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The “Panama Papers” and the Ordinary Expat


By Orlando Gotay

Over the course of the past few days we have added new words to the lexicon: “Panama Papers,” millions of documents leaked from Mossack Fonseca, a Panama law firm. They suggest that hundreds, and possibly thousands, had, through intricate networks of business entities, succeeded in concealing the location, origin, and ownership of a massive amount of assets ⎯worth billions of dollars⎯out of the reach of tax administrations worldwide.

The roster of folks involved is interesting because of their collective high profile. The Icelandic prime minister recently stepped down as angry constituents let him know their feelings about his name being involved.

What collateral consequences will the Panama Papers will have on Mr. or Mrs. “Ordinary” Expat—folks like you and me?

No US expat worth his or her salt ignores US Treasury efforts to identify those who have unfulfilled fiscal obligations. FATCA, initially seen by many as overreach by the US in the fiscal sovereignty of other states, began yielding results: prosecutions of individuals involved in schemes to conceal assets and scores of “voluntary” disclosures.

Little by little, other tax authorities began understanding that the US idea was one they could implement in their own way. The Organization for Economic Co-operation and Development has developed a common reporting standard for financial assets. Member countries will begin cross reporting of assets owned by nationals of member countries, adopting the spirit of FATCA, if not its form.

The Panama Papers provide fuel to the fire in the “war” against undeclared income and assets, suggesting there is far more out there to be “had.” The low-hanging fruit will go first. What will happen when all those are taken into account? Of course, hands are going to reach farther and farther up the tree. Suddenly, the Ordinary Expat may “look” like a Mossack Fonseca client.

Aristóteles Nuñez, head of the SAT (the Mexican “IRS”) stated his agency has begun to look at the named names. He says that offshore ownership of assets is not necessarily illegal, and I concur. But back to the Ordinary Expat—could he or she expect a paradigm shift? Possibly.

We don’t know how much or how soon. One thing is for certain: the Panama Papers may alter the prospects of increased fiscal vigilance worldwide, even if we are not prime ministers, rock stars, or tycoons.

Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the US Tax Court and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the tax matters of US expats in Mexico. He can be reached at


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