Wealth International, Limited (trustprofessionals.com) : Where There's W.I.L., There's A Way

W.I.L. Offshore News Digest :: February 2009, Part 2

This Week’s Entries :


Caribbean Property Magazine was once a hard copy publication about lifestyles and real estate in the Caribbean. After a 10 year hibernation it reappeared as monthly e-zine two years ago. In this month's issue professional commercial writer Carter Clews commences what is promised to be a series of articles on recommendations on property "best buys" in Latin America for "middle-income type" people. (Howard Rich, who also appears in CPM writing on buying property in Latin America, says he is proffering advice to "high net-worth" individuals. We are unclear about the difference in practice so far.) In this initial one he commends El Salvador to our attention.

Welcome to Clews' Views. If all goes according to Hoyle, each month throughout the coming year, this column will give you my best take on your best buys throughout Latin America.

I will tell you where I think good properties are undervalued, bad deals are overrated, short-term investments could offer high-yield returns, and -- again, in my opinion -- where you personally could find the good life at a great price as soon as you are ready to seek your place in the sun.

Now, I know these are pretty strong promises. And since I do not want anyone to harbor any false hopes -- and I want even less for anyone else to miss out on what could be a great opportunity -- let me lay down a few quick ground rules.

If you agree with these guidelines, this could be the start of something big. If not, I thank you for stopping by and completely understand if you are moving on. So, here we go: Transpats are people who can move to a new home while still embracing fond memories of the old. They are people who can resettle in Argentina without feeling a need to denigrate America; who can turn their eyes to Colombia without turning their backs on Canada; who adopt and adapt to Ecuador, Uruguay, Guatemala, or El Salvador without abandoning their affection for England, France, Germany, or the Emerald Isle.

In short, transpats are people with their feet firmly planted in the best of both worlds. They are positive thinking people who leave their native land for a new life not because they love the former less, but because they have come to love the latter more. And I would look forward to having them as friends and neighbors on either side of the Rio Grande.

Now I think you can see why I thought it so important to lay down the Clews' Views guidelines. As my dear friend Dan Taylor, the owner, developer, and #1 resident of beautiful Keyhole Bay on Roatan Island says, "I am not just looking for someone who wants to buy a house; I am looking for someone who wants to be my neighbor." That pretty well sums it up.

For the past 10 years, I have been writing about what I consider the best investment opportunities throughout Latin America (and occasionally Eastern Europe). My personal goal now is to own beachfront and inland homesteads in four Caribbean countries within the next five years. And my commitment to you is to scout out the very best buys and report back to you in this column.

I will honestly tell you what I like -- and what I loathe. I will give it to you straightforward. As I make my own buys, I will tell you where, and why. And then, you can make up your own mind on whether, and when, to join me (and Otis [Redding]) "two thousand miles from home, just to make this dock be [your] home."

Sound fair? Then, let's get started. Normally, I will devote the entire column to one or two fairly extensive analyses of countries or locales I think you need to know more about. But, since I have already just about exhausted my word count for this month, allow me to give you just a quick tale of two countries to set the pace and the tone for what is to come. Here we go:

• First, there is Mexico -- and, I have to tell you: The news is not good. More than 25 years ago, I promoted a book about that country by a gentleman named Sol Sanders. He was, and remains, one of America's most esteemed writers on international affairs. His book was called Mexico: Chaos on Our Doorstep. Just a few days ago, in preparation for this column, I called Sol and asked for an update on that troubled country. His response: "If I were writing the book today, the title would be the same."

Now, do not get me wrong: Mexico is a beautiful country with some enticing investment opportunities. In fact, right now a major company on whose board I sit is preparing to invest heavily in the Baja Peninsula. The president of the company is a financial genius, and if you are a high roller with a hot hand like he is, there is little doubt you could realize a lucrative return on an intermediate to long term investment.

But, for Clews' Views readers -- those of us who, if not sooner, then later, intend to nest where we invest -- now is decidedly not the time to place your confidence in a country that seems doggedly determined to put its worst foot forward. Here is how Sol Sanders summed up the situation in Mexico on his splendid new site, worldbuzz.com:
"The internal Mexican security situation is deteriorating at such a rapid pace that it is becoming a major and growing U.S. security threat ... Drug-cartel internecine warfare and mounting casualties for innocent civilians and security forces have killed almost 7,000 people in Mexico in the last two years ... Mexico's police forces, local and federal, and civilian officials have been decimated with what has become a terror campaign against public officials and journalists who oppose the drug dealers."
Really now, need I say more? Until they clean up, don't you head down there.

• Then, there is El Salvador. Yes, I did say El Salvador. Or, as the retromingent mainstream media likes to call it, "war-torn El Salvador." The truth is, El Salvador is no more war-torn than Fort Sumter.

Today, El Salvador is a free country with friendly people, a vibrant democracy, bountiful forests, and beautiful beaches. The Heritage Foundation ranks it 32nd out of 183 countries worldwide in terms of Economic Freedom. The Freedom Index ranks it as a "Free" nation, along such countries as the United States and Great Britain, and gives it a rating of 2 (on a scale of 1 to 7) for its strong protection of political rights.

As to where you might like to live, San Salvador, the capital, is considered one of Latin America's most modern cities (it almost has to be, since it was leveled by an earthquake in 1986). Though crime in the denser barrios (where few Americans live or are likely to move) is a problem, the Colonia San Benito area is as upscale and enticing as the finer sections of any of the better North American city. And the real estate prices are significantly lower.

Only an easy drive away from center city is the Costa del Sol, where, according to surfers, the waves are the best in Central America and among the best in the world. For those (like me) who prefer simply to bask on a placid beach, Puerto de Acajutla might be more to your liking. There, a 3-bedroom home within a seashell's throw of the ocean can run as little as $50,000.

On the whole, most foreigners in El Salvador report that they can live very well on as little as $1,200 to $1,400 a month. And that includes maid service, dining out, sleeping in, utilities, high-speed Internet, satellite TV -- all the modern amenities. Keep in mind that in El Salvador, as in most Central American countries, you pay no tax on income earned outside the country. And, unlike most Central American countries, the currency is the U.S. dollar.

Interestingly enough, perhaps the best summary of El Salvador's attributes -- and your opportunity -- might best have been expressed by its Minister of Tourism in 2004, when he proudly unveiled the country's new trademark (why they needed a trademark, I am not quite sure). Nonetheless:
“I will take the moment to tell you an anecdote: Being in the main house of JWT for Latin America, with several of the big heads with world experience in the creation of country trademark, we sat down to revise what the tourist thinks when he visits El Salvador. In this way we realized that our country surprises the visitors that arrived for the first time, that it is a more developed country of that expected, that it possesses an impacting nature, that it is a country where things work, that it is a country that has hard-working, venturesome and cordial people. There was an agreement that its capacity to impress the foreigner in overcoming its expectations is what El Salvador presents best. The answer of the tourist when becoming in contact with the Salvadorian experience is ‘I never imagined El Salvador like this.’”
And that pretty well sums it up for the maiden voyage of Clews' Views. I believe that in the next several years, millions of Americans are going to move south to seek a newer world. Young and old, rich and poor, they will be looking for that someplace in the sun where prices are cheaper, government is smaller, faces are friendlier, and where their "ten fine toes can wiggle in the sand, with lots of idle fingers to snap to their command."

At Clews' Views, my mission is to help you find all of that, and more. Welcome aboard.


Failing to diversify your portfolio beyond U.S. shores today is tantamount to financial suicide.

Another article from Howard Rich, introduction here, which appeared in the Caribbean Property Magazine last year -- May, i.e., pre-worldwide financial implosion, to be precise. Thus some of the reasons given for moving assets or body offshore, in particular those concerning raging inflation, were overtaken (if only temporarily) by events. The reasoning he offers still stands.

My good friend Harry is not the altruistic type. So, when he asked me to meet him for lunch to discuss my first Rich Report, I knew who was paying. I suggested Hanratty's, a modest uptown establishment. He countered with The Tavern on the Green. Hence, I soon found myself staring out across the grand expanse of Central Park and, of course, picking up the check.

Harry wanted to know why I was so certain that the time has come to invest offshore. Since he manages his own very successful multi-million dollar portfolio, I knew he was not just making small talk. So, over the next hour and a half, or so, I laid it all out for him.

Let me give you the truncated version, because if you are reading this column, you, like Harry, are a serious investor. And if you are a serious investor, you probably have some of the same questions Harry had. Then, I will finish up with the same "Rich Rewards Best Investment of the Month" I gave him. Fair enough?

Over the past few decades, I have noticed that serious investors share two important traits. First, they reduce their risks by diversifying their portfolios. Now, please understand: it is not just that they don't put all their eggs in one basket. Any savvy investor knows not to do that. Serious investors go a step further: they do not limit their portfolios to eggs at all, or anything even remotely related. They invest across the board: in Blue Chips and start-ups, at home and abroad.

