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New York State Department of Taxation and Finance Commissioner Robert L. Megna today announced a new program to help taxpayers clean-up old tax liabilities while avoiding punitive actions such as criminal charges and significant monetary penalties.
"It's the right thing for these taxpayers to do and it’s right for the state to help them," Commissioner Megna said.
The new program, the Voluntary Disclosure and Compliance Program, offers significant incentives to taxpayers who disclose tax liabilities unknown to the state and who come forward voluntarily to pay those taxes. Eligible taxpayers can save thousands in tax penalties and gain protection from criminal tax prosecution if they agree to pay back tax debt and become compliant in future years.
Commissioner Megna said, "The goal of this outstanding program is to encourage all New Yorkers to step up and pay their fair share, taxes that support important state and local government services. It is the unfortunate reality that every year the state and counties lose billions in taxes that are owed but not collected, and that thousands of New Yorkers fail to file their tax returns or under report their tax obligations.
"Given current economic realities, New York cannot afford this 'tax gap' and this program is a key part of our strategy to address that gap. We hope that by inviting delinquent taxpayers to do the right thing we will bring in millions in unpaid taxes. The benefits of this program are so good that we expect thousands of New Yorkers who owe back taxes to accept our invitation and become tax compliant."
Those who choose to ignore the Department’s offer of reconciliation risk being caught by the flip side of the Department’s 'tax gap' strategy – increased and more aggressive tax enforcement by the Department and state District Attorneys.
"While we would rather reward those who voluntarily do the right thing than punish those who do not, the Tax Department will not hesitate to take the latter path if left no alternative by delinquent taxpayers," Commissioner Megna said.
It is easy to apply. To participate in the program, taxpayers apply online and need only answer a handful of simple questions to determine if they are eligible. Taxpayers can make their disclosures in complete confidence knowing that under the law the Department cannot use the taxpayer’s disclosures against them, or share those disclosures with any other agency, unless the taxpayer later breaches his or her compliance agreement under the program.
Taxpayers who cannot pay what they owe in full when they enter the program will be allowed to participate in payment plans that will be based on the taxpayer’s individual economic condition.
The Voluntary Disclosure Program was enacted in legislation passed in this year’s state budget, part of the state’s tax enforcement initiatives. It is a statutory program that is unique in the nation and unprecedented in New York. It balances the Department’s increased tax enforcement efforts by providing taxpayers with an opportunity to self-correct past tax delinquencies without penalty and to become tax compliant in the future.
A key part of the Program is designed to increase future voluntary compliance by taxpayers. Unlike amnesty programs, which mainly collected known tax obligations, this program focuses on new disclosures of past due tax liabilities and on the participant’s future tax behavior. In return for protection from possible criminal charges and avoidance of civil penalties, taxpayers who participate will be required to sign a compliance agreement in which they will promise to correct their past behavior, comply with the Tax Law in the future, and pay their past due tax obligations. They will face the possible loss of the benefits of the program if they fail to live up to those promises.
Most taxpayers who disclose any unreported tax liabilities are eligible to participate. For more information about the program, or to apply online, go to www.nystax.gov.
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Last Modified: September 19, 2008
