Minnesota's Department of Revenue will give residents who have used abusive tax shelters until Jan. 31 to amend their tax returns without facing new penalties passed during the 2005 special legislative session.
Under the voluntary compliance program, taxpayers can escape the newly created penalties, which authorize the department to assess stiff punishment on taxpayers who participate in, or promote, tax avoidance schemes. After the six-month window of opportunity, the department will officially step up enforcement efforts in the area.
According to the state, similar compliance programs have been successfully conducted in other states, including California and Illinois. Minnesota expects the program to generate $57 million in additional tax revenue during 2006 and 2007.
"These abusive shelters typically have no business or economic purpose, and are employed only to reduce taxes," said revenue commissioner Dan Salomone, in a statement. "If you've participated in one of these shelters, this is your last chance to make things right. The stakes will be much higher later."
The Internal Revenue Service has determined the types of transactions and shelters that are potentially abusive. Taxpayers must disclose their participation in these transactions and amend their state returns or face substantial penalties, including nondisclosure penalties as high as $100,000 for individuals and $200,000 for businesses.
To participate in the compliance initiative, taxpayers must complete Form VCI, Voluntary Compliance Initiative Agreement, amend their state tax returns, and pay any additional tax and interest due. Information on the new legislation and the voluntary compliance program is available at www.taxes.state.mn.us.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access