Products hawked by insurance companies can be made to function like banking or financial accounts, even when dressed in the guise of insurance. Accordingly, such products may be FBAR reportable and, because of the differences in tax treatment of insurance as compared with banking or financial accounts, may be used for U.S. tax evasion. Moreover, like bullshit tax shelters, they can appear in a blizzard of paper and words that makes it difficult to understanding exactly how it functions.
The Reuters report above indicates that the swisspartners indictment discussed recently (Swiss Non-Bank Enabler Enters NPA and Cooperates to Identify U.S. Persons (Federal Tax Crimes Blog 5/9/14), here) has insurance companies that played some role. Excerpts are:
Court papers and a Justice Department news release say that insurance company subsidiaries of Swisspartners based in the Cayman Islands and Liechtenstein were also parties to the non-prosecution agreement with U.S. authorities, suggesting U.S. investigators may also be looking at the role of foreign insurance companies in helping Americans to evade taxes.
The non-prosecution agreement (NPA) was entered into between the U.S. Attorney’s Office, on the one hand, and swisspartners Investment Network AG and the following three wholly-owned subsidiaries on the other: swisspartners Wealth Management AG, a Zurich-based company that establishes and manages entities such as foundations and trusts; swisspartners Insurance Co. SPC Ltd., a Cayman Islands-based life insurance carrier that offers life insurance and annuity products; and swisspartners Versicherung AG, a Liechtenstein-based insurance carrier that offers a variety of insurance and annuity products.