Secondly, serious investors increase their rewards by anticipating trends. They get first call by getting ahead of the curve. Years ago, a sportswriter asked hockey great Wayne Gretzky why he scored so many more goals than his opponents. He replied, "They skate to where the puck has been; I skate to where it's going." Enough said.

So, how does all of this apply to my earlier advice about investing in offshore real estate? In the words of "The Happy Warrior" (that would be Al Smith, for you young Turks), "Let's look at the record."

I am convinced that failing to diversify your portfolio beyond U.S. shores today is tantamount to financial suicide. The question is no longer whether we will have a recession; the fact is, it really began last January, or perhaps even earlier when it became clear that the sub-prime debacle had gained momentum. And even the top three presidential candidates have finally realized that it is already here.

The skyrocketing price of oil is fanning the flames of rising inflation. Agricultural commodities are off the charts, with the price of copper approaching a staggering $4.00 a pound. And the housing market continues to tank, with spiraling foreclosures and plummeting prices threatening to trigger a massive meltdown. Bear Stearns has already collapsed, and the other investment banks are wobbling precariously. As USA Today recently opined, "If the US economy were a car, all of its warning lights would be flashing red."

Add to that, investor concern over what US News & World Report trumpets on its April 11 cover as "The Return of Big Government." Here is the lead: "Whether you pull the lever for Hillary Clinton, Barack Obama or even John McCain in November, you are probably still going to end up in 2009 with a push for Big Government ... More taxes. More regulation. More spending." Plus, of course, there is the very real danger that, based upon their own comments, either of the two Democrats could well repeat the Smoot-Hawley protectionism debacle of 1924.

All of which, if you are a serious investor means more reason to invest offshore. Sooner, rather than later.

So (as I told Harry), the only question remaining is: Where should serious investors -- ever eager to anticipate the trends and increase their rewards -- move their money? Well, for my money (literally, as well as figuratively), the best bet right now is the Caribbean. And I'm not alone:

• Writes the Cox Newspapers Washington Bureau, "With U.S. real estate prices in a swoon and Florida stung by steep tax hikes and runaway insurance premiums, Americans in growing numbers are shifting their search for sunny second homes overseas, overcoming long-standing fears about investing in foreign countries."

• According to the London Times Online, "Cash-rich investors are snapping up homes in Latin America, from holiday villas on Brazil's beaches to high-rise flats in Mexico City and Panama. Latin America is high on glamour but low on prices -- the perfect mix for investors."

• As the Honolulu Star Bulletin recently wrote, "A Baby Boomer turns 50 every seven seconds. And they are in the highest-earning period of their lives. They are looking for resorts, vacation homes, and second homes. And if you look at where people in the U.S. are moving, they are going to warmer climates."

• According to Time Magazine, "Many of the 76 million American baby boomers are more likely than their parents to consider retiring to a foreign land, because they have traveled more, have higher hopes for retirement, and tend to be more active and adventuresome."

• And the respected European business intelligence gatherer Datamonitor recently revealed that British and Irish investors have purchased nearly 4 million overseas properties. And the overseas property market is expected to nearly double within the next five years.

So, where do we go from here? I would suggest the Dominican Republic, because that is where you will find my May "Rich Rewards Best Investment of the Month." But, not just anywhere in the DR. Specifically, a pristine paradise with white sandy beaches, coconut-covered mountains, and crystal azure waters as far as the eye can see. It is called the Samana Peninsula -- or as Christopher Columbus described it, "the fairest land under heaven." Yet, it is still largely undeveloped. Though not for long.

Before I recommend a location as a prime investment, I always look for what I call a "Market Moving Event." In short, I ask myself, "What is about to occur here that could cause the property values to skyrocket over the short term?"

On the Samana Peninsula, there is not just one Market Moving Event. There are three. First, the modern new El Catey International Airport, completed in November of 2006, is now receiving 19 tourism-related flights per week. Direct flights are already arriving from Europe and Canada. And El Catey is expected to begin receiving direct flights from Atlanta in the near future.

Second, a new toll-based road is nearing completion from Santa Domingo to the Samana Peninsula. It will cut the drive time in half and make Samana a tourist mecca. And third, in the coming year, more than 100 cruise ships are scheduled to dock in Samana, up from just 35 in 2007.

Yet, for all of this, prices on the Peninsula are still remarkably low. Prices range from about a dollar per square meter (a little better than 10 square feet) for remote, countryside properties to just over $100 per square meter for prime, commercial-oceanfront property in populated areas. Oceanfront property in the more remote, undeveloped areas can run as little as $3 per square meter.

Of course, serious investors will negotiate their own best deals, possibly bringing the prices down even further. But, here is my word to the wise: Don't wait. Before the waiter had even brought the check, Harry had already left the table.

And as I mentioned at the outset, my good friend Harry is not the altruistic type.

Winning the Offshore Beauty Contest

The Rich Report that came out a month after the above one is below. Some basic pointers about buying offshore real estate, many of which apply to investing in general.

I am going to start off this month's column by saying something that may sound almost heretical to a lot of serious investors (that is right, the very folks I write it for): Investing in offshore properties is something akin to a beauty contest.

Now, before you take umbrage and turn away in indignation, allow me to add a corollary, if I may: Which is something equity investors do every time we pick a stock. And some do quite well, I might add.

I was reminded of this while re-reading one of my favorite books, Innumeracy, by the irreverently witty John Allen Paulos. The title describes what the author characterizes as the overwhelming mathematical illiteracy of most Americans (particularly, it often seems to this observer, the political substrata).

Paulos begins his tome with an observation by economist John Maynard Keynes suggesting that for most investors, buying stocks principally involves anticipating "what the average opinion expects the average opinion to be." In short, buying stocks, Keynes posits, is something akin to a beauty contest. The object is not to choose the prettiest woman, but to choose the woman others think to be the prettiest. And that brings us back to investing in offshore properties.

My friend Carter Clews, the president of the Offshore Opportunities Network property search service, has an invariable mantra he recites to any and all who seek his advice about buying offshore: "Buy only what you see." Now, before you toss that aside as all too obvious an admonition, revisit the concept of picking winners in the "beauty contest," if you will. The cardinal rule is to look closely and examine carefully, is it not? And that is all the more so in the still rarified world of offshore investing, where maximizing rewards and minimizing risks is very much a matter of anticipating what is most going to tickle the fancies of nouveau investors.

So, let me give you some guidelines, applicable whether investing in raw land or developed properties:

Take time for a title search. Even in some of the most developed areas of Latin America -- and especially in the "outback" -- the lines of property ownership are not always clear. To put it mildly. It is not entirely unusual to buy from Raoul ... only to find out that José, Juan, Juanita, Jorge, and eight cousins thrice removed, may also have staked claim.

Recently, I was offered an unusually good deal on some beachfront property along the Atlantic Coast of Nicaragua. As you know if you are a regular reader, I am long-term bullish on that country; its current administration notwithstanding. My first call after receiving the offer was to mi amigo Carlos Amado Torres at Discover America in Managua. His advice: Proceed with caution; much of the Atlantic coast property is in dispute over Rama Mosquito Indian claims.

Now, to me that did not mean: "Don't buy." It meant: "Take time for a title search, drive a hard bargain -- and get ready to wave an ironclad title in front of prospective investors' faces."

Do not fall prey to the "Efficient Market Hypothesis Fallacy" (EMHF). Please don't misunderstand, I am not saying that EMH, as pioneered by the University of Chicago's economist extraordinaire Eugene Fama, is a fallacy. Nothing of the sort. Of course prices of offshore properties, as with those of individual securities, are going to reflect the best knowledge of current market and the most informed opinions about the future. That is axiomatic.

What I am saying is that carrying EMH to the extreme can result in analysis paralysis. We have all heard the old saw about the two strict efficient market theorists walking down the street and spotting a $100 bill. They pass it by, reasoning that if were really a $100 bill, someone else would have already picked it up.

Sound far-fetched? Not really. A few short years ago, I got word of a beachfront lot at Playa Flamingo, Costa Rica, then on the market for under $100,000 and expected to appreciate 3-to-4-fold in the short run. I passed along the tip to a good friend of mine. "Too good to be true," he snorted. A few weeks ago, I told him the property now sells for $850,000 -- but that I was looking at a similar valuation on some nearby land. His response? "Well, if it is that good, it will probably be gone before I can close the deal." Hello EMHF, goodbye potential profits.

All things being equal, if it looks like beach, buy it. Let me take you on a quick trip down memory lane. You will see why shortly. Around 1930, The Talmadge sisters of celluloid fame (Constance, Norma, and Natalie) opened a subdivision in California called La Jolla Shores. Beach homes sold for as little as $4,000. Today, homes at La Jolla Shores run $3,500,000 and go up from there.

