Monday, August 31, 2009

Border Visa Processing: Practical Benefits Diminished

Earlier this year I had the privilege of co-authoring ILW.COM's 2009-2010 Edition of The Consular Posts Book, edited by Rami Fakhoury.  Actually, "co-authoring" is a bit grandiose and exaggerated: I wrote the section on visa processing in Port Au Prince, Haiti.  Still, it had been awhile since anything I'd written made it beyond the digital domain, so it was kind of cool when I received the book in the mail this past June.

To my surprise - and I can only imagine what Rami and staff went through trying to get dozens of lawyers to actually meet authorship deadlines - the new handbook did not contain any information on visa processing in Mexico.  While some more esoteric posts made the list (Armenia and Vietnam, for example), our neighbor to the south went unmentioned, a true reflection of the continuing diminution of border visa processing as a lost art form.

Back in the early 90s when Danny was a newborn and I was tooling around in my 10 year old Chrysler K car convertible, consular processing -- especially in Mexico -- was the bread and butter of my fledgling law practice.  Once a month I turned mother duck and gathered the Indian, Chinese, Filipino, and African clients of my AILA brethren under my wings and flew to El Paso, Texas, via Dallas, for what was more often than not a hair-raising 48 hours.

Back then, border posts like Juarez would entertain all visa applications from those present in the consular district (i.e., anyone who crossed the border from the U.S.) so a lot of folks who either had "issues" or who were terrified of getting stuck in their home country would pay me to bring them to Juarez with their I-797 approvals and get their new visa stamps issued.  We'd fly into El Paso on Thursday, I'd meet with them one on one for last minute issue review, and before dawn we'd be on the van crossing the border.

Why, you might ask, would people go through this?  One simple answer: reentry.  Under bilateral border policies, Mexico didn't want to be stuck with visa applicants from third countries who'd been denied their visa application at a border post.  That meant that if a person crossed into Mexico with a valid I-94, they could reenter the U.S. even though their visa stamp had been denied at the U.S. consulate in Mexico.  That's a big insurance policy for those concerned.

The whole thing worked well but surprises were common, particularly when clients would "forget" to tell me about "issues", such as a denial in their home country.  By the time I decided that I was tired of  the monthly trips and passed them on to my associate, I'd done about 250 visas in Juarez, all approved, but all nail-biters given the realities of client expectations and consular absolutism.

These days, consular processing in border posts such as Juarez serves basically as simple tool for those without issues: the visa examiners will gladly renew a visa stamp in the existing category, but don't ask them for a change of category because they won't do it.  And while border policies regarding re-entry after visa denial are anything but clear, the demand for this "Insurance" has been significantly reduced through the new consulate polices.

Wednesday, August 19, 2009

UBS AG Coughs Up Names of U.S. Account Holders

So much for banking privacy at UBS: pursuant to terms of the Swiss-USG tax-evasion overhaul/settlement, the Wall Street Journal reported today that UBS AG will be handing over some 4,450 names of U.S. account holders.  Both governements had cut the deal with UBS last week but the final settlement terms were not disclosed publicly till this morning.

It probably gives investors little solace that, according to the WSJ, that UBS will most likely not pay any fines as part of the deal.

While everyone agrees that tax "evasion" schemes are illegal, as someone who has been involved in international business for a very long time I know all too well that in the zeal for prosecutable examples, governments will too hastily label a legitimate tax-planning vehicle as "evasion"...almost always later losing in court.

I am uncomfortable with both the terms of the settlement AND with the fact that it was brokered/forced by bilateral partners as powerful as Switzerland and the U.S.  The bottom line is that, for all intents and purposes,  UBS AG was a voiceless participant in what were essentially bilateral negotiations between two very strong sovereign nations in search of a mutually beneficial and politically expedient resolution.  In fact, if the Swiss-U.S. participants in the settlement had ordered UBS AG execs to wear chicken costumes, there'd feathers-aplenty in Zurich right now.

The settlement, to me, smacks of the kind of political maneuvering so often seen in troubled third world nations, when the U.N. and several sovereigns - invariably the U.S. - dictate a truce, a land redistribution, etc. - under polically expedient terms...which have little relationship to the real-world dynamics at hand and which - invariably - fail.

Hence Darfur.

