Friday, September 25, 2009

New York State and New York City Voluntary Disclosure and Compliance Programs

Taxpayers are generally aware of the IRS' Voluntary Compliance Program for those who have not filed FBAR reports or have not reported on their FBARs all foreign bank and financial accounts. In fact, New York State and New York City have established Voluntary Disclosure and Compliance Programs (the “VDCP”) that are not limited to unreported income from foreign bank and financial accounts.

The New York VDCP applies with respect to any underreported state or city taxes, e.g., income and sales tax, and there is currently no ending date for the New York programs. Under the New York VDCP, neither New York State nor New York City will impose penalties on delinquent taxpayers, who are required to pay only back taxes and interest. Taxpayers who participate in the New York VDCP will not be criminally prosecuted for underpayment of taxes. They will be required to sign a compliance agreement, promising to correct past behavior, comply with the tax laws in the future, and pay past due tax obligations.

Eligible taxpayers can participate even if their tax liability is the result of fraudulent or criminal conduct. However, the New York VDCP does not apply to underpayments due to participation in tax avoidance transactions that are federal or New York State reportable or listed transactions, i.e., tax shelters.

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Monday, September 21, 2009

IRS Announces One-Time Extension on Deadline for Acceptance Into VCP

The Internal Revenue Service ("IRS") announced this morning a one-time extension of the deadline for taxpayers seeking to be accepted into its Voluntary Compliance Program ("VCP") for disclosure of offshore bank and financial accounts. The IRS extended the original deadline of September 23, 2009 to October 15, 2009.

The IRS also announced that there will be no further extensions of the date to seek entry into the VCP.

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