I think you can see at a glance that one of the primary reasons for the vast increase in the value of the Talmadge properties, can't you? In a word: Shores. Not surprisingly, Forbes magazine's Top 10 most expensive U.S. zip codes last year all shared one common feature: shores.

And, according to the International Herald Tribune, the most expensive housing market in Canada, by far, is located in Vancouver. And where is Vancouver located? That is right, on the shores of the Pacific Ocean.

Central America has some 4,000 miles of beautiful, mostly pristine shoreline, not including its beckoning paradise islands. And, it is likely going to take nowhere near eight decades for today's "Talmadge sisters" to see a 1000-fold return on investment.

Now, let us be clear: We are not talking here about a coastal buying "bubble" -- which respected economist Kevin Hassett defines as "a period when the price of an asset (stocks, real estate, tulips, etc.) suddenly soars for irrational reasons." The exponential increase in Latin America's coastal real estate prices will be the rational, predictable, and sustainable result of the shifting North American Baby Boomer market.

Check out the infrastructure. There are some places in Latin America where developers start offering lots before they even begin building the infrastructure. And, believe it or not, there are even some places where they do not bother promising any infrastructure at all. We are hearing of this happening more and more around Costa Maya, Mexico, as well as in Brazil. In any case, wherever it occurs, wise investors see a yellow flag.

Infrastructures are not frills to be added later. When developers do not include the infrastructure, it is usually for one of three reasons.
• First, and most probably, they are in business to make a fast buck and take a quick powder. In that case, the price is probably well below market value, offering the false illusion of a great return.

• Second, the developers could not get the approvals, for environmental, bureaucratic, or other reasons.

• And the third, they simply do not have the cash or experience to get the work done.
Whatever the case, savvy investors make certain the infrastructure goes in before the cash comes out. Otherwise, you may get stuck with a piece of property with pageant-winning beauty -- and no market value.

Look for the little things. I am one of those people who believe that if you take care of the small things, the big things will take care of themselves. For example, when I invest in equities, I am a stickler for taking the approach formulated by the late Benjamin Graham, the mentor to Warren Buffet among others.

I consider myself an actual partner in the business, so I buy a stake, not a stock. Now, to some, that may seem like a small difference in terminology. Right, and so is the difference between lightning bugs and lightning bolts. Small matters make a big differences.

The same holds true when I invest in a development, particularly in Latin America, to which I intend to attract future buyers. Let me give you just one example of the types of small details I look at before making the big decision to invest. Dan Taylor, the meticulous developer of Roatan's Keyhole Bay, turned me on to this detail. And I think it is important. If you do not, fine; if you do, you are welcome.

Early on, before the first building goes vertical, I go to the site and make sure the first concrete building block is filled only half way to the top before the next block is put in place.

And so it goes all the way up the entire wall. Now, if you are like me when Dan first pointed out this detail, you are shaking your head and shrugging. But, think of it this way: In most parts of the Caribbean, the prevailing winds can blow pretty strongly -- to put it mildly. So, if each block as it is put on top of the other is filled half way to the top, a solid, almost unbreakable bond, is formed that bridges the seam.

Is that a small point? Not where my money is concerned. Not when I intend to get the maximum return on a long-term investment.

Now, this column has already gone on longer than most, so I will bring it to a close. But, it answers a lot of important questions I have been asked since The Rich Report starting appearing, and I wanted to answer them early on. There is no getting around that investing in property -- onshore or offshore -- is something akin to a beauty contest. So, you need to make certain that what you see is what will sell when you are looking to pick a future winner. Hope this helps.

See you next month!


Educated population (95% literacy) makes country a good place to set up a business.

Some nuts and bolts on favorite North American expat destination Costa Rica, which has a lot to offer foreign investors. This article is light on the country's fiscal situation, which as is the case with most (all?) coutries with a large governmental sector is not the personification of financial prudence.

I am always receiving inquiries from readers of my articles about Costa Rica's ability to welcome foreign business investment. This article provides a lot of answers to those inquiries as I overview the local wage, labor and educational requirements in Costa Rica, as well as objective indicators for conducting business.

Costa Rica has a population of 4.4 million people, 34% are between the ages of 15 and 45 years old. The local workforce of over 2 million people enjoys universal health care and education as well as a low unemployment rate. The countries key advantages for global business investments are its convenient location, educated workforce and competitive costs.

Productivity and wages

Costa Rican workers are considered to be very trainable and productive. The countries main comparative advantage for attracting high-tech investments is to provide sufficient educated professional and technical personnel. In lower technology industries, although Costa Rica's wage rates are higher than many country competitors abroad, higher labor productivity and modern manufacturing techniques can often compensate for labor costs. This highly educated, versatile and productive workforce is accessible at competitive rates that currently range from $1.80 to $4.11 (per-hour, fully loaded).

Labor Regulations

Labor unions only have a significant role for public sector workers. The main form of labor organization in private companies is the "Solidarity Association" that employers support through a credit union and other assistance services. Investors seem very satisfied with the operation of solidarity associations, and frequently mentioned that they tend to work with the company, not against it. The associations have not been confrontational in nature or used for negotiating wages. Some companies have a separate permanent council of employees, serving as a mechanism to bring up complaints and problems for solution.

Educational System

Costa Rica has one of the highest literacy rates of the American Continent (95%). Additionally, its National Training Institute (INA) offers free technical training in many fields. Several technical schools and universities prepare professionals with the highest international standards. These institutions offer various levels of education in electronic, electric, mechanical, and process engineering.

A new Gallup poll of 40,000 people in 24 countries was commissioned by the Inter-American Development Bank and it amazingly shows that 85% of Costa Rican's are [happy] with their countries' public education system ...

According to the same study, only 66% of those questioned in Germany, 67% in the United States and 70% in Japan are happy with their respective countries' public education. There has been a lot of progress in expanding education. Literacy rates have doubled since the 1930s, to 86% of the region's population, but there had been very little focus on improving the quality of education.

In Costa Rica, multi-national companies such as Intel, HP and Procter & Gamble moved in and created the need for higher education standards. This commercial demand for higher educated, English speaking workers fueled the Costa Rican educational system to achieve the highest standards in the region.Costa Ricans became conscious of their educational systems limitations years ago and took steps to provide specific institutions that focus on training local students to compete in a global economy where knowledge-based exports are in high demand and traditional products such as coffee and fruit succumbing to international competition.

English Skills

Education is compulsory up to 9th grade and places a strong emphasis on both computer skills and English skills from an the early grade level. To this respect, an official nationwide survey showed that more than 258,000 Costa Ricans speak English well.

Educational Institutions

Two key factors have become critical to the country's educational strategy: science and technology. Costa Rica's previous and current administrations believe that technical training, along with innovation and technology transfer, are crucial factors to achieve higher levels of productivity and a better competitiveness level in the global economy.

The National Learning Institute (INA) offers free technical training in a wide variety of fields, and is able to provide tailor-made programs to meet specific manufacturing and service investors' needs. Several other technical schools and universities prepare professionals with the highest international standards. Even Harvard University has had an extension in Costa Rica since 1964 through INCAE, to prepare middle and upper level managers. The America Economy Magazine ranked INCAE as the best Latin American business school during 2003 and 2004.

Schools are allowed sufficient flexibility to pursue curriculums that fulfill the needs of a changing society, but are also monitored to ensure excellence and quality. As a result of this ample array of options, the country enjoys a large pool of engineers, business officers and other professionals. As it was cited in Latin Trade (August 1998), Intel's Corporate Vice President Mike Splinter said the company chose Costa Rica over Brazil, Chile and Mexico because of its "excellent educational system."

Since 1870, education in Costa Rica has been universal, free and compulsory up to the 9th grade level. Elementary schools promote a new approach to education that goes beyond teaching how to read and write, and have established programs intended to guarantee world-class literacy in computer sciences and English as a second language.

In fact, 82.5% of all Secondary Education students, and 50% of all elementary students have computer-based education. English as a second language is nearly universal in Secondary Education. The Government has put special interest in providing increased resources to enhance existing English programs and create additional ones nationwide. As a result, a unique, free and widespread education system allows firms to find a wide array of human resources at various levels, from technical schools to university degrees.

High School Education -- High School education is divided between academic and technical schools. Academic instruction is centered on science and humanities, while technical schools prepare students in areas such as: accounting, microelectronics, electro mechanics, industrial electronics, precision mechanics, computer programming and network set up and administration, among other.

High school education, with 5-year level, is divided in two cycles, and upon completion of each cycle, students are required to pass tests on all subjects studied during those years. The most notorious of these tests are the Bachelors Tests, which are required to get the high school diploma needed for admission to Universities.

