Minnesota Creates Voluntary Disclosure Program for Undisclosed Offshore Accounts
Minnesota has created a Voluntary Disclosure Program for taxpayers to avoid penalties on any unpaid state taxes on undisclosed offshore accounts. The program runs from July 1, to October 29, 2010. Minnesota will forgive penalties that would be otherwise imposed on foreign entities and accounts used to avoid tax compliance with Minnesota laws.
RISK?If a taxpayer fails to disclose any foreign accounts or entities, they should make a voluntary disclosure in order to become compliant with Minnesota’s tax laws. In exchange for making a voluntary disclosure, the taxpayer can eliminate the risk of criminal prosecution and avoid substantial civil penalties.
If a taxpayer does not submit a voluntary disclosure, they run the risk of detection by Minnesota Revenue.
To this end, the Department of Justice and the Internal Revenue Service (IRS) have recently entered into an agreement with the Swiss Confederation/government to release the names of thousands of United States residents suspected of using foreign bank accounts held by UBS AG to avoid and evade taxes. As the IRS and Minnesota Revenue have information sharing agreements, Minnesota Revenue will ultimately obtain the names of those individuals.
Making a Voluntary Disclosure
To make a voluntary disclosure, taxpayers should submit the information listed below. To remain anonymous when making a voluntary disclosure, taxpayers may engage a representative such as a tax preparer, accountant, or attorney.
A voluntary disclosure must contain the following information:
- A cover letter stating an intention to enter the MN Offshore Voluntary Disclosure Program;
- A description of the source of funds or other assets in each account;
- The date the initial deposit was made or the date on which the taxpayer took control or ownership of each account;
- Documentation indicating whether the principal (which includes initial deposits and all subsequent contributions) has been taxed or untaxed and the years involved;
- The amount of potential tax liability; and
- Whether the taxpayer participated in the IRS Offshore Voluntary Disclosure Program.
If you need assistance in pursuing a voluntary disclosure agreement, please contact me at firstname.lastname@example.org.
For more information, visit Minnesota's website: Offshore Accounts Voluntary Disclosure
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at email@example.com.
Because state and local taxes are deceptively simple and endlessly complicated.