Amnesty Programs

The Massachusetts Department of Revenue has announced a tax amnesty program from September 1, 2014 through October 31, 2014.  Unlike other amnesty programs, this one appears to be limited to companies and individuals that the state already has notices issued to and is actually mailing out notices to prospective participants.  The state expects to collect $35 million in revenue from this program.

For more information please visit the state’s website at: http://www.mass.gov/dor/breaking-news/what-you-need-to-know-about-the-tax-amnesty-program.html

Ned Lenhart, President

Michigan Governor Granholm just signed legislation that will create a tax amnesty program for any unpaid Michigan tax due for periods prior to January 1, 2010.  The amnesty period is short-May 15, 2011 to June 30, 2011.  Taxpayers must pay the full tax and interest.  Penalties will be waived.

Sounds OK, but I could never recommend a client participate in that process given the other programs that are currently available in Michigan.

Michigan currently has voluntary disclosure and “taxpayer initiated” request opportunities that allow both registered and unregistered taxpayers to pay the tax and interest due and petition for abatement of penalties.  Under the amnesty program, 2010 liabilities are not eligible for penalty abatement.  However, under both the VDA and the taxpayer initiated program, all liabilities for the past 4 years are eligible for penalty abatement. Further, the amnesty program wants all the taxes due.  Under the VDA or taxpayer initiated the look back in just 4 years.

Finally, why wait 6 months for this deal.  If you owe back taxes to Michigan, act now, don’t wait for this deal.  The longer you wait the more risk you take that you will be audited.  If that happens, then there will be no penalty abatement and the state might go back several years. Most of the states that have an amnesty program start immediately and don’t wait 6 months to get going.

Let me know if you have any questions.

Ned Lenhart, President
Michigan Tax Amnesty Program

The Illinois Department of Revenue announced this week that is was offering a tax amnesty from October 1 to November 30 2010 for taxpayers who owe tax from June 30, 2002 to July 1, 2009.  This is the second amnesty program Illinois has had this decade.  Its last one was in 2003.

Under the program, taxpayers will get abatement of penalty and interest.  If the amnesty eligible liabilities are not paid during the amnesty period, a penalty at 200% of the normal penalty could be imposed.  Taxpayers who forgo amnesty will pay a hefty price if they are audited and the liability is determined.  If your company files in Illinois or believes it should be filing in Illinois, this amnesty program may be a very worthwhile effort for you to participate in.

Also, Kansas will have an amnesty program from September 1 until October 15 and Maine will have an amnesty program from September 1 until November 30

Ned Lenhart
Illinois Amnesty Program

Oklahoma House Bill 2359, if signed by the Governor, could provide one of the best deals of the year to resolve unpaid use tax due the state.  This applies both to  retailers and to consumers.

For retailers, there will be a total forgiveness of any use tax that you may owe the state so long as you come forward and register under the new Retailer Compliance Initiative.  This will run from July 1, 2010 to June 30, 2011. You have to do this before you get audited and you must remain registered for at least 36 months after registration.  This program is similar to what the SSTP states did with their amnesty.  The state will even waive their registration fee for companies that register under this program.

For consumers who owe Oklahoma use tax, the state is limiting the look back to 12 months and is waiving the penalties and the interest related to the tax that is paid.  The consumer cannot be under audit and cannot have been contacted by the state.

These are very good opportunities for taxpayers who owe Oklahoma tax.  The Governor is expected to sign the bill which will become effective July 1, 2010.

Ned Lenhart
Oklahoma Amnesty

Keep your eyes peeled for a Nevada tax amnesty program starting July 1 and running through September.  In talking with the Department this week, they mentioned that the state was finalizing the plans for an amnesty program that would have penalty and interest abatement with full payment of tax.  That’s hard to beat.  The program would be for any tax due prior to July 1, 2010.

Once the details are public, I’ll report back.

Ned Lenhart
President
Nevada Amnesty Program

So Florida has announced an amnesty program for state taxes.  The program is scheduled to run from July 1 to Sept. 30.   In most amnesty programs, you find a balance between the carrot and the stick.  You will pay the back tax and some interest but that’s about it (the carrot).  For companies that don’t participate in the amnesty program you may be denied favorable treatment and penalty abatement on future audits (the stick).  Florida has done something that I have never seen before they are offering the carrot and the stick as part of the same program.  Here’s the deal.

1. Pay all the taxes owed
2. Pay interest of 50%
3. Pay no penalty
4. Pay a 10% administrative fee on the taxes due, the pre-abated interest, and the pre-abated penalty.
5. If you need a payment plan, you can get a 7 month plan with 12.5% down payment
6. Applies to businesses that are under audit

I have never seen an administrative fee assessed on an amnesty program before.  What is Florida thinking? 10%–That’s a deal breaker there.

To make matters even more confusing, the Florida DOR is still running its voluntary disclosure program.  Here are the details:

1. 3 year look back on tax
2. No penalty
3. No administrative fees
4. Reduced interest (just like amnesty program)
5. 12 month stipulated payment plan

This seems like a no brainer to me unless you are under audit or have some other reason why the VDA won’t apply!!  Why pay more tax, more interest, and a 10% administrative fee just to participate in the amnesty program?

If you have any unpaid Florida sales tax, please call me to discuss whether the VDA process or the amnesty program is right for you.  Don’t just assume that the amnesty is best program.

Ned Lenhart
President
Florida Amnesty Program