My personal opinion: UBS AG offered one thing and one thing only to their clients: absolute, bullet-proof bank secrecy.  Neither the threat of penal sanctions against the bank nor of arrest of its leaders should have led UBS AG to betray these initial 4,450 customers (regardless of their saintliness or lack thereof.)  Remember, folks, we are talking at worst about sleazy tax evaders, not public threats to the welfare of the U.S.  Subpoenas are issued judiciously to insure privacy; not so with bilateral tete-a-tetes designed for political expediency while running recklessly over the individual privacy rights of Americans.

Privacy laws in the U.S. have been and continue to be decimated, but can be challenged by a magnificent Constitution which ultimately protects fundamental rights.  In the international arena, no such protections exist, and while one may not be sympathetic to U.S. tax-evaders, any Guantanameque move which treats fundamental fairness and rights as dispensible in the name of "tax enforcement" is fundamentally flawed.

It's Official: USG Crackdown on Employers, I-9 Compliance

The Wall Street Journal reported yesterday that Obama's new chief of U.S. Immigration and Customs Enforcement (ICE) has announced an intensified crackdown on U.S. employers who hire unauthorized workers.  John Morton, new head of ICE (which is part of the Department of Homeland Security) told the Journal that the agency  is "set to increase the number of companies it will audit and systematically impose fines on violators."  He added that these violations -- as most of my regular readers well know -- can also lead to criminal charges.

Folks, I am feeling less and less like Chicken LIttle and more and more like Nostradamus.  I am not going to bore you by yet AGAIN quoting myself from blogs I've written since President Obama was elected, but, frankly, the accuracy of my predictions and timing is downright creepy at this point.

The last volley on this subject came at the beginning of July when  Homeland Security Secretary Janet Napolitano announced what many of us have been expecting: the launch of audits of employers to verify whether their employees were eligible to
work. Mr. Morton now added, according to the WSJ,  that 654 companies are currently being audited
and that many more employers will be notified soon that they also will
be under scrutiny by the government
.  He was quoted as follows:

are going to see audits regularly and on a larger scale...You will see the resuscitation
of...civil fines."

The WSJ succinctly summarized the bottom line for lay readers:

"As part of the audit, immigration agents review the I-9 forms and
other records of a company. If agents conclude that a business
knowingly hired illegal workers, criminal investigations follow...Fines for companies found to employ workers in the country illegally
could exceed $800 per employee.[emphasis added].

The WSJ further came to the same conclusion I did late last year:

"The Obama administration has made employers the cornerstone of its
immigration policy. "If we are going to have serious change, we must
make sure the employer community is complying with the law," said Mr.
Morton, referring to employers as the magnet that attracts thousands of
illegal workers to the U.S. each year."

Please do your company a favor and read last month's article foreshadowing this grim new policy announcement so you can get internal corporate leadership to understand that an internal audit is not just an "insurance policy" but, rather, a preemptive tactical strategy through which your company can seize market share when your competition crashes and burns via federal enforcement.

Immigration Crackdown Shifts Focus to Employers

Folks, it is time to stop dilly-dallying and conduct those internal audits!  Please contact me for further information on our turnkey I-9 Internal Audit services featuring the best compliance software around, I-9 Advantage.


Thursday, August 6, 2009

Nostradamus Strikes Again

NOTE: The sole purpose of today's blog is so that I can brag about my foresight, so skip it unless you are curious...

I wrote this last November, when the surreal specter of propping up the private auto sector had reached a frenzy.  My point was simple: let the consumers get the money and decide.  While the $4500 "Cash for Clunkers" credit is far more generous than the modest $625 I proposed in my hypothetical, and while the ability to buy new foreign cars was more than I'd proposed, it is SOOOOO nice to see an administration in office which thinks rationally.  What I wrote then:

This one is simple, though the relevance to immigration is, uh, vague:

-The government is giving the auto industry $25 billion dollars
-There are about 200 million drivers in the U.S.
-That breaks down to $125 per driver
-Let's hypothesize that a driver buys a new car every 5 years and forget that many drivers do not own cars
-Multiply $125 by 5 = $625

of giving the cash to a failing industry, lets offer $625 vouchers
available on a first come first serve basis, with a six month
expiration, only valid for U.S. manufactured vehicles.  The consumer
cuts his/her best deal without divulging the voucher and when they are
ready to sign, the voucher goes to the dealer.

This not only gets
the money in the hands of the consumers, it stimulates demand AND
allows free market dynamics, i.e., the money ends up in the hands of
the U.S. companies which are most attractive to U.S. consumers.

