Unclaimed Property News - Delaware Offers a Carrot

by Ken Urish 11. July 2012 15:15
By virtue of its being the legal home for a large majority** of corporate America, Delaware is the big dog in the world of abandoned or unclaimed property. Policies and procedures regarding the reporting of unclaimed property are under scrutiny by state treasuries across the country because it is increasingly seen as a key resource to plug budget holes. Very understandable, since recoveries by states are literally found money. Because Delaware leads the country in unclaimed property receipts by a wide margin, it is significant that Governor Jack Markel is about to sign into law a new and alternative Voluntary Disclosure Agreement Program (“VDA”). The program is designed to be an incentive for holders to bring their reporting into compliance with Delaware’s laws, in return for a reduced look-back period. The earlier participants enroll the shorter the look-back period will be. Enrollees by 6-30-13 will be limited to a 1996 look-back period; those that wait until 6-30-14 may be eligible for a 1993 period. Delaware’s current VDA requires reporting back to 1991. Will this program increase compliance? State treasurers nationwide will be watching with great interest, as will those of us that practice in the area of unclaimed property recovery. For more details on Delaware’s new VDA, please see this state and local tax alert.     ** More than 900,000 business entities have their legal home in Delaware including more than 50% of all U.S. publicly-traded companies and 63% of the Fortune 500 (source: State of Delaware).
Categories: Tax

2012 Offshore Voluntary Disclosure Program

by Bill Adams 13. February 2012 10:45
  The IRS recently announced that it has reopened the Offshore Voluntary Disclosure Program (OVDP), which will continue for an indefinite period of time.  The OVDP allows for reduced penalties for taxpayers who voluntarily disclose their offshore bank accounts or other assets that have not been properly taxed in the US. It is similar but not identical to the disclosure programs that were available in 2011 and 2009. So far, collections in back taxes and penalties under those programs total $4.4 billion. Participants in the program file all original and amended tax returns for up to eight years, and pay the associated back taxes, interest, and penalties. Participants generally pay a penalty of 27.5% of the highest aggregate balance in foreign accounts during the eight years prior to disclosure. However, accounts not exceeding $75,000 are subject to a 12.5% penalty, and taxpayers in certain situations may qualify for a 5% penalty. If a taxpayer shows reasonable cause for noncompliance, no penalty is imposed. Taxpayers who believe the penalty is unwarranted in their case may choose to opt out of the program and submit to an IRS examination. The IRS is becoming more adept at discovering hidden assets overseas. For those who willfully fail to report their foreign accounts or assets and do not participate in the OVDP, the law allows for a penalty of $100,000 or 50% of the balance of the undisclosed account each year. It is suggested that taxpayers who own unreported foreign accounts or assets consult an attorney and carefully weigh the financial consequences of participating in the program or opting out.
Categories: Tax