Thursday, June 19, 2014

Important Offshore Tax Update from Cantor & Webb

Steve Cantor of Cantor & Webb just sent me an important notice I need to share with you.  Steve is an old friend and among the best international tax experts in the U.S.

I'm pasting his message in below, but here's who needs to read this carefully!:

  1. U.S. tax residents abroad -- meaning anyone who is a U.S. citizen or permanent resident -- who lives and works overseas and has not reported foreign income or assets as required by the IRS AND
  2. U.S. tax residents in the U.S. -- meaning not only citizens and residents but even a TOURIST whose physical presence in the U.S. has been sufficient under IRS definitions to render their assets on a worldwide basis.
Whether you are one or the other, it looks like Uncle Sam is giving you a tax Mulligan, as in a "get out of jail free" card, provided you act now.  Bank KYC ("know your client") regulations, the Patriot Act, and all of the post-September-11th legislation has taken international cooperation on finding the hidden foreign assets of U.S. persons to a whole new level guys.  If you are one of the above, read the below and contact Steve or Hal Webb at Cantor & Webb and tell them Jose Latour sent you for your confessional....(-;


Dear Clients and Friends:

We share with you the announcement made by the IRS regarding important changes to the Offshore Voluntary Compliance Programs and Streamlined Procedures. This will provide new options to help both taxpayers residing overseas and those residing in the United States.

Please feel free to contact us should we be of service in assisting you determine how this may impact upon you.

Best regards,

Cantor & Webb   

IR-2014-73, June 18, 2014 

WASHINGTON – The Internal Revenue Service announced today major changes in its offshore voluntary compliance programs, providing new options to help both taxpayers residing overseas and those residing in the United States. The changes are anticipated to provide thousands of people a new avenue to come into compliance with their U.S. tax obligations.

The changes include an expansion of the streamlined filing compliance procedures announced in 2012 and important modifications to the 2012 Offshore Voluntary Disclosure Program (OVDP). The expanded streamlined procedures are intended for U.S. taxpayers whose failure to disclose their offshore assets was non-willful.

“This opens a new pathway for people with offshore assets to come into tax compliance,” said IRS Commissioner John Koskinen. “The new versions of our offshore programs reflect a carefully balanced approach to ensure everyone pays their fair share of taxes owed. Through the changes we are announcing today, we provide additional flexibility in key respects while maintaining the central components of our voluntary programs.”

Balanced against the modified programs is the government’s ongoing effort to combat the misuse of offshore assets. The IRS, working closely with the U.S. Department of Justice, continues to investigate foreign financial institutions that may have assisted U.S. taxpayers in avoiding their tax filing and payment obligations. In addition, on July 1, the new information reporting regime resulting from the Foreign Account Tax Compliance Act (FATCA) will go into effect. Thousands of foreign financial institutions will begin to report to the IRS the foreign accounts held by U.S. persons.   

The current Offshore Voluntary Disclosure Program was launched in 2012 and is the successor to prior voluntary programs offered in 2011 and 2009. Since the launch of the first program, more than 45,000 taxpayers have come into compliance voluntarily, paying about $6.5 billion in taxes, interest and penalties.

The expansion of the streamlined procedures and modifications to OVDP reflect the thoughtful input of the tax community given the growing awareness among U.S. taxpayers of their offshore tax obligations.

“Through our enforcement efforts and implementation of FATCA, taxpayers are more aware of their obligations, and we believe want to come into compliance,” Koskinen said. “In this rapidly changing environment, we listened to feedback from the tax community as well as the National Taxpayer Advocate about our voluntary programs. We have made important adjustments to provide opportunities for all U.S. taxpayers to come in, including those who are not willfully hiding assets.”

Streamlined Procedures Expanded

The changes announced today make key expansions in the streamlined procedures to accommodate a wider group of U.S. taxpayers who have unreported foreign financial accounts.

The original streamlined procedures announced in 2012 were available only to non-resident, non-filers. Taxpayer submissions were subject to different degrees of review based on the amount of the tax due and the taxpayer’s response to a “risk” questionnaire.

