N.C. Department of Revenue Offers Taxpayers
Chance for Reprieve
RALEIGH – North Carolina Department of Revenue Secretary Norris Tolson today announced a new voluntary compliance program that gives taxpayers a one-time opportunity to avoid fees, penalties and prosecution if they come forward voluntarily and pay past-due taxes and interest accrued from engaging in income-shifting tax strategies or other tax shelter activities that reduce or eliminate their state taxes.
“Courts have upheld that taxpayers who engage in income-shifting or tax shelter strategies must pay their fair share of taxes in accordance with the North Carolina Revenue Laws,” said Tolson. “The department has an obligation to identify those taxpayers that have participated in income-shifting schemes and collect those revenues.
“This new program will give taxpayers a window of opportunity to correct their returns, pay the taxes they owe and avoid further penalty,” Tolson added.
The voluntary compliance program will allow corporate and individual income taxpayers who have underreported their tax liability to correct their returns and pay their tax bill along with any interest that has accrued. In exchange, the department will waive all civil penalties and will not pursue further legal action up to and including prosecution. This program is available for all tax years from Nov. 2, 1992 to the present.
All individual and corporate taxpayers who have engaged in tax strategies where income that would otherwise be taxable in North Carolina is shifted to out-of-state or other tax shelters to eliminate or minimize their tax burden are eligible to participate. They must meet additional criteria. Please see the department’s website at www.dor.state.nc.us/compliance/ for more information.
For taxpayers with current assessments, the deadline for paying the tax and interest is Jan. 31, 2005. All other taxpayers must sign and return a voluntary compliance agreement by Feb. 28, 2005 and pay all taxes and interest due by April 15, 2005. After the compliance program ends, the department will vigorously pursue taxpayers who have engaged in income-shifting or tax shelter strategies. For those found to be involved in these strategies, civil penalties can amount to more than 60 percent of the tax due.
(Additional information regarding the voluntary compliance
program is available at www.dor.state.nc.us/compliance/)
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