New Jersey Announces Voluntary Program for Taxpayers to Disclose Offshore Accounts

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New Jersey Announces Voluntary Program for Taxpayers to Disclose Offshore Accounts
December 1, 2009
From the December 2009 Riker Danzig Tax and Trusts & Estates UPDATE
Area(s) of Practice:
Tax Law

On November 4, 2009, the New Jersey Division of Taxation ("Division") announced that it would offer a Voluntary Compliance program to complement the IRS program aimed at identifying assets of and unreported income from previously sheltered offshore accounts. Individuals and businesses that voluntarily disclose their tax obligations by December 31, 2009, will avoid all civil penalties, including the 50% civil fraud penalty, but not the 5% amnesty penalty.

To participate in the program, by December 31, 2009, individuals and businesses, or their authorized representatives, must apply to the Division by submitting a letter requesting acceptance into the program containing the following:

  • the applicant's complete name and address;
  • the 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 to establish the correct tax liability and to pay all taxes, interest and the 5% amnesty penalty incurred from this voluntary disclosure; and
  • a completed Appointment of Representative form M-5088-R, if applicable.

The letter should be sent to:
New Jersey Division of Taxation
PO Box 240
Trenton, NJ 08695-0240

The Division will consider the application and notify the applicant of its decision as to whether the applicant is accepted into the program. Within 30 days of acceptance into the program, applicants must pay the estimated tax due, as declared in the application. To conclude the voluntary compliance agreement, the applicant 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 and review of the federal information, the New Jersey tax liability, including tax, interest and the 5% amnesty penalty, will be finalized and billed with payment to be submitted within 30 days.

The Division indicated that individuals and businesses with undeclared offshore assets or income who do not participate in the program will be subject to all available penalties and may be referred for criminal prosecution.