The New Jersey Department of Treasury, Division of Taxation announced today that it will offer a Voluntary Compliance program to compliment the Internal Revenue Service current 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 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, the individual, the business or 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
- 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
- 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
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 Voluntary Compliance 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 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:
New Jersey Division of Taxation
Individual Tax Audit Branch
P.O. Box 288
Trenton, NJ 08695-0288
For questions concerning individuals and partnerships, please call the Individual Audit Tax Branch at (609) 292-2163 and ask for Dan Nagle, Audit Supervisor.
For questions concerning corporations and related business entities, please call (609)292-7199 and ask for Joseph Immordino, Audit Supervisor.