State Tax Amnesty Details
Introduction
This SALT Buzz provides information on various state amnesty programs that may assist taxpayers in limiting state and local tax exposures. This SALT Buzz will be updated periodically to discuss new state amnesty programs or to provide updates to scheduled state tax amnesty programs.
If you have an unreported liability in a state other than those discussed in this SALT Buzz, don’t worry. Most states have voluntary disclosure programs that are similar to amnesty programs, in which a taxpayer enters into an agreement with the state to remit unreported liability for a limited period of time without the payment of penalty (and sometimes interest). Participation in voluntary disclosure programs can generally be done on an anonymous basis. Please see our previous SALT Buzz, dated February 19, 2017, for more information on voluntary disclosure programs.
September 15, 2019
Illinois:
Beginning October 1, 2019 and ending November 15, 2019, taxpayers may be able to take advantage of Illinois’ most recent tax amnesty program if they have outstanding eligible tax liabilities to report. Eligible liabilities are most Illinois taxes due from periods ending after June 30, 2011, and prior to July 1, 2018. The following taxes do not qualify:
taxes not collected by the Illinois Department of Revenue (IDOR), such as property, estate, franchise, and insurance taxes, and local taxes paid directly to the local government;
International Fuel Tax Agreement (IFTA) liabilities;
Motor Fuel Use Tax (MFUT); and
any liability that is not a tax (e.g., licensing fees, tire user fees, motor fuel violations, permits, and some surcharges).
To participate in the amnesty program, taxpayers must make full payment of eligible tax liability between October 1, 2019, and November 15, 2019. If a taxpayer has failed to file a tax return, the taxpayer is required to file an original return. If a taxpayer has underreported liability on a return that has already been filed, the taxpayer is required to file an amended return to make corrections.
Taxpayers participating in the amnesty program will have any eligible penalties and interest waived.
Certain items do not qualify for waiver as part of amnesty program, including:
lien filing and lien release fees;
bad check penalties;
collection agency service fees;
penalty and interest amounts (when no tax is due);
penalty and interest amounts associated with IFTA and MFUT; and
various other penalties and fees that are not based on a tax liability (e.g., abusive tax shelter penalties, frivolous return penalty, and certain audit penalties).
The amnesty program allows taxpayers that have been referred to a private collection agency to participate in amnesty, but the taxpayer must make payment through the private collection agency.
The amnesty program also allows taxpayers recently audited or currently under audit to participate in amnesty. If your audit was recently completed or will be completed prior to the close of the amnesty program on November 15, 2019, the taxpayer must pay the full amount of audit tax liability. If an audit is currently in process and cannot be completed prior to the close of the amnesty program on November 15, 2019, the IDOR requires the taxpayer to estimate the tax liability due, file the appropriate return, and pay the tax balance in full. It is probably a good idea to contact your IDOR auditor to discuss your options. If the final audit tax liability exceeds the paid estimate, penalties and interest may apply.
The amnesty program even allows taxpayers with a case pending with IDOR’s Board of Appeals, IDOR’s Administrative Hearings or the Independent Tax Tribunal to participate in amnesty. Taxpayers may not participate in amnesty if they are a party to a criminal investigation or have a criminal or civil case pending for any amnesty-eligible tax collected by the IDOR. Taxpayers may participate in amnesty if that tax-related civil case is dismissed before the end of the amnesty period. It is probably a good idea to contact your IDOR attorney assigned to your case to discuss your options.
Please note that the IDOR has sent a letter (IDOR-99FSEU) to some taxpayers alerting them of the opportunity to pay any amnesty-eligible tax liabilities using MyTax Illinois. Taxpayers will want to make sure the amount on the letter is the correct amount of tax due. Further, the IDOR has provided a notice that only certain taxpayers that received the IDOR-99FSEU can actually pay using MyTax Illinois. Those unable to use MyTax Illinois will need to pay by check or credit card.
ZHF Observations
As with most state tax amnesties, taxpayers should weigh the benefits of using the amnesty program against the benefits offered by a state’s voluntary disclosure program. Under Illinois’ amnesty program, taxpayers are required to look-back 7 years[1], while the voluntary disclosure program only requires taxpayers to look-back 4 years. While amnesty offers the waiver of penalty and interest, the voluntary disclosure program only abates the penalty. Keep in mind that if the IDOR has initiated an audit or an investigation on a taxpayer, that taxpayer is prohibited from completing a voluntary disclosure. Taxpayers will need to do the math to figure out which program provides the biggest benefit.
