Much has been said about the Washington-announced amnesty for holders of undeclared offshore assets, but one expert says the states’ offers may be more attractive.
Following the example of the federal government, many U.S. states have recently adopted voluntary disclosure programs for taxpayers with undeclared offshore accounts.
However, the benefits of a state tax amnesty can be even more advantageous than the current IRS policy, say lawyers from Caplin & Drysdale, a company specializing in tax and legal services to companies and individuals.
They add some state programs can include full penalty abatement, immunity from state criminal prosecution and a limit on the number of years of tax returns that need to be amended.
However, "To qualify for most of the state voluntary disclosure programs, the taxpayer must make an application directly to the state taxing authority [so] simply filing amended state tax returns is not sufficient," says Jim Mastracchio, a partner with the firm.
The U.S. government’s crackdown on what it sees as tax havens was prompted by the financial crisis and the costly stimulus bill as well as several rounds of corporate bailouts that need to be paid for.
It gathered steam after the G20 summit in London earlier this year where global leaders pledged cooperation in pursuing the matter.