May 31 is Deadline for Tax Shelters Voluntary Compliance

For Release: May 30, 2008
Contact: Jessica Iverson, Communications Officer, (608) 266-2300

MADISON — The 2007-09 Budget Bill (2007 Act 20) enacted the Tax Shelters Voluntary Compliance Program to encourage taxpayers to pay taxes they may have previously avoided with tax avoidance transactions, or “abusive tax shelters.” The program began January 1, 2008 and ends on May 31, 2008.

During the program, Wisconsin waives all penalties relating to tax avoidance transactions for taxpayers who voluntarily disclose their participation in those transactions.The program also phases in new requirements to specifically disclose “reportable transactions” to Wisconsin whenever those transactions are required to be specifically disclosed to the Internal Revenue Service (IRS).

In 2007, DOR participated in the Multistate Voluntary Compliance Program along with 23 other states, collecting more than $1.5 million through that initiative.

Any taxpayer who has used a tax avoidance transaction to reduce or eliminate Wisconsin income or franchise tax liability for any tax year beginning on or after January 1, 2001 and before January 1, 2007, is eligible. A “tax avoidance transaction” is a plan or arrangement devised for the principal purpose of avoiding federal and Wisconsin income or franchise taxes, or of avoiding Wisconsin income or franchise taxes without affecting federal tax liability.

To participate, eligible taxpayers must do the following by May 31, 2008:

• Complete an amended or original Wisconsin return for each year in which the tax avoidance transaction affected Wisconsin income or franchise tax liability or caused nonfiling of Wisconsin returns.
• If the tax avoidance transaction required Form 8886 (Reportable Transaction Disclosure Statement) for federal income tax purposes, submit a copy of federal Form 8886 and provide details of the transaction. If the tax avoidance transaction did not require Form 8886 for federal income tax purposes, provide details of the transaction.
• Complete Wisconsin Form WI-VCP (available on the Internet at www.revenue.wi.gov).
• Enclose a check for full payment of the unpaid tax and interest.
• Send the above items to: Wisconsin Department of Revenue, Tax Shelters Program, P.O. Box 8958, Madison, WI 53708-8958.

For more information, please visit www.revenue.wi.gov.

Last updated June 4, 2008