As an Intake Specialist at IRSMedic, I am one of the first people our clients from all around the globe speak with. Clients that, for whatever reason, have neglected to report income on their federal tax returns. These taxpayers hire our firm to deal with the many intricacies of whatever federal tax amnesty program our legal team thinks is most appropriate for them.
Adding to the complexity is that typically if there is unreported income on a federal tax return, there will be a change to a client's state income tax return as well. Assuming, of course, that they are US-based and live in a state with an income tax.
The problem is that offshore disclosure initiatives vary significantly state-by-state. Some states, like Alaska, have no state income tax, thus there is no need for an OVDP-type program. And other states like Florida that have no personal income tax, yet still have a voluntary disclosure program for business entities. Other state offshore amnesty programs once existed but have since lapsed. Some states have created new programs.
This all adds much confusion to an already confusing situation, especially for those who are not natural-born US citizens and are unfamiliar with parallel state taxing regimes, such as Chinese nationals as Julia wrote about in an earlier article.
To help sort this all out, the following is the guide we created by making calls and investigating state revenue department websites to help us determine what type of state Offshore Voluntary Disclosure Programs our clients who are based in the US should use.
Note: Information changes all the time, so use this guide at your own risk. A legal opinion, for which this is not a substitute for, is always recommended. I will be updating as there are still a few states I am waiting to hear back from or are about to announce disclosure programs. Also, some states are quite vague if a program exists or limits to programs usage to unique facts. In that case, legal advice is again, highly recommended.
| US State | OVDP-Type Voluntary Disclosure Program? | URL for Voluntary Disclosure Program | Amended Returns Required: Years? | State DOR Website | Notes: | |
| AL | No | Alabama DOR | Awaiting response | |||
| AK | N/A | N/A | N/A | Alaska DOR | No Individual Income Tax | |
| AZ | Yes | AZ Voluntary Disclosure | Domestic only | Arizona DOR | Qualifications are very superficial. We have received limited information from the state to determine if our clients would be well served to go under VD program. | |
| AR | No | All OVDP years | Arkansas DOR | Amended AK tax return due within 90 days of federal change. | ||
| CA | No | All OVDP years | California DOR | State specifically directs that we should only submit amended returns for all years included in OVDP. Amended returns due within 6 months of federal changes. | ||
| CO | No | All OVDP years | Colorado DOR | |||
| CT | Yes | CT Voluntary Disclosure | CT VD will mirror federal OVDP. | Connecticut DOR | Unsure look back is 6 or 8 years for standard. | |
| DE | No | All OVDP years | Delaware DOR | program valid for and closed in 2009 only | ||
| FL | Yes | FL Voluntary Disclosure | 3 years | Florida DOR | No Individual Income Tax, but can apply for business entities with foreign holdings | |
| GA | Yes | GA Voluntary Disclosure | VDA response will set look-back period | Georgia DOR | Must file application | |
| HI | No | All OVDP years | Hawaii DOR | Amended HI tax return due within 90 days of federal change. | ||
| ID | No | All OVDP years | Idaho DOR | Amended ID tax return due within 60 days of federal change. | ||
| IL | No | N/A | All OVDP years | Illinois DOR | Voluntary Disclosure for non-filers only. Amended IL return due within 120 days of federal change becoming final. | |
| IN | Sort of | IN Voluntary Disclosure | Indiana DOR | Disqualified from voluntary disclosure if living in state. | ||
| IA | Sort of | IA Voluntary Disclosure | Iowa DOR | Non Specific | ||
| KS | Yes | KS Voluntary Disclosure | 3 year look back period | Kansas DOR | Non Specific | |
| KY | Sort of | KY Voluntary Disclosure | Kentucky DOR | Program Description is very superficial | ||
