The New Jersey Division of Taxation announced yesterday two voluntary disclosure initiatives that will each run from March 15, 2014, through May 15, 2014. Under each initiative, all penalties will be waived and there will be a limited look-back period. These initiatives are limited to two specific areas:
- Companies that derived income from the use of intangible assets (e.g., intellectual property) in New Jersey but have not reported this income (the Intangible Asset Initiative).
- Partnerships that have New Jersey-sourced income but have not filed the relevant New Jersey forms and/or remitted taxes and fees owed to the state (the Partnership Initiative).
Under each initiative, the taxpayer must file all required
returns and must remit payment of all taxes owing within 45 days of
executing a voluntary disclosure agreement with the state. In
addition, taxpayers must pay all interest within 30 days of
assessment.
Taxpayers will not be eligible for these initiatives if they are
filing taxpayers, taxpayers under audit or taxpayers notified by
the division of a pending audit.
For the Intangible Asset Initiative, the look-back period will be
limited to the periods beginning after July 1, 2010, or the date
business commenced, whichever is later. For the Partnership
Initiative, the look-back period will be limited to periods
beginning on or after January 1, 2010.
Under the Intangible Asset Initiative, companies that have paid
royalties and added them back to their New Jersey entire net income
may file amended returns for any open period to claim an exception
to the royalty add-back. The Partnership Initiative will apply also
to individual partners that have not satisfied their New Jersey
filing and tax remittance requirements.
These initiatives are limited, however, in that all returns will be
subject to routine audit with respect to issues not specifically
covered by the voluntary disclosure agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.