The expanded streamlined procedures are available to a wider population of U.S. taxpayers living outside the country and, for the first time, to certain U.S. taxpayers residing in the United States. The changes include: 

·        Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year; 
·        Eliminating the required risk questionnaire;
·        Requiring the taxpayer to certify that previous failures to comply were due to non-willful conduct.

For eligible U.S. taxpayers residing outside the United States, all penalties will be waived. For eligible U.S. taxpayers residing in the United States, the only penalty will be a miscellaneous offshore penalty equal to 5 percent of the foreign financial assets that gave rise to the tax compliance issue. 

Offshore Voluntary Disclosure Program (OVDP) Modified
The changes announced today also make important modifications to the OVDP. The changes include: 
·        Requiring additional information from taxpayers applying to the program;
·        Eliminating the existing reduced penalty percentage for certain non-willful taxpayers in light of the expansion of the streamlined procedures;
·        Requiring taxpayers to submit all account statements and pay the offshore penalty at the time of the OVDP application;
·        Enabling taxpayers to submit voluminous records electronically rather than on paper;
·        Increasing the offshore penalty percentage (from 27.5% to 50%) if, before the taxpayer’s OVDP pre-clearance request is submitted, it becomes public that a financial institution where the taxpayer holds an account or another party facilitating the taxpayer’s offshore arrangement is under investigation by the IRS or Department of Justice.

Full details of the changes to both the streamlined procedures and OVDP can be found here (link to 

Saturday, March 29, 2014

SEC Scrutiny of EB-5: Proactivity by the Commission Continues

The SEC's first truly proactive enforcement effort against an EB-5 project began a little over a year ago (February 6, 2013) when the Commission sought and obtained a temporary restraining order and asset freeze against Anshoo R. Sethi, A Chicago Convention Center, LLC (ACCC) and Intercontinental Regional Center Trust of Chicago, LLC (IRCTC) for their roles in raising approximately $158 million dollars from close to 300 EB-5 investors as part of a fraudulent offering. On April 19, 2013, the Court granted the Commission's motion to return to investors the entire $147 million of principal that had been frozen pursuant to the SEC's motions.  The only remaining dispute involved some $11 million in "administrative fees" paid by the investors, which were the only funds remaining to be returned in order to make the investors whole.

That got resolved two weeks ago: on March 17, 2014, the U.S. District Court entered judgment against the defendants.  The Final Judgment establishes, among other punishments, joint-and-several liability among the defendants for over $11.5 million in disgorgement and prejudgment interest and an order enjoining and restraining defendants for twenty years from offering or selling securities issued by any of the defendants or issued by any entity owned or controlled by Sethi, and the forced dissolution of the entities in question.  For a full breakdown of the enforcement actions, see the SEC's press release:

SEC Obtains Settlements in $150 Million EB-5 Immigrant Investor Offering Fraud

As my good friend Sam Udani put in ILW's Immigration Daily blog yesterday, "the SEC is on the prowl" they SHOULD be!   This is an excerpt from Sam's comments yesterday:
"Immigration Daily has learned that over the last couple of months the SEC has served subpoenas on 8 Regional Centers represented (separately of course) by 3 law firms. From the pattern of information that Immigration Daily has gleaned it appears that the SEC effort started in Q4 2013, when it received information (thru subpoena or otherwise) from financial institutions involved in EB5. The effort is not based in one particular SEC office, multiple SEC offices are involved. This may not be a one-time effort, since the subpoenas were sent out many weeks apart. So far, the RCs involved are small-to-mid-sized. Our calls to attorneys representing several of the top 10 RCs indicate that none of them has yet received a SEC subpoena.

