New Jersey Enacting Limited Voluntary Disclosure Agreement for Unreported Intangible Asset Income
New Jersey recognizes that many taxpayers having nexus with New Jersey have not reported income generated from intangible assets. As a result, the Division of Taxation (Division) has implemented a limited Voluntary Disclosure Agreement (VDA) program to file returns and pay the tax interest and post-amnesty penalties. In addition, the Division will consider discretionary Throw-out relief by averaging a Throw-out receipts fraction with a non-Throw-out receipts fraction.
Effective September 15, 2012 through January 15, 2013 a taxpayer can apply for relief under the Division’s standard VDA program; however, the following additional requirements apply:
- Look back for VDA limited to periods beginning after 12.31.2003; returns not required for earlier periods
- 90 days to pay full tax liability after execution of VDA
- Waiver of all penalties except 5% post-amnesty penalty for returns due prior to 2.1.2009
- Remittance of tax and interest due within 30 days of assessment
- Discretionary Throw-out relief by averaging a throw-out receipts factor with a non-Throw-out receipts factor
- Amended returns available for previously added back royalties by operating companies, if year still open by statute
- Any settlement with respect to the Throw-out issue will be binding on the taxpayer and the Division, irrespective of any future court decisions
- Throw-out issue need not hold up the VDA process; The Division will hold that issue open for determination
Read more about New Jersey Intangible Assets.
If your company is interested in pursuing this VDA initiative, please contact your State & Local Tax professional.