Offshore Voluntary Disclosure Program

Offshore Voluntary Disclosure Program

The United States generally taxes its citizens and resident aliens on their worldwide income. Historically, taxpayers have been required to report foreign bank and financial accounts (FBAR), and to check the box on Schedule B of their personal return to inform the IRS of offshore accounts. However, these regulations were not closely monitored by the IRS and many taxpayers either took advantage of the lax oversight to hide otherwise taxable income overseas or simply taxpayers were not aware of the reporting obligations. The combination of both resulted in a significantly high amount of potential U.S. tax revenue that went uncollected. In order to correct this, the IRS designed the Offshore Voluntary Disclosure Program (OVDP) in 2009 to assist noncompliant taxpayers in becoming current with reporting their offshore accounts and related income.

OVDP is specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. The primary benefit of the OVDP is that it is designed to provide taxpayers with such exposure protection from criminal liability as well as terms for resolving their civil tax and penalty obligations.

Over the years, over 55,000 people have participated in OVDP resulting in compliance. To date these efforts have generated about $10 billion in back taxes, interest and penalties since 2009. In addition, the Streamlined Filing Compliance Procedure, that was developed for taxpayers with non-willful compliance issues, have resulted in the submission of more than 96,000 delinquent and amended income tax returns from the 48,000 taxpayers using these procedures.

The IRS website provides detailed guidance on this subject. Due to the complexity of the filings, a detailed analysis and calculations performed by an experienced tax professional might be necessary.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Saving NY Sales Tax When Purchasing Computer System Hardware

Saving NY Sales Tax When Purchasing Computer System Hardware

A reminder to all software and web developers located in New York: purchasing, renting, or leasing qualified computer hardware exempt is exempt from sales tax if certain qualifications are met. The exemption applies to the purchasers if the services performed on the qualified hardware are predominantly (think 50% or more) involved in the design and development of computer software, websites, or a combination of both services.

New York has a long list of qualifying sales-tax-exempt computer system hardware which can be found here, but the common thread is that most physical components and embedded software are eligible for the exemption. If a taxpayer is in the business of performing the two services above it is in their best interest to complete New York Form ST-121.3 “Exemption Certificate for Computer System Hardware” and present it to the vendor at time of purchase.

Please be aware: New York does not take sales tax exemptions lightly and if a taxpayer is caught erroneously utilizing this exemption the state has recourse in the form of: a penalty equal to 100% of the tax due; a $50 penalty for each fraudulent exemption; and criminal felony prosecution which could result in a jail sentence. We highly recommend that if you are considering utilizing this exemption that you reach out to your respective tax professional.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

NJ Bulk Sales – What You Need to Know

NJ Bulk Sales What You Need to Know

The state of New Jersey has recently released some clarification regarding the Bulk Sale law. The law which was first enacted in 1995 and amended in 2007 is in place for purchaser protection. Purchasers, assignees or transferees are protected from any State tax liabilities such as deficiencies, assessments on delinquent returns, and any possible assessments for future audits owed by the Seller. In the event of a Bulk Sale violation the Purchaser does not receive these protections and will be responsible for any of the potential aforementioned liabilities.

The Bulk Sale law encompasses a broad range of transactions; any business assets, other than those sold in the ordinary course of business qualify. The Purchaser must notify the state at least 10 business days in advance so an escrow can be established if the Division of Taxation determines the seller to have any potential tax liabilities. There is no filing fee for Form C-9600 and it requires modest disclosures such as NJ tax ID for both Seller and Purchaser, closing date and price, and a copy of the executed contract of sale.

The Bulk Sale law has extensive application in real estate transactions. Real estate that is used for income/business purposes, vacant land, deed in lieu of foreclosure, and short sales may be subject to notification requirements. Individuals selling a one or two family residence (“simple dwelling house”) are excluded from notification requirements. Sellers who buy, rehabilitate, and sell properties in their ordinary course of business, are not subject to the notification requirements.

Purchasers should be aware of the notification rules as Bulk Sale violations can be very costly. For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Taxpayers Failing to Take Advantage of Accelerated Capital Investment Deductions

Taxpayers Failing to Take Advantage of Accelerated Capital Investment Deductions

When considering the acquisition of depreciable assets, many businesses and business owners are often seeking to answer the challenging questions of: What are my options for writing off depreciable assets and what is the best way to save tax-dollars today?

The Treasury conducted a study of the usage of special depreciation provisions in the tax code and found that qualifying taxpayers do not utilize the allowable tax provisions to the fullest. The Internal Revenue Code allows for two types of special depreciation deductions: Section 179 and Bonus Depreciation (Section 168(k)). The study found that the Section 179 deduction was underutilized by qualified taxpayers between 20-40% while the Bonus Depreciation varied among taxpayer types but ranged in the 30-70%. Barring certain limitations, taxpayers can deduct up to $500,000 of qualifying property under Code Section 179 and 50% of qualifying property under Bonus Depreciation. Utilizing these deductions would allow a taxpayer to accelerate the deductions for assets placed in service during a certain year rather than depreciate them over the life of the asset.

The study found that the allowable special provisions were not utilized due to a combination of tax code complexity between federal and state law, unqualified assets, or other factors influencing the ability to utilize the deductions. As we approach the 2016 year-end, it is imperative to consult your tax advisor prior to making the fixed asset acquisition as there may some crucial tax-planning to consider.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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