In a Special Session, the Missouri House passed HB 2 which would provide an opportunity for taxpayers to pay the past due taxes without interest or penalty. The Bill was sent to the Senate where it is expected to pass. The amnesty program would run from January 1, 2012 until February 29, 2012. Once registered, the taxpayers would need to comply with state tax laws for the next 8 years. Under HB2, the amnesty applies only to tax liabilities unpaid as of December 31, 2010. As such, no 2011 liability will be covered by this plan.
Although this may be an attractive opportunity, companies need to carefully assess the overall difference between pursuing an amnesty and a Voluntary Disclosure Agreement. As with other amnesty programs, all of the past due tax must be paid and the state will waive the interest and penalty. If you don’t owe taxes for many years and interest savings is more than the tax payment, it might make sense to pursue the amnesty.
However, if you owe taxes for a number of years (including 2011) and want to limit the look back, the Voluntary Disclosure Agreement (VDA) program may be a better approach. Under this approach, you would generally get a shorter look back on the taxes paid (3 years) as well as the penalty abatement. You would still have to pay interest.
This becomes a numbers game as to what will provide you with the best tax answer. Don’t just assume the amnesty program is the best deal. Once you do the math, there may be better options. Plus, under the VDA program, there is no mandatory filing length of time after you register.
If you have questions about what might be right for you in Missouri or any other state where you have a historical liability, please contact me at nlenhart@salestaxstrategies.com
Ned Lenhart
President
Interstate Tax Strategies