The tax structure applicable to foreigners in the United States of America has been specifically designed to reduce the ability of individuals to operate outside the jurisdiction of the IRS. In foreign countries, tax authorities often lack the ability to enforce tax laws as effectively as the IRS. Hence, many foreigners who obtain residency in the USA underestimate the powers of tax authorities in America. Unlike foreign countries where wealthy individuals can bypass tax rules, tax laws are implemented very rigidly in the USA.
Another aspect of tax compliance in the USA involves submission of details of foreign bank accounts held by the resident. All citizens and permanent residents of the USA must provide complete details of their foreign investment accounts.
Many foreign investors that seek to immigrate to the USA through the EB5 visa come from countries where governments and tax authorities do not evoke a lot of trust and compliance. Except for disclosure of financial information to a very small and trusted group of advisers, such individuals rarely feel the necessity to share financial information with any other government authority or entity. It would not be incorrect to assume that many foreign investors may not be fully in compliance with tax laws of their home countries.
After becoming a resident of the USA, such immigrants will be required to provide information about all of their cash and assets held in tax haven countries like Switzerland, Panama, or the Cayman Islands. Almost all tax haven countries have tax information treaties with the USA, and have signed the FATCA as well.
If it is proven that an immigrant has a wilful intent to disregard tax laws in the USA, the IRS may opt for criminal prosecution over and above the civil penalties imposed under the law. An individual applying for an EB-5 visa must consider this factor before making a final decision to establish residence in the United States.
