Nick Fountain

Yeah, dirty dozen activated, industry put on notice.

But the loophole was still out there.

They needed to figure out a way to truly close it.

And it turned out that inside of the treaty, there contained a little important take-backsies clause.

Which said, basically, if there's something that's not clearly defined in the treaty...

They said, oh, by the way, when the treaty said the U.S.

would honor the terms of these Maltese retirement accounts for Americans, it didn't mean that Americans could put in highly appreciated assets.

It meant they could deposit their already taxed cash, just like in the U.S.,

In other words, no real estate, no Bitcoin, no chunks of companies.

And just like that, less than a year after Carolyn first learned about the loophole, the IRS was able to clarify a previously mushy-mouthed area of tax law.

This was a scary time for people who did this Malta thing and the whole cottage industry that encouraged them to do it.

Because the government had sort of shifted that line between legitimate and illegitimate.

They said, you cannot use that loophole.

And actually, you maybe never could.

Of course they didn't do that.

Their lawyers and advisors started to meet to strategize on how they were going to fight back against the IRS and protect their loophole.

After the break, we hear someone who is now one of the most powerful tax officials in President Trump's administration on tape leading the charge to protect the Malta tax loophole.

So you've got all these very wealthy people with millions, even billions of dollars in these Maltese retirement accounts.

But now the IRS is telling them, no, you can't be putting your chunks of companies or any appreciated assets in there.

But just because the IRS says, uh-uh, doesn't necessarily make it so.