Schools are allowed to change the curriculum to satisfy the needs of a changing society, but are also monitored to ensure excellence and quality. As a result of this organizational axiom, Costa Rica has developed a diverse and sophisticated educational framework that adequately fulfills the needs of the private sector through enhancing the abilities and knowledge of the students.

Amid the private schools, there are world-class institutions with a cultural emphasis on the United States, the United Kingdom, France, Germany and Israel, which further complements the range of cultural diversity of the school system. As a result of the advances in elementary schooling, Costa Rican high school graduates are educated; enjoy a working knowledge of English, an increasing ability to use computers and a proven aptitude for developing new skills and tasks.

With an average growth of 7.74% for the last 7 seven years, high school education is focused in achieving new competitive skills. For example, the teaching of English language and Computer Science was declared mandatory in all of the nation's public schools (1994-1998). That implied the training of 500 teachers and a huge expense from the government.

In the Technical Colleges, in the Third Cycle of the General Basic Education, the study plan, besides the academic subjects, includes two exploratory workshops per level that allow students to discover their skills, attitudes, aptitudes and interests and facilitate the process of selection of a specialty.

INA -- National Learning Institute -- The National Training Institute (INA, for its Spanish acronym) works in order to elevate the productivity of the workers in all the sectors of the economy, by means of actions of formation, training, certification and accreditation for a sustainable productive, competitive and quality.

At a technical level, free training programs have been developed in order to address appropriately the requirements of both local and international corporations in specific sectors, therefore allowing Costa Rican technicians not only to work on the cutting edge of technology but to maintain at the same time a productivity rate which is 20% higher than that of workers of other countries in the Americas. ...

Higher Education

The Costa Rican workforce is considered perhaps the most important attraction for foreign investors, as the population is highly literate and well educated. The government has long placed a high priority in investing in public education, which includes the university system as well as the technical and vocational training scheme. The abolishment of the armed forces in 1949 freed resources that have mostly been invested in free education and health services for the population, while a generous education expenditure ratio of more than 5% over GDP is currently maintained by law.

As a reflect of these efforts, Costa Rica now has one of the highest Human Development Indexes among developing nations (0.834), and one of the highest literacy rates of the Americas (94.9%). In addition, the expected number of years of schooling has been calculated at 10, according to World Bank's World Development Indicators 2004. A nation that long ago realized the importance of education and which currently allocates more than 6% of its GDP to educational programs is indeed the best guarantee for a successful business environment.

Costa Rican investment in higher education is yielding substantial benefits. Universities produce not only highly trained individuals, who are very well appreciated by the multinational companies, but also entrepreneurs with the ability to develop their own companies, specially in high-tech areas.

Currently, Costa Rica has 54 universities, four of which are public and the rest are privately owned and managed. The Ministry of Education through the National Council of Higher Education (CONESUP) supervises all of them. ... Based on data from the National Deans Commission, in 2005 [the] four public universities were attended by 66,359 students.

Between 1993 and 2002, 85,038 students have graduated from public universities, while during the same period 96,403 students got degrees from private universities. With 26,111 students in 2005, the prominent University of Costa Rica leads annual enrollment at the higher education level. This university, founded in 1843 in the city of San Jose, has the most ample range of degrees offered in the country, either by the number of careers it offers or the degree levels that can be opted for.

The UCR and the ITCR are the leaders in higher and specialized technical education in the country. Between 1993 and 2002, 10,133 degrees in the field of engineering were granted, most of which coming from these institutions. Much of the emphasis put into these areas of study has been stirred by the increasing demand of technologically intensive industries, which shows the interest of local authorities and the capability the higher education system to respond quickly and meet changing demand promptly.

Private universities are generally smaller than their public counterparts, either measured by the number of students or the variety of professional careers they offer. These institutions of higher education usually cater to the demand of working persons that wish to expand their capabilities while still holding their jobs. The National dean's commission offers information regarding the number of graduates from public and private universities, which totaled 26,472 in 2004.

In addition to local education, Costa Rican students have been successful in accessing internationally recognized foreign graduate degree programs, especially in the US. Recognizing this potential, Harvard University established a highly accredited extension program in Costa Rica called INCAE. This university is currently ranked as second leading business school in Latin America and has done pioneering investigations about the factors that determine Costa Rica's competitiveness and the best strategies to take advantage of them.

Conducting Business Indicators

The following information and graphs list the overall "Ease of Doing Business" rank in Costa Rica during 2008 as indicated by key indicators for each topic and benchmark against regional and high-income economy (OECD). ... [See article for all the indicators.]


American customers of Swiss bank UBS AG suspected of avoiding U.S. taxes did not commit a tax fraud, according to an investigation by a Swiss legal expert published in Swiss daily Le Temps ... Instead they exploited a loophole known to the U.S. tax authorities, and so the Swiss are under no obligation to pass the customers' names to the U.S. authorities, according to the study by Urs Behnisch, a law professor at Basel University.

Behnisch's opinion, produced for lawyers of one of the affected clients, was originally published last month in Jusletter, a Swiss online law review.

The U.S. Justice Department wants the Swiss authorities to hand over confidential data on the wealthy clients to help its investigation into offshore services provided by UBS advisers to U.S. customers from 2000 to 2007. UBS is accused of helping U.S. clients avoid taxes by hiding assets in Switzerland.

Swiss law prohibits disclosure of client data or names unless the country's authorities believe the client has committed a serious crime such as money laundering or tax fraud. Switzerland does not consider tax evasion to be a crime.

Nearly 1/3 of wealth kept abroad globally is in Swiss banks. The Swiss Bankers Association and consultants estimate this at $2.2 trillion, making the Alpine state the world's biggest offshore center. But Swiss bank secrecy is under renewed pressure from the United States and other countries like Germany who are cracking down on tax evasion.

U.S. President Barack Obama has singled out UBS as one of the banks who helped "tax cheats", and a U.S. indictment has alleged that Raoul Weil, the former head of UBS's wealth management business, and other unidentified bankers conspired to help 17,000 Americans hide $20 billion of assets in Swiss bank accounts to avoid paying U.S. taxes.

Behnisch concluded in his study that the sums invested by U.S. clients with UBS were deductible rather than the result of a fraud, such as the use of falsified documents, which would require the Swiss authorities to help their U.S. counterparts.

Behnisch said Swiss banks had expressly drawn the attention of the U.S. authorities to the possible loopholes in the system of "qualified intermediaries", introduced in 2001 to attract foreign investors to U.S. securities.

Under the scheme banks are supposed to identify investors, withhold tax on U.S. securities on their behalf and and send it to the U.S. tax authorities.

U.S. clients of UBS targeted by the Justice Department may have breached their duty to declare their holdings in companies wealth management companies or trusts through which they held U.S. securities, Behnisch found, according to the newspaper. But they did not falsify their accounts, and the banks were only obliged to identify the wealth management companies holding U.S. securities, not the people investing in them.


Scheme featured fake invoices which generated false deductions.

A 62-year-old suburban Sydney accountant created and promoted tax scams to the tune of $10 million, it was alleged in court [on February 10]. Lynette Kathleen Liles, her husband, Billy Ray Liles, and 10 clients were charged ... as part of the nation's $300 million Wickenby operation into tax fraud and money laundering.

Ms. Liles allegedly established schemes for her clients in which companies in Vanuatu were set up to issue fake invoices for her Australian clients, and companies associated with them. The companies would then claim these false expenses as tax deductions, the Australian Federal Police claim.

Authorities have so far recovered $5.2 million that has been laundered offshore.

The offshore tax deals are linked to Vanuatu companies but are not connected to an alleged $100 million tax scam involving Vanuatu-based accountant Robert Agius, who is also facing charges as part of the Wickenby investigation.

Ms. Liles, her husband, and the 10 clients ... appeared in Sydney's Downing Centre Court to face a total of 153 charges. They include conspiring to defraud the commonwealth, dealing with the proceeds of crime, obtaining a financial advantage by deception and money laundering.

In some cases, false payments for marketing and promotion fees were claimed. In others, personal income was not properly declared on tax returns. ...

The charges follow an investigation by the tax office, which referred the matter to the AFP. In April last year, Vanuatu police raided several businesses in Port Vila and seized a number of documents linked to the clients' tax activities. The documents arrived in Australia in November and further raids followed in Sydney.

AFP assistant commissioner Mandy Newton said yesterday: "Financial services providers and members of the public alike are warned that defrauding the commonwealth is a crime and evading tax can result in criminal charges."

The schemes are not linked to the activities of Swiss-based firm Strachans, whose principal, Philip Egglishaw, sparked the nation's largest investigation into offshore dealings. As part of the Wickenby investigation, music entrepreneur Glenn Wheatley was jailed for 15 months in relation to tax offences.


