Wealthy Bermuda residents are consulting advisors on the impact new US tax laws will have on their money.

The US, perhaps unlike any other country, taxes citizens and residents on their worldwide income. Even residing abroad does not exempt such people from the requirement of filing annual tax returns.

Two years ago, Forbes magazine reported that some wealthy Americans were giving up their US citizenship and moving to other countries in an effort to protect their fortunes from an increasingly aggressive Internal Revenue Service.

The magazine reported from a Bermuda conference on offshore money that a Philadelphia lawyer talked to new clients about expatriating from the US every week.

They just couldn't pay the federal tax rate and maintain the lifestyle they desired, he said, and they were prepared to consider actually giving up their US citizenship and adopting a new country as home. Some highly prominent people did.

The US government is seeking, through legislation signed into law this week, to get more information on offshore assets, and vehicles such as trusts used to protect those assets.

The Clinton administration has viewed foreign, or non-US, trusts as a vehicle for abusing tax provisions.

London lawyers at Bryan Cave wrote significantly on the entire issue in a report entitled Government Intervention: The Empire Strikes Back -- US Treasury bombshells, a year ago in June.

They said: "Treasury appears to be genuinely concerned that US taxpayers may employ foreign trusts to evade, rather then avoid, tax liabilities.'' Their view was that the US Treasury's concern was raised when they read the Forbes magazine article that discussed asset protection trusts (APT's). The officials, they said, have a "fundamental suspicion of foreign trusts'' generally.

The issue of confidentiality -- of having to tell `Uncle Sam' where all one's assets are -- is considered by some to be even more unacceptable than having to pay the tax.

But the tax is an issue. Americans with an estate worth $3 million or more pay 55 percent in estate tax. Who wouldn't consider a warmer climate and zero in estate taxes? Even those leaving $600,000 to their children face losing 37 percent in a marginal rate.

The Forbes article estimated in November 1994 that the wealthy held over two trillion dollars in offshore accounts from Zurich to the Cayman Islands. The article attracted significant attention from President Clinton and those in his administration.

The assumption is that some of that money belongs to US citizens who have forgotten to tell the US government when filing tax returns.

Bermuda is witness to the fact that offshore money has been growing faster than any other segment of the financial services industry. Forbes quoted a Merrill Lynch private banking executive as saying that it was "multiplying at a double digit rate of growth''.

Merrill's trust bank in the Caymans had assets growing at over $100 million a month, and had nearly $5 billion in the assets of the wealthy.

The direct result of the high profile article, it is widely believed, is a revised set of reporting rules signed by President Clinton yesterday, seeking to chase down US assets that have escaped taxation.

Some of the new rules relate to more reporting of foreign trusts.

But also, a new presumption exists that wealthy people leaving the US to live elsewhere, are doing so to avoid tax.

And on this score they will be deemed to be guilty of such an allegation, until they prove otherwise. Such suspects would face increased taxation. They would also automatically be subject to more extensive reporting.

But also, said Patrick Hackenberg, a US tax specialist with Ernst & Young/Bermuda, "They are changing the law to impact long term residents of the US, who were not affected in the past. Before, the law applied to only Americans who gave up their citizenship. Now new laws will apply to long-term residents, such as green card holders or others who have lived in the US for eight of the last 15 years.

"In all of these cases now, except for certain exemptions, special tax provisions will apply for ten years after you expatriate. You will be subject to US taxes for ten years after leaving the US and giving up either citizenship, a green card or other residency status.'' Mr. Hackenberg also noted that another new rule automatically deems those emigrating to be leaving for the specific purpose of avoiding tax, if they have paid $100,000 a year in taxes for five years or their net worth is more than a half a million dollars.