| LA | Sort of | Past 3 years only | Louisiana DOR | Unfortunately taxpayers who are already registered with us and filing returns are not eligible to enter into a voluntary disclosure agreement for that tax. Their only alternative is to amend their returns and pay any additional taxes due plus interest and request a waiver of any penalty due. The amended returns, payment, and waiver request should be submitted to our Office Audit Division. | ||
| ME | No | Maine DOR | Amended ME tax return due within 180 days of federal change. | |||
| MD | Yes | MD Voluntary Disclosure | Maryland DOR | Non Specific | ||
| MA | No | Massachusettes DOR | Voluntary Disclosure for non-filers only | |||
| MI | No | Michigan DOR | Voluntary Disclosure for non-filers only | |||
| MN | Unclear | MN Voluntary Disclosure | Same # of yrs would apply for both OVDP and Streamlined, as long as there's a state filing requirement | Minnesota DOR | Non Specific | |
| MS | Unclear | MS Voluntary Disclosure | Mississippi DOR | Non Specific | ||
| MO | No | Missouri DOR | Voluntary Disclosure for non-filers only | |||
| MT | Yes | MT Voluntary Disclosure | Have to report the foreign assest(s) on both state and federal return; did not specify the look back period | Montana DOR | Specifically addresses Foreign Accounts | |
| NE | No | Nebraska DOR | Voluntary Disclosure for non-filers only | |||
| NV | No | Nevada DOR | Voluntary Disclosure for non-filers only | |||
| NH | Yes | NH Voluntary Disclosure | 3-year look back period | New Hampshire DOR | Non Specific. New Hampshire does have income tax on unearned income, like foreign investment earnings | |
| NJ | Yes | NJ Voluntary Disclosure | Unfiled participants will have a look back period of the years unfiled with the state only, and may get penalties waived depending on the years; does not apply to taxpayers amended returns. See also OVCI | New Jersey DOR | Non Specific | |
| NM | They did, unclear if still avail | NM Voluntary Disclosure | OVCI; Will need to amend state return to reflect offshore accounts | New Mexico DOR | Program was active in 2003. Could not find any recent info suggesting that it is still available. | |
| NY | Yes | NY Voluntary Disclosure | look-back period will be equal to the tax years that were required to be filed with the IRS | New York DOR | Specifically addresses Foreign Accounts | |
| NC | Yes | NC Voluntary Disclosure | The participant would need to complete the program (OVDP or Streamlined), then amend the state return for the same years. | North Carolina DOR | Tricky Qualifications. Suspect only SDOP, STOP and Opt-Out would qualify | |
| ND | No | North Dakota DOR | Business Compliance Program Only | |||
| OH | Sort of | Ohio Disclosure Program | Ohio DOR | Program pertains to "those who believe they have a liability". Does not specify qualifications or disqualifications. | ||
| OK | No | Oklahoma DOR | Voluntary Disclosure for non-filers only | |||
| OR | No | Oregon DOR | Business Compliance Program Only | |||
| PA | Sort of | PA Voluntary Disclosure | N/A (state only) | Pennsylvania DOR | Disclosure program applies to "those who have recently become aware" which may alleviate penalties from OVDP, but is not specific to the program | |
| RI | No | Rhode Island DOR | Could not find any Disclosure program | |||
| SC | No | South Carolina DOR | Could not find any Disclosure program | |||
| SD | No | South Dakota DOR | No Personal Income Tax | |||
| TN | No | Tennessee DOR | Business Compliance Program Only | |||
| TX | No | Texas DOR | Business Compliance Program Only | |||
| UT | No | UTAH DOR | Business Compliance Program Only | |||
| VT | No | Vermont DOR | Business Compliance Program Only | |||
| VA | No | Virgina DOR | Voluntary Disclosure for non-filers only | |||
| WA | N/A | N/A | N/A | Washington DOR | No individual or corporate income tax. | |
| WV | No | http://www.wva.state.wv.us/wvtax/personalincometaxes.aspx | None | |||
| WI | No | Wisconsin DOR | Voluntary Disclosure for non-filers only | |||
| WY | N/A | N/A | N/A | Wyoming DOR | No Personal Income Tax | |
