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Alabama Joins Multistate Tax Shelter Compliance Program

Alabama Revenue Commissioner Tom Surtees announced on June 1, 2007 that the Department of Revenue has joined with 20 other states in a voluntary compliance program aimed at abusive tax shelters. Under the program, which is operated under the auspices of the Multistate Tax Commission (MTC), Alabama taxpayers who have claimed benefits from abusive tax shelters on returns filed for periods beginning before January 1, 2006 have until October 1, 2007 to file an amended return and pay any additional tax due without penalty. The program is also available for taxpayers who did not file a return for a period beginning before 1/1/06 due to an abusive tax shelter, perhaps because the shelter reduced their incomes below the point where they were required to file a return.

According to the discussion on the MTC's web site, an "abusive tax shelter" is "...any plan or arrangement devised for the principal purpose of avoiding state or federal income tax (and similar business activity taxes)"... Abusive Tax Shelters may be, but are not limited to, Listed Transactions or Reportable Transactions as defined by the Internal Revenue Service. There could be, for example, a shelter that is devised for the principal purpose of avoiding state taxes, and therefore would not fall under the IRS definitions of Listed or Reportable Transactions.

If you are an Alabama taxpayer, and you think that you may have been involved in an Abusive Tax Shelter in the relevant time frame, you are strongly urged to seek competent professional tax advice and legal advice before becoming involved in this program. Subtle differences in individual fact patterns can make huge differences in the legal outcomes.

If you do decide that it is appropriate for you to participate in the program, MTC is acting as a clearing house for all returns filed under the voluntary compliance program, and your amended or original Alabama return must be received by the MTC no later than October 1, 2007. The Commissioner's announcement includes the following contact information for the MTC:

  • E-mail: VCP@mtc.gov
  • Telephone: (202)624-8699
  • U.S. Mail: Voluntary Compliance Program c/o Multistate Tax Commission, 444 North Capitol Street, Washington, D.C. 20001

This page last updated 6/7/07

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