Guys, this isn't that hard! (-:  Jose

Wednesday, August 5, 2009

How To Play Offshore Legally

One of the funny things about discussing offshore investment is that we forget a very basic fact: not ALL Americans who invest offshore are up to shenanigans.  Some U.S. citizens (and foreign nationals who are U.S. tax residents and, accordingly,  taxable worldwide) in fact, make a great business of offshore investing...and the IRS doesn't blink an eye.

I had an interesting chat with Fernando today regarding this and, as usual, his explanation was very enlightening.. (Fernando Reategui, for those of you who don't know, is the Managing Director of Private Client Insurance Advisors, LLC, my business colleague, office partner, and very dear friend.)  I am currently looking at innovative tax planning structures for some high net worth individuals who have come my way, some of them via immigration, some of them via other channels.  I had long ago come to the semi-conclusion that except for the additional "bulletproofing" provided by using an offshore trust to insulate U.S. taxpayers from litigation and claims, it was pretty much impossible to legally do business offshore, comply with U.S. tax laws, and still make a buck.  Not worth the hassle, or so I thought.

Turns out this isn't so. Since the subject is pretty complicated, I'll give you the two key bullet points which, to me, were the most illuminating:

-A U.S. taxpayer may want to go offshore with his or her investments for the most basic of reasons: investment expertise.  Fernando cited soveriegn bonds as an example: most U.S. investors do not have bonds issued by sovereign nations anywhere in their portfolio, and it is pretty much impossible to find a U.S. investment advisor with meaningful expertise in this area.  A U.S. investor interested in these vehicles would do far batter to channel his investments via an offshore advisor who DOES know this product.  The same logic applies to a number of other securities which are not traded in volume in the U.S.

-Going offshore doesn't necessarily mean going too far: consider Puerto Rico.  Did you know (I certainly didn't) that investing through a Puerto Rican agent who is dealing with foreign securities does NOT require the filing of an FBAR?  Turns out Puerto Rico is exempted.  (Before you scoff and say "well, what's the point of Puerto Rico, that's really the U.S., think again: having lived in the U.S. Virgin Islands and having had foreign clients with a lot of activity in the BVI's, I can tell you that Puerto Rican investment managers are key players in managing traditional tax haven investments in the Caribbean.  They may be in Puerto Rico but their investment management is much more globalized than that of most U.S. brokerages.)

Fernando works with this information daily as he develops tax solutions for high net worth inviduals using everything from trusts to complex private placement insurance structures.  If you or a client is looking to diversify their portfolio or trust corpus and interested in global markets yet very wary of stepping on IRS toes, drop me an email.

Tuesday, August 4, 2009

The Kidney Pie Test?

Monday's new rules affecting would-be immigrants to the United Kingdom has been met with both praise and anger: praise from the large sector of the population which believes that government has done little to mitigate illegal migration; anger from immigrant and other groups which say the new rules will make it more difficult for talented migrants to move to the U.K.

The Home Office has been under the gun for several years because of the heavy influx of African and Asian immigrants, and announced the new rules as part of the most significant changes to UK immigration regulations in the past half century. The new system assigns scores under various categories, and all inbound workers, students, or those migrating permanently to the UK must meet thresholds or be rejected admission. 

While similar point-based systems are utilized in many countries - arguably, the qualifying criteria for many U.S. employment based categories involves an unspecified defacto enumeration of "points" without which a person cannot qualify.  What is sufficient work experience in a given field to one USCIS adjudicator may not be enough for another, and in that discretion lies the potential for abuse.

While the popular response has been generally supportive, the UK is seeing its business community respond much as the U.S. business community has reacted in the past to everything from Sen. Alan Simpson's declared war on the H-1B visa he sought to eliminate to numerical limitations which have prompted companies such as Microsoft to move planned expansions across the border to Canada.  Because the UK has a number of pragmatic, lesser-skilled visa categories, it isn't just the IT, banking, and technology sectors complaining; the hospitality industry is outraged as well.  That would be because said industry in the U.K. does not, like its brethren sector in the U.S., operate under a tacit understanding that since suitable temporary visas don't exist for food service workers in the U.S., reliance on illegal workers here is as ubiquitous as it is strategically avoided.

The system both gives points to aliens whose contributions to the UK would be beneficial AND discounts points for negative things, such as "antisocial" behavior, suggesting that yours truly would at times be most unwelcomed by Her Majesty.  But my absolute favorite point-reducer:

"Displaying disregard for British values"

If that means passing the Kidney Pie Test, they might as well have slammed the door shut...(-;