STEVE INSKEEP, HOST:

Now, over the summer, some conversations turned to the offshore financial holdings of Mitt Romney and other politicians. Our Planet Money team wasn't feeling political, they were feeling curious. They wondered how exactly does one set up an offshore company and can we get one.

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INSKEEP: After Googling offshore company registration, NPR's Chana Joffe-Walt made some calls.

CHANA JOFFE-WALT, BYLINE: Hi, my name's Chana Joffe-Walt. I'm calling, hoping to set up a shell company somewhere offshore - Cayman Islands, Belize, Bahamas.

INSKEEP: Within days, our Planet Money team owned two shell companies - one in Belize and one in a tax haven in the United States - Delaware. It was incredibly quick, incredibly easy. Or at least it seemed that way to Chana at first.

JOFFE-WALT: Our companies arrived in the mail. I have them right here. I don't know what I expected, but somehow, that was surprising to me, that you just pay a fee and then there are your shell companies, a pile of papers in a DHL envelope from a Central American island. I kind of couldn't get over how exactly like the movies everything felt.

I was offered a simple promise over and over: complete confidentiality. No one will ever know you are behind your company. Well, a guy named David Buckley heard that first story where we bought our companies, and we went on and on about how secretive and simple the whole thing was, and he got worried about me.

DAVID BUCKLEY: Oh, I just thought she entered a minefield of U.S. tax compliance obligations, and I hope there's someone there who can help her.

JOFFE-WALT: David Buckley is a tax lawyer with Rogin Nassau, and he emailed us to say, sure, it's easy to set up a company offshore, but as soon as you do that, you step into an IRS sinkhole. That got our attention. So my colleague David Kestenbaum and I drove to Buckley's firm in Connecticut to ask him one important question.

DAVID KESTENBAUM, BYLINE: How do we make sure Chana didn't break the law? Like, what does she have to do now that we have these things?

BUCKLEY: Well, it depends on a few things.

JOFFE-WALT: It turns out that despite all the big red letters advertising absolute confidentiality, I am legally required to declare to the IRS that I own a company offshore, even if - as is true in my case - the company has done absolutely nothing, just exists in some papers. At some point, I may need to also file additional forms, including one that has a helpful estimate for how long the whole thing should take.

BUCKLEY: The recordkeeping estimated burden is 82 hours, 45 minutes.

JOFFE-WALT: Eighty-two hours and 45 minutes.

DANIEL GOTTFRIED: And they're notorious for underestimating those times, by the way.

JOFFE-WALT: That's David Buckley's colleague Daniel Gottfried. The two continue.

BUCKLEY: Learning about the law or the form, 16 hours 14 minutes. And preparing and sending the form to the IRS is 24 hours and 17 minutes.

JOFFE-WALT: You hear about the Cayman Islands, Bermuda, British Virgin Islands, these places that are called tax havens, and it kind of sounds like if you can figure out how to get your money there, you suddenly don't have to pay taxes. But, of course, that is not true at all. If you're an American earning income, you do have to pay taxes. And, in fact, the IRS wants you to report a lot about what exactly you're up to offshore.

But if you were a person determined to evade taxes, and that is your whole goal, creating a complex financial structure in a tax haven will certainly make it harder for the government to catch you, but not impossible.

GOTTFRIED: Well, first of all, if you get audited, you may get caught.

BUCKLEY: Scorned lovers and, you know, disgruntled employees are a great source of information for the IRS.

JOFFE-WALT: It seems much harder than I expected to evade taxes.

BUCKLEY: Well, sorry to let you down.

JOFFE-WALT: To be absolutely clear, here, I am not trying to evade taxes. We have been upfront with everyone we've spoken with that we're reporters and we're trying very hard to keep this whole thing legal. Keeping it legal, it turns out, just may take an extra 82 hours and 45 minutes. Chana Joffe-Walt, NPR News.

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