To compliment the IRS Offshore Voluntary Disclosure Initiative (“OVDI”), the New Jersey Department of Treasury, Division of Taxation is offering its own offshore disclosure program named the Voluntary Compliance Initiative (“NJOVCI”). NJOVCI provides an avenue for NJ businesses and individuals to disclose unreported offshore income in consideration for reduced tax penalties and the avoidance of criminal tax exposure.
The IRS has made offshore tax evasion a top enforcement priority. Any time during the year a U.S. citizen or resident has offshore financial accounts totaling more than $10,000 in the aggregate, they must notify the IRS about those offshore accounts. To notify the IRS about offshore accounts, a taxpayer files the FinCEN Form 114, formerly TD F 90-22.1, known as the Report of Foreign Bank and Foreign Accounts (FBAR). If there is any offshore income associated with the accounts, the taxpayer reports the income on their individual or business tax return.
The IRS offshore disclosure program provides an opportunity for non-compliant taxpayers to disclose unreported offshore accounts and income. A New Jersey individual or business who participates in the IRS offshore disclosure program is required to participate in the NJ Offshore Voluntary Compliance Initiative.
If NJ taxpayers receive acceptance into the NJ Offshore Voluntary Compliance Initiative, then the NJ Division of Taxation will waive all civil penalties, including the 50% civil fraud penalty. Instead, the Division of Taxation will reduce tax penalties and assess a 5% late payment penalty and 5% amnesty penalty.
Some of the requirements into NJ’s offshore disclosure program are as follows:
- Disclosing the tax type and the years of non-compliance;
- Providing the Division of Taxation with both original or amended federal and NJ returns covering the years of non-compliance;
- Providing the NJ Division Taxation an explanation to support the application into the offshore program; and
- Executing a certification acknowledging that you will cooperate with the Taxation Division to establish the correct tax liability.
Completing the NJ offshore disclosure is essential to reduce tax penalties, become compliant, and avoid criminal tax prosecution. In order to participate in the offshore disclosure program, you must make your application prior to being contact by the IRS or NJ. Delay is not an option, contact tax attorney Todd S. Unger, Esq. and find out how to avoid prosecution of unreported offshore accounts. (877) 544-4743.