Taxpayers who missed the April 18th deadline for filing their New York State tax returns may be able to become compliant by applying to the NYS Department of Taxation and Finance’s Voluntary Disclosure and Compliance Program. As provided under the program, “eligible taxpayers who owe back taxes and haven’t filed related returns can avoid monetary penalties and possible criminal charges by:
- telling the Department what taxes they owe;
- paying those taxes; and
- entering an agreement to pay all future taxes.
The program is open to any eligible taxpayer, including individuals and businesses, for all types of tax administered by the NYS Department of Taxation and Finance. However, taxpayers must act quickly. The program is available to those who have not yet been contacted by the State with respect to the tax type and period being disclosed. If the State has already started an investigation or audit, then the taxpayer won’t qualify.
For qualified taxpayers, there are significant benefits to the program, including:
- Three-year or six-year limited look-back periods where appropriate
- No referral for criminal prosecution
- No imposition of penalties
The taxpayer must pay the tax and interest due for the agreed periods. Taxpayers who can’t pay in full at the time of acceptance may qualify for an Installment Payment Agreement to pay over time, with interest continuing to accrue. The taxpayer also agrees to remain in compliance with tax laws in the future.
Voluntary disclosure can be especially useful for taxpayers who have not filed NYS tax returns in many years, and would like to become compliant. For example, individuals and businesses who may not have realized they were supposed to file tax returns, were overwhelmed with other problems, or made mistakes on their returns have a way to get back on track without penalties or prosecution.
The NYS program may be available for taxpayers participating in the IRS Offshore Voluntary Disclosure Program (OVDP), regarding foreign bank accounts. For these taxpayers, the State’s look-back period will be for the same number of years as required by the IRS.
If you failed to file returns and owe back taxes to NYS, contact us about whether the NYS Voluntary Disclosure and Compliance Program is the right option for you.