Simply opening an offshore bank account in Oklahoma is not illegal. However, by the same token, it is not tax-exempt either. If your reasons for investing in an offshore account are legitimate, you can do so without worry.
Consequences of opening an offshore account
Investing in an offshore account becomes illegal when someone does so to evade taxes. Some people use offshore accounts for illegal activities, such as money laundering and to take proceeds from illicit funds. These illegal activities are estimated to make up approximately 2% of the U.S. economy, which comes out to about $300 billion annually, according to 2018 statistics. You need to report your financial activities to the IRS. Otherwise, you may face fines for tax evasion.
What are some tax evasion methods?
Hiding income in an offshore account is only one of several methods of tax evasion. These forms include investing in foreign trusts, captive insurance companies, private banking, international business companies and offshore private annuities. Offshore tax shelters allow taxpayers to defer taxation on investments for many years due to legal loopholes. Some individuals use these tax evasion methods as an investment strategy to dodge certain tax liabilities instead of paying income tax on an investment for a given year. Instead of paying the money that they have earned, instead, some people pay part of the taxable income on the money that has been withdrawn. Tax evasion disincentives workers who have paid their taxes fully and fairly by allowing corporations to pay less through these tax evasion methods.
If you feel as though an employer is hiding taxable income through an offshore account, talk to a white-collar crimes attorney for further help.