On March 23, 2009, the Internal Revenue Service (IRS) announced a voluntary disclosure program for taxpayers to report income derived from offshore bank accounts that was previously not reported on the taxpayer's federal income tax returns. Taxpayers were given until October 15, 2009, to declare their intent to participate in the program. Wisconsin is offering a similar program, available to taxpayers with a Wisconsin filing requirement related to unreported income from foreign accounts. To participate in Wisconsin's program, taxpayers must contact the Department of Revenue by January 15, 2010.
Note: On August 19, 2009, the IRS and the U.S. Department of Justice announced that Swiss Bank UBS would provide information to the IRS regarding U.S. holders of accounts in Swiss Bank UBS. The Wisconsin Department of Revenue (DOR) has requested information from the IRS regarding Wisconsin holders of Swiss Bank UBS accounts.
Although it is not illegal for a U.S. citizen to hold a foreign bank account, holding a foreign bank account is considered to be a reportable transaction. A reportable transaction is defined as a transaction, plan or arrangement, including a listed transaction, for which a taxpayer is required to submit information to the department because the taxpayer is required to disclose the transaction, plan, or arrangement for federal income tax purposes for the taxable year in which the transaction occurred, as provided for under U.S. Treasury Regulations. A listed transaction means any reportable transaction that is the same as, or substantially similar to, a transaction, plan or arrangement specifically identified by the U.S. Secretary of the Treasury as a listed transaction for purposes of section 6011 of the Internal Revenue Code and that is specifically identified as a listed transaction on or after the date the transaction occurred.
Wisconsin's disclosure requirements for transactions the Internal Revenue Service has designated as reportable transactions or listed transactions is found in Section 71.81, Wis. Stats. (2007-08). Section 71.81, Wis. Stats. (2007-08), sets forth the penalties applicable for reportable transaction understatements occurring on or after January 1, 2001, and extends the statute of limitations to 6 years after the date on which the return for the taxable year in which the reportable transaction occurred was filed.
Wisconsin will allow residents and other entities with a Wisconsin filing requirement, who have not been contacted by the department regarding a foreign account, until January 15, 2010, to voluntarily disclose information regarding foreign accounts. To voluntarily disclose this information, a completed
Form WI-VCP Wisconsin Tax Shelters Voluntary Compliance Program Participation and Agreement, must be filed with the department by January 15, 2010.
Taxpayers are required to file amended or original Wisconsin income or franchise tax returns, for the years 2003 through 2008, to report previously unreported income from foreign accounts within 90 days of a final determination by the IRS regarding the foreign income. A copy of Form WI-VCP (that was previously filed with the department by the January 15, 2010 deadline) must be attached to the amended and/or original Wisconsin returns. In addition, taxpayers must attach complete copies of all amended or original tax returns filed with the IRS, including copies of all paperwork provided to the IRS as a result of the disclosure. Taxpayers must provide an explanation for any differences between the Wisconsin and federal returns regarding the amount of unreported or underreported income or incorrectly claimed deductions or credits related to the foreign accounts.
Use Form 1X to amend individual income tax returns. For corporation franchise or income tax returns (Form 4 or Form 5), fiduciary income tax returns (Form 2), and partnership returns (Form 3), the appropriate box on the form should be checked identifying the return as an amended return.
Wisconsin income tax forms are available at
Wisconsin residents and other entities with a Wisconsin filing requirement who do not voluntarily notify the department by January 15, 2010 of income from foreign bank accounts for the years 2003 through 2008 can expect to be contacted by the department.
FOR MORE INFORMATION PLEASE CONTACT:
WISCONSIN DEPARTMENT OF REVENUE
Tax Shelters Program
PO Box 8958
Madison, WI 53708-8958
Phone: (608) 266-1235
Fax: (608) 267-0834
November 3, 2009