By Terry Barrett, CPA, Tax Senior Manager | State and Local Tax Team
A number of states will be offering tax amnesty programs this fall. Amnesty programs afford taxpayers the opportunity to correct past tax deficiencies, benefit from waivers of penalties and interest, and start fresh with a taxing jurisdiction. In addition, if a business only recently became aware of or has ignored past tax filing requirements amnesty programs often provide streamlined processes for getting into compliance. For the states, amnesty programs provide substantial revenues, bring taxpayers into compliance, and help reduce the audit-backlog.
The following are highlights of upcoming state tax amnesty programs:
- Arizona: September 1, 2015 through October 31, 2015. The following taxes administered by the Arizona Department of Revenue are included in the program: individual and corporate income, transaction privilege (sales), and use tax. Program city taxes are included; non program city taxes are NOT included. The amnesty applies to taxes due on an annual basis for any tax year ending before January 1, 2014 and to other taxes (not on an annual basis) for any tax period ending before February 1, 2015. The state will waive or civil penalties and interest.
- Indiana: September 15, 2015 through November 16, 2015. Applies to unpaid tax liabilities that were due for tax periods ending before January 1, 2013 and to all tax types managed by the Indiana Department of Revenue, including but not limited to: individual and corporate income, sales, employer withholding, inheritance, estate and generation-skipping transfer taxes. Interest, penalties and collections fees will be waived.
- Kansas: September 1, 2015 through October 15, 2015. For tax periods ending on or before December 31, 2013 for the following: privilege, individual and corporate income, employer withholding and estimated tax, estate, cigarette, state sales and use, and local sales and use tax. Interest and penalties will be waived.
- Louisiana: No dates set but coming this fall.
- Maryland: September 1, 2015 through October 30, 2015. For the following taxes due on or before 12/31/2014: personal and corporate income, employer withholding, sales and use, admissions and amusement taxes. The state will waive one-half of the interest and all civil penalties.
- Missouri: September 1, 2015 through November 30, 2015. For tax liabilities due but unreported on or before 12/31/2014 and applies to corporate and individual income, sales and use, corporate franchise, employer withholding, and fiduciary taxes. The state will waive penalties and interest.
- Oklahoma: September 14, 2015 through November 13, 2015. For tax periods ending before January 1, 2015 for the following: income tax, sales and use tax, withholding tax, privilege tax, mixed beverage tax, gasoline and diesel tax, gross production and petroleum excise tax. Interest and penalty waived will be waived.
- South Carolina: No dates set but will apply to all taxes. The state may waive penalties and interest.
Some General Rules
Tax amnesty programs may not apply to all taxes or for all open periods. Typically they do not apply to current periods or to on-going audits and taxpayers participating in the programs often are not allowed to file refunds for the periods for which they sought amnesty even if payments are made in error. It is noteworthy that some states impose higher noncompliance penalties on taxpayer who could have taken advantage of the amnesty program to clear up past liabilities but did not. Each state has its own rules that should be carefully considered and followed if a taxpayer is interested in participating in the particular state’s amnesty program.
Amnesty programs are a great way to get into compliance and correct past filing oversights. However, other solutions such as voluntary disclosure programs may provide more favorable terms (e.g., limited look-back periods) than amnesty programs, depending upon a client’s particular situation. Keiter’s SALT group is available to provide additional information on or assistance with the various amnesty programs and other options to correct potential deficiencies in the states.
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