The Panama Papers leak has made waves across the globe and for good reason – celebrities, CEOs and even political leaders face accusations of widespread tax avoidance. An anonymous source leaked the implicating documents, and an international coalition of hundreds of journalists has sifted through each and every piece of evidence. The parties involved in the cover-up went to great lengths to avoid the law, and there have been calls for increased financial transparency among the super wealthy. The purpose of accounting is not to bend the rules, but to provide a wealth of knowledge for sensible financial decision-making. The Panama Papers leak shows us that accountability is the most important part of accounting and being an Accounting firm servicing many businesses in a metropolis like Chicagoland that has many businesses with global connections made us want to shed some light on what happened.
What Happened
Just over a year ago, the German newspaper Sueddeutsche Zeitung received 11.2 million documents from an anonymous tipster. These papers, sourced from the Panama law firm Mossack Fonseca, included the hidden financial transactions of everyone from public officials to sports stars. These people used offshore shell companies within Panama to hide their money from their own national governments, and avoid paying taxes. Those accused of funneling money were able to stay anonymous for years because of a complex network of offshore accounts run by Mossack Fonseca.
Why It Matters
Shifting tax responsibilities to other (often less wealthy) taxpayers perpetuates a corrupt system – the responsible majority of the population carries the financial burden while a select few stand to gain. Managing finances should never be about what you can get away with. A reputable bank, accountant or financial manager always makes decisions with laws and moral obligations mind. Cheating the system will not only destroy a firm’s reputation, it can damage the public’s trust of financial services as a whole.
Our Take
Whenever a story like this breaks, it’s disappointing to say the least. There’s nothing wrong with attempting to lower an individual or company’s tax burden, so long as it’s done legally and without ulterior motives. Whether or not the individuals who evaded taxes were aware of what their accountants were doing is still unclear – every knowledgeable party should be held fully accountable. We work closely with every one of our clients to explain tax decisions before filing because transparency matters. Motl Accountants touch base with their clients monthly; it is our way of ensuring that both the client and the accountant can make the best financial decisions. We assist businesses and individuals in the Chicago area and have a great track record of doing things the right way.
Trust is a huge part of any financial institution’s reputation. Once trust is lost, it’s impossible to regain. The Panama Papers have brought shady financial practices to light on a scale never seen before, and everyone involved will face serious consequences. There are a myriad of ways to save money on taxes and other finances within the law, and knowing where the line is drawn can make the difference between a successful financial year and a lengthy prison sentence. We at Motl Accounting are experts at assisting you with taxes and providing you with best information to make the best decisions that will keep you and your business out of unwanted trouble.
Don’t wait for the IRS to catch your mistakes. Let a professional Motl CPA or EA save you time and money by making sure your taxes are correctly filed the first time around. Call our West Dundee Office at 847 426 2100 to speak to our accountants.