“Traditionally, Europe and North America are the places where, as financial centers, most money would be laundered”

Cash-rich mafia groups have been channeling funds into banks desperate to survive the global credit crisis, the UN anti-crime chief said on [February 9]. Antonio Maria Costa of the UN Office on Drugs and Crime said he had collected ample evidence to make such accusations.

"Consultations I have had with prosecutors and law-enforcement officials around the world show there is ample evidence that the banking system's illiquidity is providing a unique opportunity for organized crime to launder their money," Costa said. "Just about every financial center can be characterized as part of the problem," Costa said, but declined to name countries or banks involved, saying that was for prosecutors and other law-enforcement bodies to do.

Costa said a Vienna conference next month marking the 10th anniversary of a UN General Assembly special session on drugs would mull ways to boost steps against money laundering and ease the impact of drug gang profits on the integrity of states.

He said the multilateral Financial Action Task Force (FATF) formed in 1991 did much to help drive mafia money out of banks over the ensuing decade but that achievement was being challenged by the global hemorrhaging of legitimate credit.

"You have the supply -- an organized crime industry with enormous amounts of cash, estimated at $322 billion in 2005, not any more stored in banks -- and the demand, a banking sector strapped for liquidity," said Costa. "This is a supply and demand driven situation. Our intuition, based on logic, is now supported by ample evidence."

Asked where cases were occurring, he said: "Traditionally, Europe and North America are the places where, as financial centers, most money would be laundered."

Treasury Department Designates 26 Companies and 14 Individuals with Ties to Peruvian Drug Kingpin

The Treasury Department designated 26 companies and 14 individuals tied to Peruvian drug kingpin Fernando Zevallos Gonzales ... Gonzales, currently imprisoned in Peru, has been a major figure in Peruvian narcotics trafficking activities since 1980.

On June 1, 2004, President George Bush named Gonzales as a significant foreign narcotics trafficker pursuant to the Kingpin Act. At the same time, Treasury blocked, pending investigation, six companies and six individuals, including the Peruvian airline Aerocontinente S.A. On November 10, 2004, the department formally designated Aerocontinente S.A., which subsequently changed its name to Nuevo Continente S.A.

Finally, on July 27, 2007, Gonzales was indicted on money laundering and multiple violations of the Kingpin Act.

Despite Gonzales's imprisonment, Treasury sanctions investigation found that his financial network has continued to function under the leadership of key family members and close business associates.

The financial network designated today principally consists of aviation and travel companies in Peru, including four air transportation service companies, three travel agencies, two aviation cleaning service companies and two printing press companies.

Additionally, the department investigation targeted key offshore companies in Panama and the British Virgin Islands that supported the Fernando Zevallos financial network.

The actions taken today freeze any assets the designated individuals may have under U.S. jurisdiction and prohibits U.S. persons from conducting financial or commercial transactions involving those assets.

"Our action demonstrates the importance of following the changing networks of major drug kingpins, like Fernando Zevallos," said department official Adam Szubin. "This designation identifies additional front companies and supports the Peruvian authorities' ongoing efforts to shut down the Fernando Zevallos criminal organization."


Frequent traders of options, commodities and currencies who do not have an accountant might want to start shopping for one in the next few weeks. They are not going to get much help from electronic tax preparers. "We figure those people are getting their taxes done professionally," is the way one software maker's representative explains the lack of advances aimed at derivatives traders.

That notable oversight notwithstanding, a lot has changed in tax-prep software in the past year. Publishers are trying to keep pace with the many changes in the tax code affecting first-time homeowners, investors and those who use their vehicles for deductible activities. All the programs we inspected contain tools to help these groups prepare their taxes electronically.

We put TurboTax Premier, TaxCut Premium Federal+State+Efile and the budget-priced TaxACT Ultimate through their paces. All three give you the option of downloading the software to your computer or preparing your returns on their secure Websites. TaxACT's downloadable version runs only on Windows PCs.

Robert Green, a CPA and tax guru to frequent traders, says that the IRS is working to close the "tax gap" by finding more unreported income, thereby boosting revenue without having to rely on Congress to raise tax rates or shrink deductions. A law passed in 2008 will require additional reporting of your average-cost basis and short-term versus long-term treatment on securities, so it will then be easier for the Internal Revenue Service to double-check net trading gain or loss reporting. This law, which affects the 1099-B forms that you receive from your broker, will be mandatory in 2011.

"This 1099-B rule change may actually help traders, because when there is noncompliance, the IRS mails jeopardy tax bills to traders, discounting all missing cost-basis information on 1099-Bs," says Green. To check out his Website, Green Trader Tax, for advice and tips for frequent traders, go here.

In the past three years, one of the main changes we have seen in the tax-preparation-software market is the massive push for e-filing, or electronic transmission of tax forms to the IRS. I am all in favor of filing pixels rather than paper, as it saves untold numbers of trees, plus it avoids a step that often introduces errors when a paper return is converted to electronic form for processing. E-filing can speed your refund, if you're getting one. So I am pleased to see e-filing bundled with tax-prep software; that just makes sense.

TurboTax walked into a pricing pot-hole late last year when its initial product announcement said that e-filing would carry an added charge (Electronic Investor, Dec. 8, 2008). That set off a chat-room furor. TaxCut's downloadable and CD versions for 2008 include five free federal e-files, so TurboTax ultimately followed suit. When you prepare your return online with any of these packages, you pay for a single return at a time, including e-filing.

TaxACT has a few interesting features, including its price -- the Online Ultimate Bundle, which includes a state return and one free e-file, is only $16.95. For those with kids in college, TaxACT fills out the FAFSA (Federal Student Aid) form, which can save a lot of time.

This year, the publisher 2nd Story Software added a Donation Assistant to the program, which helps you track cash and other donations to charity.Both TurboTax and TaxCut have had similar features for several years. The video assistance added to the program also is a big help, but it is still light on features for the frequent trader. If you are watching expenses and do not mind forgoing a few creature comforts, TaxACT is a terrific deal.

TurboTax comes in a variety of flavors, but the one of interest to investors is the Premier package ($49.95 online, $89.95 CD or download). The Schedule D preparation section covers stocks, bonds, mutual funds and employee-stock plans, but isn't much help for currency traders. It treats options contracts as though they were stocks, and did a good job of dealing with several dozen options transactions that we imported. If you use TurboTax for a lot of options trades, make sure you go over the resulting form to see that the purchases and sales match up correctly.

We also like TurboTax's ability to import data from a variety of financial institutions. If you can avoid data entry by importing transactions, that helps avoid errors. The streamlined interview and user interface are also pleasing to use, and we like the monitors that show your tax due or your potential refund for both federal and state on every page. The Mac download/CD version has some interesting features that can send reminders to your iPhone if you have to look up some data -- say your offspring's Social Security number -- for later entry. Alas, TurboTax will not work on any pre-Leopard Apple operating systems.

TaxCut Premium ($39.95 online and $49.95 for PC/Mac download) tosses in an estate-planning program, WILLPower, for Windows users, as well as free e-filing for up to five returns. The great thing about TaxCut is the support offered. You get one free conversation with a tax adviser during the tax-prep process, and help from H&R Block if you are audited.

Like TurboTax, the investing section copes well with stocks, bonds, mutual funds and employee-stock purchases. You can import transactions that include options, but TaxCut has difficulty making sense of large numbers of options trades.

Using a tax-prep program, even if you consult with a professional, is a great way to organize your paperwork. For frequent traders, the combination of TradeLog, which is supported by Robert Green, plus TurboTax, should do the job. If you are not a frequent trader and stick mostly to stocks and mutual funds, any of these programs will do the job. The nice thing about the online versions is that you can get started for free and see how you like the interface. You pay only when you file.


So far three of President Obama's high-profile nominees have acknowledged that they failed to pay some income taxes they owed, and two have already pulled out of contention as a result. Does this high hit rate in the pool of Obama picks likely mean that tax evasion is widespread?

Accurate statistics on levels of tax evasion are hard to come by, since the official statistics from the Internal Revenue Service reflect the agency's resources to pursue tax cheats as much as, if not more than, they reflect the actual frequency of tax-related crimes at any given time.

In all likelihood, though, the vast majority of Americans do not even have the opportunity to create the kinds of tax problems Tom Daschle, Mr. Obama's former pick to lead the Department of Health and Human Services, and Tim Geithner, the Treasury secretary, have had.

Mr. Daschle got in trouble for failing to pay taxes on a hired car and driver provided to him by a private equity firm. Truth be told, few Americans face the quandary of figuring out how to report chauffeur services as income. (They may, however, fail to pay tax on other, less flashy types of in-kind compensation, like computers.) The tax arrears faced by Mr. Geithner arose because he was employed by the International Monetary Fund, which, as an international organization, does not withhold payroll taxes for Social Security and Medicare from its American employees' paychecks. Those workers, including Mr. Geithner during his time there, are required to pay the tax themselves. The I.M.F. does pay its American workers an amount equal to the employer's half of the payroll tax, though, with the expectation that employees will use that money to pay the I.R.S. Instead of handing this money over to the government, as he was supposed to do, Mr. Geithner kept it. Again, few Americans need to calculate how their foreign-earned income should be taxed.

