US to Shut $11bn Offshore Voluntary Disclosure Programme

Courtesy of International Adviser


The disclosure scheme that allows US taxpayers hiding offshore accounts to come clean and face more lenient penalties will close in September 2018, the Internal Revenue Service (IRS) announced this week.

The IRS said it will start ramping down the offshore voluntary disclosure programme (OVDP) and end it on 28 September.

By alerting taxpayers now, the IRS hopes that those who have not taken advantage of the scheme will be motivated to act.

Acting IRS commissioner, David Kautter, said: “Taxpayers have had several years to come into compliance with US tax laws under this programme. All along, we have been clear that we would close [it] at the appropriate time, and we have reached that point.”

The planned end of the programme also reflects advances in the IRS’s oversight of taxpayers’ assets. This includes the foreign account tax compliance act (Fatca), advances in third-party reporting and increased awareness of US taxpayers of their offshore tax and reporting obligations.

“Those who still wish to come forward have time to do so,” Kautter added.


56,000 taxpayers

The OVDP has netted $11.1bn (£8bn, €9bn) for the IRS since it was launched in 2009.

More than 56,000 taxpayers have used one of the programmes to pay back-taxes, interest and penalties.

The number of voluntary disclosures peaked in 2011, when around 18,000 people came forward. That number has steadily declined over the years, with only 600 taxpayers coming forward in 2017.



The IRS was quick to add that it will continue to use other tools in its arsenal to combat offshore tax avoidance.

These include taxpayer education, whistleblower leads, civil examinations and criminal prosecution.

Since 2009, the IRS Criminal Investigation unit has indicted 1,545 taxpayers on criminal violations related to international activities – resulting in 671 taxpayers indicted on international criminal tax violations.

Don Fort, chief of the Criminal Investigation unit, said: “The IRS remains actively engaged in ferreting out the identities of those with undisclosed foreign accounts with the use of information resources and increased data analytics.

“Stopping offshore tax noncompliance remains a top priority of the IRS.”


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Farringdon Group

+60 3 2026 0286

Week 11 2018 In Review


Stocks fell modestly for the week after a Friday rally broke a four-day losing streak for the Standard & Poor’s 500 Index and partially compensated for earlier losses. Small- and mid-caps outperformed larger shares. Within the S&P 500, utilities and real estate shares fared best, helped by a decline in longer-term Treasury yields, which make their healthy dividend payments more attractive in comparison. Conversely, the much larger financials sector, which sees lending margins squeezed by lower interest rates, was among the market’s weaker segments.

Major trading partners in Asia and Europe appeared to be taking a wait-and-see approach to Trump’s implementation of tariffs. Markets were also unsettled by the dismissal of Secretary of State Rex Tillerson, widely viewed as a free trade advocate within the administration. Also worrisome were what appeared to be reports that President Trump had requested the preparation of a package of tariffs targeting China.

The week’s economic data may have also dampened sentiment. The Commerce Department reported that retail sales declined 0.1% in February, well below the 0.3% rise many expected. February consumer prices rose modestly and in line with expectations, but the absence of an upside surprise seemed to add to worries of a potential slowdown in global growth.


Europe has Mixed Week

European equities ended the week mixed amid relatively low trading volumes, disappointing inflation numbers for the eurozone, and political uncertainty about the prospects of a trade war and other geopolitical tensions. At the start of the week, the pan-European benchmark STOXX 600 gained ground following the strong U.S. jobs report the week before. Germany’s DAX 30, Spain’s IBEX 35, and France’s CAC 40 all trended higher, oil prices were steady, and volatile bond yields and interest rate uncertainty were no longer forefront topics. But by midweek, investor sentiment turned more negative. Optimism began to flag following U.S. President Donald Trump’s staffing reshuffles, UK Prime Minister Theresa May’s assertion that Russia was connected to the chemical poisoning of a former spy on British soil, and news of softer-than-expected economic data.

Meanwhile, the European Central Bank (ECB) signaled that it would continue its monetary policy and that it would have to have more confidence that inflation was rising before ending net asset purchases. Eurozone industrial production fell 1.0% in January compared with the month before.


China Merges Banking and Insurance Watchdogs

China announced that it would merge its banking and insurance regulators, a long-awaited move that aims to tighten control of the country’s financial sector and curb the risks that have accompanied years of rapid credit growth.

Under a proposal released at the country’s annual legislative meeting, Beijing plans to merge the China Banking Regulatory Commission and the China Insurance Regulatory Commission. The People’s Bank of China (PBOC), the central bank, will gain new powers to draft financial sector regulations, in addition to determining monetary policy.

Combining the nation’s banking and insurance watchdogs marks China’s biggest financial industry overhaul in over a decade. The shake-up comes as Chinese officials are seeking to deleverage the corporate sector and clamp down on riskier lending practices. It also follows a Communist Party congress last October that cemented the authority of President Xi Jinping, who has made containing financial risks a priority as part of a goal to put China on a more sustainable growth path. Earlier in March, China’s party-controlled legislature voted to abolish term limits on the presidency, a move that effectively allows Xi to rule indefinitely.


All the best



Farringdon Group

+60 3 2026 0286