Offshore tax evasion is crime in several onshore countries and includes jail time so it should be avoided. On the other hand, offshore tax planning is NOT a crime.

What is the difference between tax planning and tax evasion? If you can answer "no" to each of the following questions then your tax plan is not tax evasion:

1. Did you do anything illegal as part of your tax plan?

2. Does your tax plan involve hiding money or information that if revealed would cause you to owe more taxes? (We are NOT implying that banking secrecy is tax evasion. Rather your plan cannot involve hiding money to avoid taxes.)

3. Is the only purpose of your tax plan to avoid paying taxes? (This a grey area that draconian tax agencies use to determine if you are into tax evasion territory. It is really an unfair rule because it involves the tax auditor making business judgements he/she is not qualified to make. To keep clear of this rule make sure what you do makes business sense and that you can clearly articulate the business reason for doing what you did.)

If you answered "yes" to any of the above questions, you are into tax evasion. Do NOT do tax evasion. It is far too easy to setup a legitimate tax plan that will reduce your taxes due.

Large corporations use offshore tax shelters all the time but they do it legally. If they brought a tax auditor in and showed them everything they did, if the auditor was honest, he would say everything is perfectly fine. That should also be your test. Ask yourself, if you brought an auditor in and showed them everything you did you reduce your tax load, would the auditor have to agree everything you did was legal and above board?

The best tax plans are created by restructuring your business affairs legally in such a way that the new structure is better from a business perspective. In other words, the new structure should give you business advantages as well as reduced taxes.

Doug writes for Offshore Legal covering information on offshore banking and offshore asset protection. Visit Offshore Legal to learn more about avoiding offshore tax evasion.

Offshore Call Center Outsourcing
There is no shortage of offshore call centers. India and the Philippines offshore call centers are rapidly becoming the two countries of choice for doing business with U.S. companies simply because of the language.The most recent concern has been a p...

Tax Evasion Penalties
Tax evasion is illegally avoiding paying taxes, failing to report, or reporting inaccurately. The most common one is failing to report cash income. The government imposes strict and serious penalties for tax evasion.Tax evasion is different from tax ...

Offshoring Management - Avoid Costly Process Deterioration When Managing Offshore Projects
If you are responsible for managing offshore projects, you should be aware that even when your initial offshore projects work well, problems can enter the picture over time. When your domestic team has a problem, someone from one cubicle can walk a...

2006 List of Tax Scams Released by IRS
Every year, the IRS issues a list of tax scams. The goal is to alert taxpayers to the lack of merit of certain strategies as well as letting everyone know the IRS will not accept them.2006 ScamsThe IRS has kicked out its annual list of highly dubious...

Offshore IT Outsourcing
IT (Internet Technology) companies from advanced countries are increasingly outsourcing their work to developing countries in Latin America, Africa, Asia and the Middle East. The main motive behind this outsourcing of IT work is to reduce the costs t...

IRS Tax Help
IRS tax help refers to the free tax help offered by IRS. It is considered as the easiest way to get tax help. Every tax year, Americans shell out $7.5 billion to get help from tax professionals to prepare their tax returns. IRS tax help is meant for ...

Foreign Bank Accounts, Offshore Bank Accounts, IRS and 5 Year Prison Term
The Tax Code Reads as Follows:Any United States person who has a financial interest in or signature authority, or other authority over any financial account(s) in a foreign country is required to file a Report of Foreign Bank and Financial Accounts (...

Save Budget On Offshore SEO
While planning your website promotion budget, consider entrusting site promotion to an offshore SEO. Why?First off, you dont have to share your data. Offshore SEOs are given facts and area to work in. They start link building and PR gaining, produce ...

Offshore Outsourcing
Offshore Outsourcing is one of the most popular practices in the IT industry today. More and more companies are realizing the importance of saving costs and resources. This has generated the culture of offshore outsourcing companies globally.India ha...

Offshore Project Management - What is Offshore Supplementary Project Management
When you offshore projects, one of the key people you will interface with are your first level leaders of the team offshore; this person may be called by various titles - tech lead, module lead or project manager; some times the module and tech leads...