Nancy Killefer's tax problems may be more common, however. Ms. Killefer, Mr. Obama's choice for chief White House performance officer, said her tax issues involved the District of Columbia unemployment tax, which sounds like a possible nanny tax issue. As my colleague Ron Lieber reported, "Various estimates put the tax cheat rate at 80 to 95 percent of people who employ baby sitters, housekeepers and home health aides." (For Ron's tips on how to avoid the tax problems Ms. Killefer, Mr. Geithner and Mr. Daschle are facing, go here.)

What may be more important about these recent cases is not how representative they are of current levels of tax evasion, but how much they might contribute to future levels.

Given that the likelihood of being caught is relatively low, says Daniel N. Shaviro, a tax professor at New York University School of Law, most people comply with tax laws because of a "sense of good will, the sense that others are complying and the fairness of the system." (For statistics on what people say motivates them to pay their taxes "honestly," go to page 5 here [PDF].) The perception of the likelihood of being prosecuted for tax fraud may also be higher than the actual likelihood of being prosecuted, Mr. Shaviro says -- perhaps because the I.R.S. regularly goes after high-profile defendants like Leona Helmsley, who is said to have once proclaimed that "only the little people pay taxes."

The I.R.S. also has an extremely high sentencing rate in the cases it chooses to bring to court. This success rate is probably a function of the I.R.S.'s using its limited resources to maximum effectiveness, Mr. Shaviro says, as well as a function of pursuing only the strongest cases because a bulletproof conviction record may intimidate would-be cheats.

In any case, high-profile cases involving unpaid taxes are probably not good for inspiring compliance with the tax system, Mr. Shaviro says. Unless, that is, the message "the little people" take away is that tax evasion today can result in major sacrifices down the road -- like, say, a lost cabinet position.

How to Avoid a Tom Daschle Tax Problem

In just a couple of hours on Tuesday (2-3), two high-level nominees for jobs in the Obama administration took themselves out of the running because of tax problems that they could have avoided. So what sort of mess is lurking in your return?

Tom Daschle, who was to head the Health and Human Services Department, had income that he didn't report in a timely fashion.

Nancy Killefer, who was Mr. Obama's nominee for chief White House performance officer, had a nanny tax problem. (And let us not forget Treasury Secretary Timothy F. Geithner, who made a number of tax errors but somehow survived.)

The tax code is complicated enough that many, perhaps most returns contain some sort of flub. But this is no excuse for making big mistakes, even if the I.R.S. audits only about 1% of all returns (though a higher percentage of those from the wealthy). The system is what it is, and law-abiding citizens are supposed to comply with it.

So if you are trying to produce a bulletproof set of tax returns, start with a simple suggestion from Anthony J. Guinta, a principal with Homrich & Berg, a wealth management firm in Georgia: Assume you will be appointed to a cabinet position someday. Then, inform your accountant, if you have one, of this fact and proceed accordingly.

If your accountant follows through, doing your tax returns each year will involve the same amount of scrutiny that presidential appointees receive. The paradox here, according to J. Mark Joseph of Sentinel Wealth Management in Reston, Virginia, is that the troubled appointees ultimately got that level of vetting. But all those mistakes raise the question of why the nominees did not get it right in the first place.

By adopting a conservative, even paranoid, approach, you will improve your odds of avoiding the tax problems President Obama's appointees encountered. It might also help you sleep better around tax season. Here is how that mindset might have helped Obama's nominees -- and could help you, too, in the next 10 weeks (not to mention years).

Don’t forget your driver. Mr. Daschle's mistake in missing income was related to his consulting work and use of a car and driver.

The real problem, according to Allan S. Roth, who runs Wealth Logic, a financial planning firm in Colorado Springs, is that we are wired to hunt for deductions but not additional taxable income. "We think about how we can have more money in our pockets and not how we can pay more money," he said.

But there are lots of ways to earn taxable income, and thus increase the amount we have to pay in taxes. "There are different ways that people are compensated, including nonmonetary benefits," said Dan Shapiro, a tax partner with New York accounting firm Berdon LLP. "There is deferred compensation or stock options. Any time you receive something of value from somebody, a person or organization that you have an employment or consulting arrangement with, you have to assess it."

So ask yourself this: What, of any value, did you take in or use last year thanks to someone else, and what might the tax implications be?

The case for getting help. Mr. Geithner made a number of mistakes that he later corrected, including neglecting to pay payroll taxes when he worked for the I.M.F., and improperly counting sleepaway camp in his dependent care tax credit calculations. More than the errors, however, the disclosure that really got people talking in the financial planning world was the fact that he was trying to do his own returns in some of the years.

There is something noble about trying to do it all (and understand it all) yourself. But if you are taking the paranoid approach, have an accountant double-check your work. Or, better yet, start with a live accountant with decades of experience and then have another one at a different firm check the first person's returns.

David McPherson, of Four Ponds Financial Planning in Falmouth, Massachusetts, suggests this list, for starters, of people who should not do their own taxes: Small-business owners, who are better off spending the time expanding their businesses; owners of investment properties; second-home owners, particularly those who rent out the property part of the year but also use it themselves; people with large investment losses who wish to reap tax benefits; anyone thinking about selling an asset that will lead to a large capital gain. That covers an awful lot of us, aside from those with political aspirations. ...

Full disclosure: My father is a partner in a medium-size accounting firm that does personal income tax returns, including mine. But even if he did not do mine free, I would pay someone else to do them. Good preparers can help find savings, just as they can discover income you have not reported. Their fees may also be tax-deductible.

The nanny tax. While I wrote about the nanny tax issue a few weeks ago, Ms. Killefer's problem with unemployment taxes for household help suggests the need for a couple of reminders. If you have a babysitter or home health aide or housekeeper, you are probably responsible for more than just their Social Security and Medicare taxes. There may also be payments related to unemployment or disability insurance or workers' compensation coverage.

If you make mistakes, and the authorities catch up with you, pay the back taxes and fines promptly. And if your accountant expresses even a smidgen of doubt about how to handle all of this, look to a specialist like Breedlove & Associates, the Nanny Tax Company or HomeWork Solutions for help with the blizzard of paperwork that you will need.

Don’t start in March. Cramming all of your thinking about taxes into a few weeks of the year is a recipe for errors. Your accountant might miss things, and you could, too.

Steven Podnos, principal of Wealth Care L.L.C. in Merritt Island, Florida, suggests a tax-focused conversation with an experienced accountant during the tax year, not just a rushed conversation the following March or April. Then, you will be more likely to catch the need for quarterly filings or potential nanny tax issues.

Check your work. Last year's tax return is a good reference point, both when you start the process of filing tax returns each year and again at the end. "Sometimes the light bulb goes off and you realize you forgot all about that bank account that paid interest," said Cindy Hockenberry, the research coordinator with the National Association of Tax Professionals in Appleton, Wisconsin.

Double-check the math as well. The I.R.S. has both addition and subtraction on its list of most common errors. Topic 303, on the I.R.S. Web site, ticks off several others.

All of this work, the trips to the I.R.S. site and the time and extra expense, may feel as if it is a tax on top of a tax. Now that President Obama has lost a couple of nominees to tax errors, maybe he will consider the possibility of finally simplifying the tax code.

Until then, however, it probably pays to be paranoid.


The Kentucky Appeals Court blocked the State of Kentucky from seizing the domain names of 141 gambling websites. One might think this happened in a fit of common sense and sanity, but that would be naïve. First of all the ruling was 2-1. Secondly, each of the "2", as we comment below, did not vibrate the rafters with their ringing denouncements of the whole idea. Parsing their comments leaves us with the interpretation that the gambling sites should expect another seizure effort in the future. We would recommend that they start getting customers used to the idea of directly typing in IP Addresses, like, directly into their browsers. Also, they should change their domain registrars to some place outside the U.S. and OECD.

[T]he Kentucky Appeals Court ruled on behalf of online trade association iMEGA against the forfeiture action of 141 internet gambling domain names sought by Gov. Stephen Beshear to protect the state of Kentucky's gambling industry from online gambling websites. The Kentucky Court of Appeals issued a ruling ... prohibiting the seizure of 141 Internet domain names by the state.

In a 2-to-1 majority opinion, the court ruled for the Interactive Media Entertainment and Gaming Association (iMEGA) in its suit against Judge Thomas D. Wingate ... by blocking the seizure orders issued by the Franklin (Kentucky) circuit court judge for the domain names, all related to Internet gambling ...

