In an effort to address the large backlog of cases awaiting an administrative hearing pursuant…
16 February, 2011
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By Parag P. Patel, Esq. | Updated February 16, 2011The New Jersey Department of Treasury, Division of Taxation announced today that it will offer a Second Voluntary Compliance program to complement the Internal Revenue Service Second Special Voluntary Disclosure Initiative to identify assets and unreported income from previously sheltered offshore accounts. Similar to the IRS initiative, the New Jersey initiative covers tax years 2003 through 2010.
Individuals and businesses that come forward voluntarily and disclose their tax obligation by September 30, 2011 will avoid all civil penalties, including the 50% civil fraud penalty. However, the 5% late payment penalty and the 5% amnesty penalty will not be waived.
In order to participate in New Jersey’s initiative by September 30, 2011, the individual the business, or the authorized representative, must apply to the Division by submitting a letter requesting acceptance into the program. The letter should contain the following items:
- Applicant’s complete name and address
- NJ tax identification number and federal number, if different
- The tax type and the tax years affected
- A New Jersey original or amended return and a copy of the federal original or amended return, for each year
- For each year, submit remittance of the additional tax due, interest (see Technical Bulletin 21(R) for appropriate interest rates), 5% late payment penalty and 5% amnesty penalty, if applicable (tax years 2003 through 2007)
- An explanation of the circumstances to support the application
- Whether an application was submitted to the IRS offshore voluntary disclosure program
- A certification that the applicant will cooperate with the Division of Taxation to establish the correct tax liability incurred from this voluntary disclosure
- Completed Appointment of Representative form M-5088-R, if pertinent
The Division will promptly review and consider all applications and notify the applicant or their representative of the decision. In order to conclude the voluntary compliance agreement, the applicant must submit a copy of the IRS acceptance letter into the IRS second offshore voluntary disclosure program and copies of the IRS documents reflecting the federal tax examination changes. Upon receipt and review of the federal information, the NJ tax liability, including tax, interest, the 5% late payment penalty and the 5% amnesty penalty, will be finalized. At such time, the taxpayer will be advised of their actual New Jersey tax, penalty and interest liability as well as any additional amount payable or any overpayment that may be due.
New Jersey taxpayers who disclosed foreign bank accounts to the IRS are very likely to be uncovered by the Division. The Offshore Voluntary Compliance Initiative offers New Jersey taxpayers a means to make disclosure to New Jersey with the reduced penalties of 10% of the additional tax owed. These terms are far more generous than those that had been offered by the IRS.
New Jersey urges those individuals and business entities with undeclared offshore assets and income to participate in this program rather than await certain discovery since failure to do so will result in the imposition of all penalties and may include referral for criminal prosecution.
To apply, please submit a letter with the required information to:
Individual Tax Audit Branch
PO Box 288
Trenton, New Jersey 08695-0288
Trenton, New Jersey 08695-0288
For questions concerning individuals and partnerships:
please call the Individual Tax Audit Branch at 609-292-2163 and ask for Supervisor Dan Nagle.
please call the Individual Tax Audit Branch at 609-292-2163 and ask for Supervisor Dan Nagle.
For questions concerning corporations and related business entities:
please call the Office Audit Branch at 609-292-7199 and ask for Supervisor Joseph Immordino.
please call the Office Audit Branch at 609-292-7199 and ask for Supervisor Joseph Immordino.
Parag P. Patel, Esq. brings over three decades of experience to individuals and businesses facing complex tax problems. Holding advanced degrees from Georgetown University Law Center (J.D.) and New York University School of Law (LL.M. in Tax Law), the nation’s top tax programs, Mr. Patel delivers sophisticated and creative strategies in complicated federal and state audits, penalty abatements, and foreign asset/income reporting. His practice emphasizes international tax matters, specifically foreign financial account reporting (FBAR), voluntary disclosures, and penalty defense.
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