Reminder: Voluntary Disclosure Program Regarding Offshore Accounts

The purpose of Wisconsin's Voluntary Disclosure Program is to provide a way for taxpayers who did not report taxable income in the past to voluntarily come forward and resolve their tax matters. Thus, if you reported and paid tax on all taxable income but did not file a Report of Foreign Bank and Financial Accounts (FBAR), do not use the voluntary disclosure process.

The FBAR is required to be filed with the U.S. Department of the Treasury by each United States person who has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. FBARs are not required to be filed with the Wisconsin Department of Revenue.

Transactions involving foreign financial accounts may be considered to be reportable transactions by the Internal Revenue Service (IRS). Wisconsin follows the federal rules regarding what is considered to be a reportable transaction. If holding a foreign bank account is not considered to be a reportable transaction for federal tax purposes, then it would not be a reportable transaction for Wisconsin tax purposes. If you are required to file a federal Form 8886 - Reportable Transaction Disclosure Statement with the IRS, you are required to file this form with the Wisconsin Department of Revenue.

Taxpayers who wish to participate in Wisconsin's Voluntary Disclosure Program to report previously untaxed income must file Form WI-VCP, Wisconsin Tax Shelters Voluntary Compliance Program Participation and Agreement by January 15, 2010. This form is available at www.revenue.wi.gov/forms/2009/09ic-220f.pdf.

Taxpayers who participate must also 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 www.revenue.wi.gov/html/formpub.html.

Wisconsin residents and other entities with a Wisconsin filing requirement who do not voluntarily notify the department by January 15, 2010 of previously unreported income from foreign bank accounts for the years 2003 through 2008 can expect to be contacted by the department.

Page last updated December 18, 2009