Judge Michelle M. Keller, in her majority opinion, found that Internet domain names for online gambling Web sites were not illegal "gambling devices" by Kentucky law, as had been claimed by attorneys representing the Commonwealth, in their attempt to seize control of the names from their owners. Judge Keller stated that while the Kentucky legislature could have chosen to include Internet domain names in its gambling devices law, it had not, therefore the Commonwealth could not rightfully proceed with its forfeiture action.

"[I]t stretches credulity to conclude that a series of numbers, or Internet address, can be said to constitute a "machine or any mechanical or other device ... designed and manufactured primarily for use in connection with gambling," Judge Keller wrote. "We are thus convinced that the trial court clearly erred in concluding that the domain names can be construed to be gambling devices."

On the other hand, she started by saying that the problem was that Kentucky failed to include Internet domain names in its gambling devices law. So is her credulity stretchable or not?

Judge Jeff S. Taylor, also writing for the majority, added that the Commonwealth could not seek a civil forfeiture based on a criminal statute when there had been no criminal proceeding. Since there had been no criminal proceeding or conviction against any of the Internet domain name owners, the Commonwealth could not take control of their property.

Another technicality, albeit an interesting one, which fails to say that Kentucky's case was flawed at its very root.

Judge Micheal Caperton, in his dissenting opinion, wrote that the Internet domain names were one part of a larger mechanism for gambling, which included computers and Internet service, and thus, in his opinion, met the definition of a "gambling device" under Kentucky law.

"This decision confirms why we went the way we did with suit ," said Jon L. Fleischaker, attorney for iMEGA and managing partner at Dinsmore & Shohl in Louisville, Kentucky. "We knew when we brought this to the Court of Appeals, that we would get justice for iMEGA and the domain names in Kentucky."

Justice of a rather tenous sort, per our previous comments.

Fleischaker had argued in a December 12, 2008 hear before the Court of Appeals that the Internet domain names were no more than "billboards" for the Web sites, and not mechanisms for gambling. Fleischaker had also argued that the Commonwealth's attorneys could not try to fashion a civil law remedy with a criminal statue to justify the seizure of the domain names.

"We are very happy with the court's ruling today," said Joe Brennan Jr., chairman of iMEGA, an Internet trade association in Washington, D.C. "The judges clearly agreed with our interpretation of the law, and thankfully, this reverses what would have been a terrible precedent for our country and the Internet."

The Court in its decision declined to review additional arguments submitted by the Interactive Gaming Council (IGC) and attorneys representing Sportsbook.com, also seeking to have the domain name seizures blocked.


Twitter "is on its way to becoming the next killer app," according to Time. Many think it is the next big thing and all that. Barack Obama uses Twitter.

According to its home page, Twitter is "a service for friends, family, and co–workers to communicate and stay connected through the exchange of quick, frequent answers to one simple question: What are you doing?" On the Twitter Wikipedia page the description is: "Twitter is a social networking and micro-blogging service that allows its users to send and read other users' updates (known as tweets), which are text-based posts of up to 140 characters in length. ... Twitter is something like a web-based IRC [chat] client."

Just what we need -- another way to waste lots of time on the internet, right? And one that helps you lose still more privacy: "Twitter collects personally identifiable information about its users and shares it with third parties. Twitter considers that information an asset, and reserves the right to sell it if the company changes hands." (Wikipedia)

It turns out to have some very useful purposes, as some of the stories on the Twitter Wikipedia page testify. And according to this article from Lifehack, Twitter is a useful business tool for customer service or building a brand name. As with many internet-based services, getting going can be the hardest part -- or may the second hardest, after limiting your time spent with your new toy once you have gotten going. Here is an easy-to-follow starting manual.

Twitter is clearly the Next Big Thing. In the past couple of months, we have seen CNN adopting it as a way of giving living feedback during their shows, celebrities from Britney Spears to Demi Moore opening accounts, and hundreds of thousands of new users join the ranks of Tweeters.

Businesses are getting into the Twitter game, too, using it as a way to provide near-instantaneous customer service, to promote their services, or to maintain brand awareness by staying engaged in ongoing conversations about their products and their competitors'.

We here at Lifehack have given plenty of advice about using Twitter effectively. [See here, here, here, here, and here.] Dozens of other sites have as well. But a lot of that advice has focused around principles for using Twitter, and often vague ones at that: join the conversation, do not spam, add value, be helpful -- that sort of thing. What is missing is a guide to actually using Twitter, a "best practices" guide that will walk people and businesses through the process of building up a core of followers and beginning to build a reputation on Twitter.

This is that guide. If you are on Twitter just to keep up with friends and find the best parties, this guide is not for you. But if you are looking to promote a business, build a brand, or keep up with your customers' problems using Twitter, these 10 steps will get you through the early phases – and hopefully build up enough inertia to carry you through the next ones.

(1) Sign Up.

You cannot win if you do not play. Go to Twitter.com and sign up. Choose a good username -- your name or some variation, or your company name. Avoid "cutesy" names (unless you have a "cutesy" brand) and names that are easily confused with someone else. Definitely avoid "AOL Disease." That is where every possible variation of your name is taken so you end up with your name and a string of digits after your name, like "dustin73948924" -- if you have a common name, use a memorable and representative handle (but make sure you use it elsewhere as well, since you are effectively [re-]branding yourself under this name). Make sure you post a link to your Twitter page on your blog, website, emails, and anywhere else you connect with people.

(2) Download and Install Tweetdeck.

There are lots of Twitter clients out there, and of course you can use the website as well, but for business and branding use, Tweetdeck offers several features that make it the best choice. First of all, Tweetdeck is an Adobe AIR application, which means it runs on virtually every current major operating system. Second, Tweetdeck's multi-column view lets you view a wide range of Twitter streams easily. Third, it allows you to create groups containing the tweets of a subset of all the people you follow, so you can separate out, say, business partners, clients, and suppliers. And finally, Tweetdeck has Twitter Search built in, and allows you to create permanent columns for each search term that are updated in more or less real-time. We will be using this last feature a lot in step 4.

(3) Tweet 10 times.

You can tweet all at once, or over a few days, but before you do anything else, you should start getting a history built up on your profile page. The reason is that as you follow people, they will be checking you out, and many people will not follow someone that does not seem to be actively using Twitter -- what is the point? Your Twitter profile does not say when you joined, so they have no way of knowing whether you are brand new or possibly the worst Twitterer ever.

So put up a bunch of tweets right away. Make them good, but not fake -- personal tweets are OK, as long as they are substantive, but no 2-word posts, or inane comments like "whee, this is fun." And puh-LEASE avoid the urge to write "Is this thing on?" or "Checking out Twitter" as your first post. Everyone else does that.

(4) Run three searches for your keywords.

At the top of Tweetdeck's window is a strip of icons, one of which will say "Search" when you mouse over it. It looks like a magnifying glass. Click that and run a search on keywords relevant to your business or products. This is how you will follow (and join in on) conversations that are relevant to you, demonstrating your expertise while participating in the community. Tweetdeck creates a new column for each search -- pick three keywords you think people are most likely to use to start with (you can also use phrases, just put them in quotes). For instance, if you are Mountain Dew, you might search for "dew", "thirsty", and "extreme sports". (You can always add more searches later -- for now, while you are getting started, stick to three so you do not get overwhelmed.)

(5) Respond to 10 or more tweets.

If you have picked good keywords, you should have plenty of examples of people talking about your company, your product, your competitors, or things your audience is likely to be interested in. Pick 10 of them, hit reply (hover your mouse over the speaker's avatar and click the "swoopy arrow" button (it will say "Reply To" when you mouse over it), and talk to them. Answer their question if they have asked one. Point them to a website or blog post they might be interested in (not necessarily your own). Say how cool whatever they have linked to is. Ask your own question. Just generally, you know, talk to them. Like a person. NOT like a PR person, like a real one.

As you go through the next few steps, keep doing this -- every day if you want, every few days or so at least.

(6) Follow 100 people.

Now you have a track record of interesting, helpful things you have said -- you make a pretty compelling person to follow. Some of the people you responded to in #5 will already have followed you, as well as some of your homepage visitors and others you have shared your link with. Now you want to wade into the general stream of Twitter conversation and make yourself known. So follow 100 people -- that is where the "magic" starts to happen with Twitter, and it is a reasonable amount for a beginner to track.

How to find Twitterers worth following: (7) Follow almost everyone back.

At this point in the game, it does not pay to be too choosy about who you follow -- you can always un-follow people later. There is a kind of etiquette to following and not following people -- if you have few followers and someone follows you, it looks like a pretty big rejection if you choose not to follow back. On the other hand, once you have hundreds or thousands of followers, and especially when you are already following hundreds of people, it looks more like good time management and less like a personal slap in the face when you do not follow someone back. Of course, if they are offensive in some way, use your own judgment, but the general rule should be "if they follow you, you follow them."

