Tax Alert: Connecticut Offers Offshore Voluntary Compliance Program
12/17/2009
On September 25, 2009, the Connecticut Department of Revenue Services (“DRS”) issued Special Notice 2009(5) establishing the Connecticut Offshore Voluntary Disclosure Program (“VDA” or “Program”) for taxpayers who failed to report and pay Connecticut taxes on income derived from undisclosed foreign accounts and/or undisclosed foreign entities. All taxpayers (including individuals, trusts, and all business) may avail themselves of this Program, which ends January 15, 2010.
Taxpayers with undisclosed foreign accounts or entities should consider participating in the Program because, if accepted into the program, they can eliminate the risk of criminal prosecution and avoid civil penalties relating to foreign accounts and foreign entities.
In order to participate in the Program, taxpayers must apply with the DRS by submitting a letter by January 15, 2010 requesting acceptance into the Program. To remain anonymous when making a VDA request, taxpayers may engage a representative such as a tax preparer, accountant, or attorney. The contents of the application letter must include the following information:
- Statement from the taxpayer of their intention to participate in the VDA program;
- Description of the source of funds or assets in each foreign account;
- Date the initial deposit in each foreign account was made or date on which the taxpayer took control or ownership of the foreign account;
- Documentation of whether the deposits/contributions to the accounts have been taxed and the years involved;
- Calculation of the amount of potential tax liability; and
- A statement of whether the taxpayer participated in the IRS’s Offshore Voluntary Disclosure Program.
Such information should be mailed to:
Connecticut Department of Revenue Services
Business and Employment Tax Audit Unit
25 Sigourney Street, Suite 2
Hartford, CT 06106
The DRS will review all VDA requests and notify the taxpayer, or its representative, whether the request to enter the Program was accepted or denied.
Taxpayers must generally pay the balance of tax and interest due at the time of their acceptance into the program. However, reasonable payment plans may be accepted.
For more information on this and other State and Local tax matters, please contact your J.H. Cohn advisor or Patrick J. Duffany, J.H. Cohn state tax partner, or Brenden M. Healy, manager, at 860-633-3000.
Patrick J. Duffany, CPA, J.D., is a tax partner in J.H. Cohn LLP's State and Local Tax Group, where he specializes in multistate taxation issues with an emphasis on New York and Connecticut state tax issues. He may be reached by email or at 860-368-3607.
Brenden M. Healy, CPA, is a is a tax manager in J.H. Cohn's State and Local Tax Group. He may be reached via email or at 860-368-5246.
Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing or recommending to another party any tax related matters.