11.5 Million Documents Leaked: The Crippling Panama Papers Transmuted Overnight From Privileged Attorney Information To Forever In The Hands of the Public And The Feared U.S. Treasury.
As you the Reader must suspect or know by now, this epic leak has attracted all the wrong attention and interest of governmental revenue departments around the world. The U.S. Treasury has made their intentions very clear, where its citizens are found to have been a part of tax evasion, the financial penalties will be destructive on one’s financial security of lifelong wealth accumulations. Although the investigations from these leaked documents will begin quietly and without any fanfare, a simple one page letter from the Large Audit and International Division will be just the beginning of a long, protracted and painful examination that will take years to complete, friends and family will get drawn into the examination now matter how much you and your attorney justly protest. Your employer will be issued summons for information about you, your responsibilities, any power you have with the employer such as signature authority, and employer bank records without you or your employer being able to file legal documents with the District Court to Quash the Summons.
Offshore Financial Centers number just under 100 and are judicially classified as “Tax Havens”. You may be surprised that Delaware, USA is also listed as a Tax Haven. With so many countries and even a U.S.A. state noted as Tax Havens, there are ample examples to analyze to prospectively expect what will become of the Panama Papers as well as the law firm located in Panama, Mossack Fonseca, which suffered the loss of such massive volumes of privilege and confidential papers. One can quickly recall the Cayman Island document leak just three years ago as well as the HSBC bank leak. What can we learn from these two most similar and recent leaks?
Entities and their Individuals named in the Panama Papers should definitely expect amplified scrutiny and investigations begin by the U.S. Treasury and other Governments’ Revenue Departments. You may not know that many countries have already begun their signaling of individuals that an examination has already commenced. Remember, even legitimate individuals named in these documents will be examined by the U.S. Treasury to determine if there is any fractional evidence of attempting to evade taxes. Again, individuals named in any of these 11.5 million documents will be or have already marked for extensive examination that will last several years, cost you tens of thousands of dollars in legal and accounting fees, and involve your employers, family members, neighbors, your accountants and your legal counsel that led up to having your name on any one of these documents! Also, information technology equipment, such as computers, laptops, and company servers will be examined. It is therefore advisable for any one doing business offshore to conduct a review of their affairs and have a strategy in place to deal with an investigation BEFORE the investigation begins. While there may be reasons to proactively engage with a regulatory body in advance of an investigation this should only be done by competent tax/legal counsel. Your counsel can determine the subject of inquiry, conduct a compliance audit, and also advise on any available legal remedies that may still be available; time is running out quickly if not already. Call us to discuss confidentially your particular situation.
Michael B. Nelson, Esq.