Unless you change this in the settings, you will get an email every time someone follows you. And unless you are insanely famous and can expect hundreds or thousands of new followers a day, I recommend you do not change that setting.

(8) Find at least 1 Tweet to respond to every day.

You are following at least 100 people, you have got around 100 people following you, you are watching and participating in conversations relevant to your company or brand -- now you are in maintenance. For a while at least, make sure you are responding to at least one person from your keyword searches a day -- these are not people you follow, so this is how you expand beyond your network of followers, and hopefully increase its size. It is also how you build your reputation as an engaged, concerned expert. Which is the point.

Do as many as you feel like, but do it every day -- you are building up a habit here.

(9) Post at least one “status update” every day.

Also post at least one fresh, interesting thing every day for a while -- again, you are building up a habit. Plus, you do not want to appear to only respond to other people -- you want to present yourself as an original voice in the Twitterverse, someone who makes waves and does not just react to ripples.

(10) Respond to almost every @reply or direct message.

If people care enough about you to contact you directly, show that you care about them by responding directly, in the same way they contacted you. That is, if they @replied to something you said, @reply to them back; if they privately direct messaged you, DM them back. You are showing respect for your audience, engagement with the Twitter community, and hopefully your extensive knowledge and compassion. All of which beat a stick in the eye.

Bonus tip: Enjoy yourself.

Twitter is, first and foremost, a social environment. People use it to have fun. And they tend to be very good at sniffing out insincerity, PR-speak, and all-around social selfishness. If you are not having fun, turn your Twitter account over to someone in your organization who will -- or hire someone, if you have to. Twitter is not an advertising platform (yet?) and it is not a broadcasting platform. It is a conversation platform, or better yet, an interaction platform. Interact genuinely and unselfishly -- just like you would like people to see you and your business.

As you walk through these steps, your competence will grow and you can add more searches, follow more people, and tweet more. These tips are meant to get you steadily to about 300-700 followers -- after that, your only limit is the size of the audience for your niche or niches that use Twitter, and your own creativity. Remember, your niche is more than just your product's users or potential clients. Try to connect with people who live and work in your city, whose share interests with you, or even just people whose tweets you like. That is how you will build your audience and, hopefully, your clientele.

Good tweeting!

5 Reasons to Care About Your Online Presence, and 3 to Forget About It

When looking at friends' Facebook sites the words that immediately spring to mind are "time sink." The second ones are "more loss of privacy." And after reading some of the site content the thought that occurs is "too much information!"

As we allude to in the post above, and not surprisingly given our orientation here at W.I.L., we look askance at easily available sources of information about us. But a large number of people obviously have decided, consciously or not, that the benefits are worth the information disclosure and time expenditure. For those that want to make the decision conciously, this article has a worthy compilation of costs and benefits to consider.

It has gotten to the point that you just are not keeping up with the times if you do not have a Facebook account, a LinkedIn profile, a Twitter feed and a presence on a dozen other websites. It can be crazy trying to keep up with all of it -- and there are new social networking websites coming out every day. What can you do? It is absolutely imperative that you are on all of them, right?

Well, there are some clear benefits to spending time on all those websites that make up your online presence -- but there are also plenty of drawbacks. It is worth taking a look at the reasons you should care about creating social networking profiles and updating them, as well as considering the negative aspects of dealing with all of those sites.

5 Reasons to Care About Your Online Presence
  1. Employers and clients look for you online. While many of those people interested in offering you work are looking for your contact information and your references, plenty are looking for all the bad things about you that may have be listed online. Having social networking profiles can give you several pages that pop up on a Google search that are more or less under your control. They are usually highly ranked and can help you show off your talents in a more recognizable format than a blog or personal website.
  2. You can make contacts and find friends online. Stories of long-lost friends reconnecting on Facebook and other websites are becoming common. And social networking sites do not just limit you to friends you already know: they provide an easy forum to find business contacts without any requirement that you actually leave your home or office and go to a networking event.
  3. You can communicate even without contact information. Many important people in a variety of industries have at least a placeholder profile up on a variety of social networking website. And while you could never get a direct phone number for some of the people higher up the food chain, you can still easily send them a message on LinkedIn or whatever other website they frequent. It is possible that some sort of assistant will review your message -- but you can still get a lot closer to bigwigs via social networking.
  4. If you do not claim your name on all the various social networking sites, someone might do it for you. Seth Godin, the author of numerous marketing books, provides a classic example: Despite the fact that someone has claimed the name "sethgodin" on Twitter, it was not actually Godin (who blogged about the fact). In Godin's case, the account was not used maliciously -- but it also was not a case of someone with the same name getting there first. If you do not grab your name on every social network that pops up, you may not be so lucky. Someone could easily use such an account to spread false information or otherwise cause trouble.
  5. Everybody else is doing it. Peer pressure is a poor excuse -- but if it is becoming an industry standard in your field to have an online presence, not having one can be problematic in the long run. And if all of your friends stay in touch through a particular website, you certainly do not want to get left out. Merely putting together a profile and updating it can be a small investment of your time, compared to not having the ability to connect to customers or friends online.
3 Reasons to Forget About Your Online Presence
  1. Employers and customers do not actually care that much about your social networking abilities. Sure, just about everyone will run a search on your name these days -- but as long as they do not find anything bad, it does not particularly matter what they do find. If you have a particularly common name, you are likely to get lost in the shuffle anyhow. You have got plenty of other ways to describe your abilities and connections, and you can probably do a better job of that fact than a standardized profile page.
  2. Putting too much information out there is not necessarily safe. Even assuming that identity thieves are not monitoring your every move through all your online accounts, telling your clients, family and everyone else every detail of your life just does not sound like a good idea. There are so many horror stories about over-sharing, and having a thorough online presence just asks for such a story to happen to you.
  3. Social networking and crafting an online presence take a lot of time. If you get going, it is not hard to spend hours on a site like Twitter. You can call it networking or marketing, but either way, you have spent time that certainly could have been put to better use than trying to connect with the kids in your third grade class.
Finding Some Balance

It seems like social networking and online presences only have the value that we give them -- and giving them too much value is not wise. That said, I think that maintaining a profile or two is a good idea. It is worthwhile to grab your name on multiple sites, but I do not bother with constantly updating every site I have a profile on. Instead they all point to either my website or the two sites that I do interact with regularly.

Like most things, caring about your online presence in moderation can be useful. It is when a person tries to update every site under the sun that it becomes useless. It is worth thinking about just what level of moderation makes sense for you.


Citigroup Cans Bahamas Trip

In an undoubtedly unwanted attack of conscience, someone at Citigroup decided it would be unseemly to spend a lot of money on a convention in the Bahamas after receiving a $45 billion subsidy from the U.S. government to keep Citigroup alive. If loss of perks like this does not cause them to be more careful during the next credit cycle upturn, we don't know what will!

Citigroup Inc., which recently secured a $45 billion bailout from U.S. taxpayers, has canned a Bahamas convention. The company's Primerica Financial Services canned the biannual convention, which was scheduled for June 17 to 20, at the Atlantis Resort in the Bahamas, Reuters News reports indicate.

"Everyone is aware that this is a time of unprecedented economic challenges," Primerica said in a statement, while adding that Citigroup canceled the convention "due to the current prolonged recession."

The U.S. government under the George Bush administration, bailed out Citigroup in November. The government initially injected $20 billion of capital and agreed to share losses on $301 billion of troubled assets. The infusion came a month after Citigroup had received $25 billion of additional capital from the government in October.

Lloyds Banking Group May Face Accusations of Tax Avoidance

Lloyds Banking Group -- one of the banks bailed out by the British government -- has been accused in court of using a subsidiary to put hundreds of millions of pounds into tax avoidance schemes, the Guardian newspaper reported ...

The newspaper said the government's tax body, HM Revenue and Customs (HMRC), has accused the bank of making huge loans to U.S. financial institutions and disguising them as commercial investments for tax purposes.

Citing a tax tribunal in London this week, the Guardian quotes HMRC lawyer David Ewart as saying that on two occasions, £350 million loans were made through a subsidiary, Hill Samel Investments Ltd, and "disguised as an investment." Ewart said these were "two instances of the use of a tax avoidance scheme which was used by several UK banks."

Lloyds declined to comment directly on the case but said in a statement that its disclosure regime was "second to none."

"We take our obligation to taxpayers very seriously. We have been for some time one of the UK's largest corporate taxpayers. Our disclosure regime is second to none, and we have been rated one of the best for our tax transparency," it said. "As a primarily UK-based business we pay most of our tax in this country. Where we pay taxes in other jurisdictions, we do so to the same high standards of disclosure, and are always committed to fulfilling our tax obligations to the authorities."