Tax Alert: New Jersey Division of Taxation Offers Offshore Voluntary Compliance Program
11/20/2009
On November 4, 2009, the New Jersey Division of Taxation (the “Division”) announced that it will offer a voluntary compliance program to identify assets and unreported income from previously sheltered offshore accounts.
Except for the 5 percent amnesty penalty, the Division will not impose civil penalties, including the 50 percent civil fraud penalty, on those individuals and businesses (“taxpayers”) that voluntarily disclose their tax obligation stemming from unreported offshore accounts by December 31, 2009.
In order to participate in the voluntary program, taxpayers or their authorized representatives must apply to the Division by submitting a letter requesting acceptance into the program by December 31, 2009. The contents of the letter must include the following information:
- Applicant’s complete name and address;
- New Jersey tax identification number and Federal number, if different;
- The tax type and tax years affected with the estimated tax due for each year;
- 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 and to pay all taxes, interest, and the 5 percent amnesty penalty incurred from this voluntary disclosure; and
- Completed Appointment of Representative (Form M-5088-R), if applicable.
The letter must be mailed to:
Director
New Jersey Division of Taxation
PO Box 240
Trenton, New Jersey 08695-0240
The Division will review all applications and notify each taxpayer, or their representative, of the decision to accept the application. Within 30 days of acceptance into the program, as a demonstration of good faith, taxpayers must pay the estimated tax due, as declared in the application. To finalize the agreement, taxpayers must submit a copy of the IRS acceptance letter into the IRS offshore voluntary disclosure program, copies of the IRS documents reflecting the Federal tax examination changes, and the appropriate New Jersey amended or original tax returns. Upon receipt of such information, the Division will compute and assess taxpayers the actual tax liability (including tax, interest, and the 5 percent amnesty penalty less the payment previously made). Taxpayers must pay the balance due within 30 days.
We strongly recommend that you consult with your J.H. Cohn tax advisor concerning this matter in order to minimize civil, or possible criminal penalties.
For more information on this and other State and Local tax issues, please contact your J.H. Cohn advisor or Ernest J. Barbaris, J.H. Cohn tax partner and director of the Firm's State and Local Tax group, at 877-704-3500.
Ernest J. Barbaris, CPA, MST, is a J.H. Cohn LLP tax partner and director of the Firm's State and Local Tax Group, where he specializes in corporate taxes. His specialization extends into areas of Federal state, and local income taxes; FASB 109 and FIN 48 analyses; tax planning; tax audit defense; settlements; nexus studies; and sales and use tax consulting. He can be reached via email or at 877-704-3500.
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.