"U.S. Persons" (citizens, residents, individuals, companies, etc.) are subject to taxation on their worldwide income. Income earned from a U.S. Person's efforts or investments anywhere in the world is included in their taxable income. Holding f unds in offshore banks or brokerage houses will not exempt them from this rule. The IRS has a special unit to enforce violations using what they call "Abusive Trusts.". Many offshore service providers, including uninformed foreign and American attorneys, accountants, company formation organizations and others propose "offshore plans" that amount to illegal tax evasion. Strategies can be done legally, so don't settle for less.

While the U.S. Tax Code still affords a number of substantial opportunities for advantageous tax planning, tax deferment, tax reduction and tax avoidance, such strategies should always be undertaken with the assistance of experienced professionals. Shortcuts can lead to serious problems with the U.S. authorities.

Strategies that are legal and provide the relief intended must be handled properly, with an eye on the laws of both the U.S. and the offshore jurisdictions involved. This will frequently involve a lawful recharacterization of the legal ownership of funds through a series of legitimate, arm's length, fair value transactions. Don't let anyone sell you a Shortcut.

If any service provider is telling you that the U.S. laws do not apply because of some secret constitutional loophole or suggest that their plan is so secret that you cannot be discovered... RUN, and don't look back. If it sounds too good to be true, it's probably not. Proper offshore planning involves a careful analysis and implementation, detailed documentation and hard work. It's harder for Americans, but it's worth it.