| Beware of Free
Offshore Tax Advice
of my extensive exposure on the Internet and various books or articles I've
written, I get a lot of phone calls or email from people who are seeking
free advice about taxes or asset protection.
Because I'm also a CPA who works as an international
tax consultant, I have no incentive to offer people free tax advice. In
fact, there is a huge disincentive because a person to whom I provide
free personal tax advice could sue me for allegedly causing him or her to lose
money. It's a lot like the problem of a doctor who provides free help to
someone who is injured, but the doctor isn't able to fix the problem and
gets sued for his trouble. Many states now protect doctors from being
sued for trying to help in such cases, but no such laws exist for those
who provide tax or financial advice.
obvious but overlooked fact is that when I spend time on the phone (or
via email) answering someone's questions without a fee, I am likely to
be losing time that I could be providing to a client who is willing to
pay for my advice.
Although I do provide free answers to a few questions each month through the free Jacobs Report,
I spend as much time as I need to review the law and other sources of
tax authority and my answers are limited to some very specific facts.
In addition, each answer is subject to a general disclaimer to
the effect that the information is not to be construed as personal
someone offers free personal advice, they have little or no motivation to seek
additional information that might be critical to determine if
a particular tax strategy is suitable for the taxpayer.
In many cases, people who are seeking free advice are simply shopping
for an advisor who agrees with a conclusion the taxpayer is
seeking. For example, a promoter has convinced them they can save
taxes with a "pure trust" and they are looking for a tax professional
who will agree with them. Other times, people tell me they just want a
quick answer to a simple question, but then they proceed to tell me
their life story and even get angry when I interrupt them.
you could find someone who would give you some free advice, it's not
always beneficial to you.
free advice is from someone who is not a tax professional, the risk
should be obvious that this person probably doesn't know enough about
the tax law. But even if the person does have a substantial knowledge of
the tax law, they also need to have an intimate familiarity about your
financial and tax circumstances. A tax strategy that is effective for
one taxpayer may be a disaster for another.
example, tax exempt bonds may sound like a good idea, but they can
backfire if you have any interest deductions or if you are receiving
social security benefits.
A taxpayer may conclude from some free advice that they can use a
foreign corporation to defer taxes on profits from an active business.
But when those profits are generated by an officer/director or major
shareholder within the U.S., the results will change.
mutual funds may seem like a simple way to defer taxes on investment
income, but the U.S. tax treatment of most foreign investment companies
can be extremely costly.
Virtually every tax avoidance device involves some suitability
issues that are unique to each taxpayer. It's not a good idea to use
someone else's medical prescription and it's also not a good idea to
use a tax avoidance device because some one else is using it.
benefit is there for a tax professional to spend the time to make a
diligent inquiry into the intimate details of your financial, family and
tax situation in order to give you proper advice -- without any
are very high that when someone offers to give you an hour or more of
free advice, they are trying to sell you on some kind of pre-packaged
tax arrangement that may or may not be suitable for you. When any
professional advisor is willing to give you a free hour (or more) of their time, they
are very likely to be expecting to sell something to at least one out of
five or ten prospects. In order to make up for that much lost time, they
must be able to generate a very high profit from the ones they do sell.
who offer pre-packaged off-the-shelf solutions to tax problems rarely
are concerned about whether you can really benefit from their product.
They just want to sell another one and move on to the next customer.
The Vernon Jacobs web site
includes more than 50
articles I have written about the U.S. tax treatment of foreign
investments or entities that are owned by U.S. persons. You are welcome
to read them and there is no charge. But if you call me to request
advice that is specific to you, I will ask you to pay for the
have a burning question about some
aspect of tax law and want some clarification, I offer phone
consultations about the law for $360 for up to an hour of time -- but I require a signed waiver of liability
for this type of service. If you need more extensive or personal
advice, we will need to establish a client
(C) Copyright, 2008,
Vernon K. Jacobs, All rights reserved