[1] 7/1/2011 – 6/30/2018—Based on discussions with IDOR, taxpayers are required to pay any unreported eligible tax liability going back to 7/1/2011 even if the taxpayer had filed a return and the statute of limitations has expired for that return.
November 27, 2018
New Jersey:
The New Jersey Division of Taxation announced on November 16, 2018, that a tax amnesty will be conducted beginning November 15, 2018 and ending January 15, 2019. The amnesty applies to state tax liabilities for tax returns due on or after February 1, 2009 through September 1, 2017. Taxpayers who complete amnesty will not have to pay one-half of the interest due, any penalties, Referral Cost Recovery Fees, or cost of collection fees. Taxes that are administrated and collected by the New Jersey Division of Taxation are eligible for tax amnesty, including: alcoholic beverage tax, Atlantic City casino taxes and fees, Atlantic City luxury tax, Atlantic City tourism promotion fee, Cape May county tourism sales tax, cigarette tax, corporation business tax, cosmetic medical procedure gross receipts tax, domestic security fee, inheritance and estate taxes, hotel/motel occupancy fee/municipal occupancy tax, insurance premiums taxes, landfill closure and contingency tax, litter control fee, motor fuels tax, motor vehicle tire fee, 9-1-1 system and emergency response assessment, nursing home assessment, petroleum products gross receipts tax, public community water systems tax, public utility taxes, railroad property tax and railroad franchise tax, recycling tax, sales and use tax, sanitary landfill tax, spill compensation and control tax, sports and entertainment facility tax, tobacco products wholesale sales and use tax, transitional energy facility assessment, UEZ and UEZ impacted districts reduced sale tax, uniform and transitional utility assessment, resident return, non-resident return, fiduciary return, composite return, inheritance and estate taxes. Taxes that fall outside the jurisdiction of the New Jersey Division of Taxation are not eligible for tax amnesty, including: SOIL (set-off of individual liability) debts form agencies other than the Division of Taxation, local property taxes, fees assessed by the Division of Revenue, federal liabilities, motor carriers road use taxes, and payroll taxes owed to the Department of labor. Most taxpayers will qualify for the tax amnesty. However, a taxpayer that is under criminal investigation or charge for a state tax matter by a county prosecutor or New Jersey’s Attorney General will not qualify for tax amnesty. Taxpayers in the appeal process may qualify for tax amnesty but need to request approval from the Director of the Division. Taxpayers under audit may also be able to take advantage of tax amnesty depending on the timing of the audit. To apply, taxpayers must request amnesty electronically. If a taxpayer has received an amnesty notice, the taxpayer should log-in to the Amnesty Processing Center. If a taxpayer has not received an amnesty notice, the taxpayer should log-in to the Non-Outreach Portal. No payment plans are available for amounts remitted through tax amnesty and any amounts remitted are not eligible for refund or credit.
Taxpayers that do not take part in tax amnesty, will be subject to a mandatory 5% amnesty penalty in addition to the other penalties, interest and collection fees on any outstanding balances.
May 7, 2018 Indiana: The Indiana Department of Revenue (“IDOR”) is offering a one-time voluntary disclosure initiative to out-of-state online retailers that meet certain qualifications until December 31, 2018. This special tax program is being offered specifically to out-of-state online retailers that have inventory located in third-party warehouses located in Indiana and sell to Indiana customers. This program offers out-of-state online retailers, that are not currently in compliance with Indiana sales and use tax laws, to enter into an agreement with the IDOR that will then fulfill those tax obligations. Participants will not be required to pay any penalties and will have a decreased look-back period for sales and use tax to one full calendar year (2017) plus the current period. In order for the out-of-state retailer to participate in the special voluntary disclosure program, they must meet all of the following qualifications:
The online retailer has inventory located in a third-party Indiana warehouse and sells to Indiana customers;
The online retailer has never filed tax returns in Indiana for the tax type in question;
The online retailer has never registered for the tax type in question;
The online retailer has never been audited or contacted by the IDOR about the tax type in question; and
The online retailer is not an Indiana resident that has clearly defined sales tax and income tax filing obligations in the state.
