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Posted on March 22, 2007

International Money Transfer Tax Scam

I have recently received a number of calls from individuals asking for information about the legality of assisting foreign persons with the sale of product to U.S. customers. The offer is sometimes pitched that earnings can be generated from working at home.

The reason that the individuals call me is that the purported reason for needing the individuals’ assistance is the existence of an “international money transfer tax”. This tax is supposedly imposed on corporations at a rate of 25% and on individuals at a rate of 7%. The idea is that the individual will collect the money on behalf of the foreign entity, thereby reducing this tax by 18%. The individuals typically call me to ask if it is legal to enter into such an arrangement or whether it constitutes tax evasion.

To earn a fee, the “only” thing that the individual must do is collect funds from the foreign entity’s U.S. customers and remit those funds to the foreign entity. The individual retains 10% of the funds as their compensation. This sounds like a great deal. How could this be a scam if the individual never fronts any money? They will be receiving money rather than paying money.

Of course, the foreign entity needs your contact information so that they can reach you. This may include your name, address, phone number, and a few other miscellaneous items, but they explicitly state that they are not asking for any bank records, social security numbers, or other personal information.

There seem to be a number of variations on the scam. In one scenario the foreign entity offers product for sale on the Internet (e.g., eBay). The customer who wants to purchase the product will send funds to the individual who acts as an intermediary. The individual dutifully deducts his/her fee and sends the remaining funds to the foreign entity. When the customer does not receive any product, the customer will try to contact the seller. It may be difficult to locate the seller, but the customer may be able to track down the individual through the address that the funds were sent to, or through a bank if a check was deposited. However, by the time the individual learns that he/she is involved in a fraudulent scheme, a substantial portion of money may have already been funneled to the foreign entity.

In another scenario, bogus checks are sent to the individual. The hope apparently is that the individual will transfer the funds to the foreign person before they realize that the check has bounced. Other scenarios include phishing scams. It is also conceivable that this technique could be used for laundering money.

Other websites that discuss this scam include:

Sites advertising the scam include:
   Job Bank USA
   Texas Online Jobs (link no longer valid)

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