The following horror story is true. It’s my story.

If this can happen to me, it can happen to you.

If this story will not persuade you to buy some gold coins or to set up a gold storage account outside the United States, I don’t know what will.

Check the daily price of gold here.

If owning gold is more than you can handle, then you need to consider an off-shore banking account. I’ll get to that at the end of this report.

A month ago, I was planning a morning flight out of Memphis to Atlanta. I had a 6:15 flight. So, at about 5 a.m., I went to my local bank. There, I inserted my ATM debit card. I entered $100 to withdraw. I got a note out of the machine, “Insufficient Funds.”

I was convinced that I had $500 in the account. I use it for my monthly bills. I don’t keep much money in it because I worry about identity theft.

I had a plane to catch, so I could not wait to find out what was wrong. When I got to Atlanta, I called my wife. I told her about the problem.

She looked into it. Here is what she found out. A bank employee in the bank’s Alabama operation had frozen my account two weeks earlier. The bank had not notified me of this freeze.

Why had she done it? Because she was ordered to by a woman in the Texas Department of Revenue.

What had that to do with my account in Mississippi? I had not been living in Texas since 1998.

My wife called the woman who ordered my bank account frozen. She was told that she had not paid taxes since 2003 on a solely owned corporation operating in Texas. But she owed no taxes. That corporation had ceased operating in Texas or anywhere else.

A corporation is a legal entity. It is not a proprietorship. Why had they frozen my account?

A month earlier, I had added my wife to the account. Her name came up on a computer operated by the woman in Texas. So, because of a corporate account still on the books in Texas, my account in Mississippi was frozen.

My wife had her accountant send a FAX to the woman in Texas, telling her that the corporation no longer operated in Texas. The woman then contacted the woman in Alabama, who removed the freeze.

Then, the next day, someone in Alabama re-imposed it.

My wife’s accountant contacted the woman in Texas. “Why did you put the freeze back on?” The woman denied that she had. She blamed the office in Alabama. “They must not have looked at the date on the original freeze. They thought it was a new freeze order.”

Again, she contacted Alabama, and the second freeze was removed.

In the meantime, every check I had written bounced. I was then assessed bounced-check fees by every one of them.

Understand how this worked:

My wife’s corporation in Texas had not paid taxes because it no longer operated in Texas.It took two years for the Texas Department of Revenue to assess the tax retroactively.No one in that department contacted my wife about the money owed.My wife’s name then appeared up on my account.The lady in the Department of Revenue spotted this and ordered the bank office in Alabama to freeze my account.The bank sent me no warning, before or after the freeze.The account’s funds were frozen until the lady in Texas told the lady in Alabama to unfreeze my account.

The lady in Texas told my wife that she freezes accounts all day long. That is her job. Obviously, she is very good at it.

As for the size of the tax said to be owed, she refused to disclose to my wife’s accountant on what basis the tax was assessed.

She made it clear to my wife that no money had been removed from my account.

My wife’s name also appears on our joint account in Arkansas. But the money in that account exceeded the amount of the tax said to be owed. Thus, the account could not be frozen.

The lady in Texas waited until a smaller account with my wife’s name on it appeared on her screen. Thus, the freeze would shut down the account.

A frozen account guarantees that someone will contact the lady in Texas.

Why no warnings — from Texas or the bank? Because this tactic will not work if the account holder has the opportunity to withdraw the funds.

So, here’s the deal. A tax-collecting bureaucrat in Texas uses a data base to identify every bank account in the country that has a person’s name on it. Irrespective of the legal separation of a corporation from the assets of that corporation’s officers — the so-called “veil of the corporation” — the tax collector can freeze any bank account in any bank in the country. She just contacts a low-level bank employee — the freeze lady, I guess — to freeze an account, and on the bureaucrat’s word, the account is immediately frozen. The owner of the account is not informed of the freeze until the checks start bounding or the ATM reports “Insufficient Funds.”

Did you know this? My wife’s accountant didn’t.

February 1, 2006

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