Report or not, business entirely outside the US

[Mani]

American living in Thailand (for 10 years uninterrupted) here. I am thinking of taking my remote fix and flip (real estate) skills to South Africa. It has a mutual legal assistance treaty with America.

If I moved $250k out of the US for seed funding, to either Thailand or South Africa, and that business started to thrive... how do you guys feel about not reporting it to anyone outside South Africa? Fix and flip is basically income, and please lets not get started on holding property as a rental (not worth it IMO). If unreported there's no tax at least in USA, not sure about the South Africa situation. Of course legal risk substitutes. I would not withdraw from South Africa into USA, only to Thailand and then only for personal spending (I don't really move around).

PS: The US fix and flip business would continue. Output would take a hit due to the 250k working capital deduction for "owner discetionary earnings." But we have been growing rapidly so year over year it would actually still look stable

 

[daniels27]

What kind of question is this? If course there is no tax if unreported. That's why it is called tax evasion. How do we know how good they are to chase you down in South Africa? Just pay it or get rid of you passport.

 

[Mani]

I figure I'm not the only one to think through the implications while continuing to hold US citizenship.

The question is not about taxation on the US side. It's more about how others perceive the risks of not reporting.

 

[saintjohnny]

They will get you eventually... Or they won't?

The only valid answer is that if you're a real business person... you should always stay compliant with your tax responsibilities whatever they might be. If you don't like being taxed on your worldwide income regardless of your residence, then give up your American citizenship and live your life worry-free.

Tax evasion is dumb and unprofessional.

 

[blancmon229]

I figure I'm not the only one to think through the implications while continuing to hold US citizenship.

The question is not about taxation on the US side. It's more about how others perceive the risks of not reporting.

The risk is always there because you have to assume they will find out. Almost every country and bank has some sort of information exchange agreement with the US. If the IRS has a database like the HMRC does which uses AI to link transactions, then you don't want to deal with the consequences of not reporting. Even moving 250k out of the US to feed your foreign business needs to be reported on US taxes. On top of this I am guessing you have foreign bank accounts, which know you are an American. . Even if you used a foreign passport to open those accounts, your POB if in the US will always be listed as the POB. So they know you are American no matter what unless you give then a renounciation certificate. Failing to file FBAR and other reporting forms, will have a hefty fine.

The US is also one of the few countries that considers a tax or reporting liability a criminal offense and will use the DOJ or other government bodies to prosecute you internationally. I have not heard of a country that does that as tax is more of a local and civil matter in most countries.

My advice to you is you haven't lived in the US for 10 years then there really is no point of the passport as it carries a lot of backage with it. I knew a handful of people who renonunced simply because the reporting requirements was just not manageable while living overseas and accounting costs were way too high for complicated hundred page tax returns.

If you have another citizenship, then renounce the US one and live freely. Life is much simpler not being an American.

 

[daniels27]

Again, you question sucks. The US have a solid track record of finding dudes like you. Be it through UBS out Credit Suisse, they hadn't been found.

Another dude travelled to places like Iran and was not reporting it and went into the US with ESTA. Some years later, the US got hold of passengers data from the airline and he is now banned from entry.

It really is not worth risking it. Just think of one contractor using Gmail and you data is public to the IRS. You really cannot escape.

 

[Mani]

The risk is always there because you have to assume they will find out. Almost every country and bank has some sort of information exchange agreement with the US. If the IRS has a database like the HMRC does which uses AI to link transactions, then you don't want to deal with the consequences of not reporting. Even moving 250k out of the US to feed your foreign business needs to be reported on US taxes. On top of this I am guessing you have foreign bank accounts, which know you are an American. . Even if you used a foreign passport to open those accounts, your POB if in the US will always be listed as the POB. So they know you are American no matter what unless you give then a renounciation certificate. Failing to file FBAR and other reporting forms, will have a hefty fine.

The US is also one of the few countries that considers a tax or reporting liability a criminal offense and will use the DOJ or other government bodies to prosecute you internationally. I have not heard of a country that does that as tax is more of a local and civil matter in most countries.

My advice to you is you haven't lived in the US for 10 years then there really is no point of the passport as it carries a lot of backage with it. I knew a handful of people who renonunced simply because the reporting requirements was just not manageable while living overseas and accounting costs were way too high for complicated hundred page tax returns.

If you have another citizenship, then renounce the US one and live freely. Life is much simpler not being an American.

I'd pay the tax before renouncing, it's a big deal to lose citizenship in a country where you invest and have a big professional network. The paperwork might even change for foreigners. Getting loans is probably tougher etc.

 

[daniels27]

I'd pay the tax before renouncing, it's a big deal to lose citizenship in a country where you invest and have a big professional network. The paperwork might even change for foreigners. Getting loans is probably tougher etc.

What you mean by tougher. It is much, much more difficult. Better to open all credit cards you want before. Also, make sure to get a driving licence from a state that allows you to keep it.

Alternatively, get a hot chick you can trust and open the company in her name.

 

[blancmon229]

Alternatively, get a hot chick you can trust and open the company in her name.

Good luck with that in the US. American chicks will sell you out in a second