by the US Treasury.

NEVER PAY CASH FOR U.S. TRAVEL

A chilling account of how US airline and Amtrak train employees get DEA forfeiture awards by accusing travelers who pay with cash. Read this and act accordingly.

KILL ALL THE LAWYERS?

The American Bar Association is considering loosening the strict rules that protect lawyer-client confidentiality, placing possible limits on secrets lawyers must keep on behalf of their clients.

INSIDE THE N.S.A.

A lengthy, inside look at the US National Security Agency, home of the infamous Echelon electronic spy network.

FBI CYBER SPYING ATTACKED

The son of a jailed Mafia crime boss was the target of an FBI operation that allowed it to record every keystroke he made on his computer.

BIG BROTHER’S EYES

Surveillance cameras are more powerful and ubiquitous. Increasingly we are all being monitored remotely by police.