Our best guess is that this is an effort by the SEC to educate itself on EB5 matters, and that more subpoenas will likely show up during Q2, 2014. On balance, Immigration Daily welcomes increased scrutiny by SEC into EB5 matters. Perhaps this scrutiny will focus on two major irregularities in EB5 custom as follows:
  • Most of the larger Chinese agents maintain offices in the USA, without appropriate licensure
  • In many cases, insufficient disclosures are made to Chinese investors as to intermediary fees paid by RCs to Chinese agent"
That is EXACTLY correct.  Over the past three years and my dozens of trips to East Asia, I have witnessed what I can only describe as a pandemic of hype-driven EB-5 marketing, particularly in China, which operates not only in flagrant disregard of both U.S. and local securities laws, but in flagrant disregard of fundamental principles of fair dealing and business integrity.   Many - not all but many - Chinese migration agents base their forceful "buy" recommendations not on the underlying integrity of the EB-5 project and its principals but on the size of the "success" fee offered.   Among the most dishonest agencies, the modus operandus is even simpler:  ad blitzes in secondary markets followed by hard sales pitches result in dozens of investors escrowing with the agent...who then negotiate under-the-table kickbacks with EB-5 projects for the bulk delivery of investors. And when the U.S. project is questioned about these tactics, the response is always the same:  "Hey, I can't control what the Chinese agents say!"  Sure you can't...

How do I know all this?  Because these issues are what those of us who are working very hard to comply with U.S. securities laws both inside and outside the U.S. face in overseas markets face on a daily basis.  As we painstakingly cultivate the foreign professional relationships through which bona fide, accredited prospective EB-5 investors may be able to find their way to Lake Point EB-5, the city buses roll by with giant EB-5 megaproject ads plastered on the's THAT flagrant, folks.

While AILA members fret at this increased involvement by SEC, Sam and I agree: if the securities fraud isn't aggressively contained by the SEC, EB-5 will go the way of the Canadian immigrant investor program, with the government concluding that the endeavor, in light of the reality, is not even worth the effort.

Thursday, February 13, 2014

Lake Point EB-5 Sees 1st Six Month I-526 Approval!

Congratulations to our newest Lake Point Capital Partners EB-5 investor from Vietnam, whose I-526 was approved by USCIS in a blazing six months (no RFE, of course.)  USCIS EB-5 team: you rock and we are very grateful for your efforts, aware as we are of the extraordinary workload pressures you continue to face.

Late last summer, when our first I-526 petition was finally approved after languishing at USCIS for over 18 months, "jubilation" hardly begins to express what we felt here at Team Lake Point.  I can only imagine what those first approvals felt like for our pioneer Limited Partners, who patiently watched 8 months turn to 12 turn to about blind faith!  These days, it seems a new Lake Point EB-5 approval arrives almost weekly, but it never gets old nor is the joy diminished.  As we approach the end of the offering, Lake Point's comparatively small $20 million/ 40 EB-5 investor project has proven itself as "the little engine that could".   No ad budgets, no direct marketing, no solicitation...just many thousands of miles of travel and many hours earning the trust of professional advisors worldwide whose clients were carefully considering a future in America.  (I know this may not be the most efficient way to find EB-5 investors, but being SEC-compliant makes for a better night's sleep!)

As we wind things up with the last EB-5 investors in Lake Point Capital Partners, the diverse nationalities of our EB-5 Limited Partners are reflective of the international appeal of our first EB-5 venture.  Lake Point's approved investors so far hail predominantly from Vietnam (where we may be -- we're not certain -- the top-selling EB-5 offering with the most approved I-526s),  but the rest hail from diverse parts ranging from Eastern Europe to Latin America to the Middle East.   Perhaps more interesting than the diverse nationalities is the fact that our investors are coming to us entirely via face-to-face meetings, long dialogues, and extensive due diligence on their part.  We've all heard the stories: dozens of EB-5 investors, checks in hand, systematically herded into a room to sign up for an EB-5 offering cherry-picked by a migration agent NOT for its viability but, rather, for its commission schedule.  I am happy to say that Lake Point's EB-5 Limited Partners are cut from a very different mold, and they come to us with a healthy skepticism born through decades of hard work and tenacity in their respective fields...folks who don't need someone else to tell them where to invest.  Perhaps the stories behind the success of Lake Point's General Partners and our distinction of being the only Forbes 400 owned and operated EB-5 Regional Center best explains why, so far, ALL of our investors have extraordinary stories of hard work behind their trust-fund babies so far at Lake Point...although we'd certainly welcome properly qualified ones! (-:)

