Abusive Tax Transaction Initiative
Q & A
Q - How do I apply for the initiative? Is there a specific form to be filed?
A - While there is no preprinted application form, to participate in the Abusive Tax Transaction Initiative a taxpayer, or his duly authorized representative must submit a (written) application indicating facts pertinent to their specific case, identifying the abusive transaction(s) participated in the type of tax(es) and period(s) involved, the entities utilized (if applicable), the name(s) of promoter(s), and information necessary to determine the additional tax due. Such information in addition to identifying the name of the taxpayer(s) should also contain their social security number(s) or federal identification number(s). If submitted by a representative of the taxpayer a power of attorney should be attached. Written applications as well as additional questions may be submitted to Audit Activity, 50 Barrack St., PO Box 240, Trenton, NJ 08695-240, telephone no. (609) 292-0978.
Q - Do I have appeal rights under this initiative?
A - Yes, the initiative is a means for eligible taxpayers to obtain a waiver of all applicable penalty changes, including a 50% civil fraud penalty.
Q - If I'm currently being audited by the Internal Revenue Service on a listed transaction, and my tax liability paid under New Jersey's initiative exceeds my final liability, do I have the ability to obtain a refund?
A - Yes, the Division will refund payments made under this initiative that are determined to exceed the taxpayer's final liability as outlined in your example. However, any underpayment ultimately determined will be subject to full 5% payment plus penalty plus interest charges.
Q - If my corporation comes forward under New Jersey's initiative and discloses it participated in a listing transaction, but remits nothing since it is in a net loss position what benefits might the corporation gain?
A - By making disclosure of the corporation's participation in such a transaction, the Division will grant a waiver of the 50% civil fraud penalty. In the event the corporation ultimately finds itself in a positive income position as a result of the transaction's reversal, it will be subject to a 5% late payment penalty as well as interest on the additional tax due.