In any event, today's I-526 approval sets a new threshold for speedy I-526 adjudication and is a welcome send-off as I depart for a much needed vacation.  But I'll be back in the saddle in about a week, and in March Jud and I head back to beautiful Saigon for what will hopefully be our final round of meetings for Lake Point Capital Partners EB-5.  In the meantime, if you have a qualified client still mulling over their EB-5 options, give Bianca Saltz a call at 786-866-9775 to learn more about Lake Point EB-5.

The Year of the Horse is off with a gallup!  Tally Ho!

Wednesday, February 12, 2014

Canada Kills Immigrant Investor Program, Refunding Pending Cases

It looks like the U.S. EB-5 Program is getting an unintentional boost from our neighbors to the North: Canada has just announced that it is ending its Investor Visa program, which has been extremely popular in China and proved an insurmountable adversary to the more encumbered, complex EB-5 investor visa offered by the United States.  Calling the program a failure, Canada announced the closure of the program without much fanfare, stating as follows:
"To eliminate the existing backlog, which is diverting resources away from better performing economic immigration streams, the Government intends to return applications and refund associated fees paid by certain federal Immigrant Investor Program and Entrepreneur Program applicants..."
According to our Asia teams, this will represent a flood of refunds in mainland China and other East Asian nations.   Canada's immigrant investor program, along with that of Australia, have both been far more popular than the U.S. EB-5 program at an international level for a number of reasons, not the least of which is that the U.S. program requires an "at risk" investment while the others assure that if a person invests, they WILL get residency, irrespective of any business success metrics.  But there are other reasons which suggest this latest decision on Canada's part will push more investors towards the U.S. and EB-5: recent media coverage in both Australia and Canada have focused on an increasing distaste for migration, particularly from China.  While the issue certainly does not smack of the violent xenophobia witnessed in recent years in Europe (esp. Germany and Greece), it is clear that both Australia and Canada have put away the welcome mat for foreign investors.

How will this impact U.S. EB-5?  Hard to say, but given the continued flagrant violation of U.S. securities regulations by most Chinese migration agents and by many U.S. project promoters, EB-5 is hardly treated with trust in China.  I expect that those projects with a legacy of integrity, whether large or small, will continue to draw investors from China at a strong rate.  But the big winners could the passport programs from St. Kitts or the very popular Portuguese and Greek residency programs currently in the market.

If you were planning on Canadian direct investment or will be affected by the closure of the program, write me and I'll be happy to chat with you and help you find the best option for your particular situation.  While we continue to market the final stage of the Lake Point EB-5 project, I will never recommend anything which is not in a client's best interest and the fact remains that for very high net worth individuals, U.S. residency is NOT the best option. 

Here is the full article on Canada's decision to end their immigrant investor program:
Canada Ends Investor Visa Program

Friday, January 24, 2014

Another Lake Point Investor EB-5 Investor from Vietnam Approved

Although Lake Point's stream of steady I-526 approvals is established and is no longer a "news flash", seeing the dream of U.S. residency realized for each of our investors never gets old.  It is particularly gratifying when one of our Vietnamese investor petitions gets approved without any USCIS questions or queries, and this further cements our commitment to becoming Vietnam's most reliable and proven EB-5 offering.

As we place investors in the final slots of Lake Point Capital Partners, the second and final tranche of Lake Point EB-5, our "Asia only" family of limited partners is seeing an influx of investors from Latin America, specifically from Brazil and Mexico.  We are thrilled with the cross section of entrepreneurs, professionals, and legacy investors from around the world who have joined the Lake Point family and we are humbled by the trust you have placed in us.  Rest assured that our history of proactive communication, responsible stewardship of your investment dollars, and unbridled commitment to seeing your permanent residency realized continues to grow stronger every day.