April 30, 2018
Alabama:
H.B. 137 authorizes an Alabama tax amnesty program for all taxes, except for motor fuel, motor vehicle, and property taxes, administered by the Alabama Department of Revenue (“ADOR”) that were due prior to January 1, 2017, or were for tax periods that began before January 1, 2017. The Alabama tax amnesty program will run from July 1, 2018 to September 30, 2018. Participants will pay the underpaid tax liability and will not be required to pay any interest or penalties. The Alabama tax amnesty program includes a limited look back period of three tax years.
In order to be eligible to participate in the Alabama tax amnesty program, a taxpayer must not have been contacted by the ADOR for the prior two years for the tax type that the taxpayer is requesting amnesty. Contact is defined to include an audit or notice of audit, a payment of tax, a payment of estimated tax, a registration for tax, a request for extension of time to file a tax return, or the filing of a tax return. Thus, in order to participate in the Alabama tax amnesty program, a taxpayer must not have filed a return or paid tax on the tax type that amnesty is being requested within the previous two tax years.
The following taxpayers are also not eligible to participate in the Alabama tax amnesty program:
The taxpayer that is a party to a criminal investigation or criminal litigation for the failure to pay Alabama taxes;
The taxpayer that has filed a false or fraudulent return or statement as part of the Alabama tax amnesty program;
The taxpayer that has been issued a final assessment and the time to appeal the assessment has past;
The taxpayer that has entered into a voluntary disclosure agreement with the ADOR before December 31, 2017; and
The taxpayer that has been granted amnesty as part of the Alabama Tax Delinquency Amnesty Act of 2016.
The taxpayer must electronically file an amnesty application and include a written waiver of the right to protest the tax payments made under the Alabama tax amnesty program. The taxpayer also must agree to waive the right to request a refund of tax payments, except for a refund resulting from federal audit changes, made under the amnesty program.
If a taxpayer is granted amnesty, the taxpayer must submit all applicable returns, supporting documentation, and payment of tax due for the tax amnesty period and the current tax year to the ADOR by November 15, 2018. The ADOR is not permitting payment plans for tax due. Taxpayers that participate in the Alabama tax amnesty program must remain in compliance for tax periods beginning after December 31, 2016 and before December 31, 2024 or risk being subject to penalties for the taxes reported during the amnesty period.
The ADOR may audit a taxpayer’s Alabama tax amnesty return filings. The ADOR may impose additional penalties if the audit results in a tax assessment. The penalty would only be imposed on the increase in tax from the amnesty returns and the tax assessment. A taxpayer retains the right to protest any tax assessment made by the ADOR in excess of the tax payments made under the amnesty program.
Connecticut:
The Connecticut tax amnesty program is currently open and continues until November 30, 2018. The Connecticut tax amnesty program is discussed in more detail as part of our January 2, 2018 entry below.
Texas:
The Texas tax amnesty program will run from May 1, 2018 through June 29, 2018. Taxes administered by the Texas Comptroller (“Comptroller”), including the franchise tax and sales and use taxes, due before January 1, 2018 are eligible for the Texas tax amnesty program. Participants will pay the underreported tax liability and will have interest and penalties waived.
The following taxpayers are eligible to participate in the Texas tax amnesty program:
Taxpayers that did not file and/or pay tax due on a return originally due before January 1, 2018; and
Taxpayers that underreported tax due on a return filed with the Comptroller that is unknown to the Comptroller.
Taxpayers are ineligible to participate in the Texas tax amnesty program if they are currently under audit, or received notification that they have been identified for audit. Additionally, taxpayers that have signed a settlement agreement with the Comptroller or entered into a voluntary disclosure agreement with the Comptroller are ineligible to participate in the Texas tax amnesty program.
Taxpayers that would like to participate in the Texas tax amnesty program are required to file paper returns and write “Amnesty” at the top of the return. Texas will not accept electronic returns as part of the Texas tax amnesty program. Additionally, the Texas tax amnesty program will not permit payment plans.
More information is available at the Comptroller’s website and can be viewed here.
January 2, 2018 Connecticut: The Connecticut tax amnesty program is currently open and continues until November 30, 2018. Taxes administered by the Connecticut Department of Revenue Services (“CDRS”), including income tax, business entity tax, sales and use tax, withholding tax, corporation business tax, and gift tax, that were due by December 31, 2016 are eligible taxes for the Connecticut tax amnesty program. The Connecticut tax amnesty program does allow for participants to negotiate a limited lookback period. Participants will pay the underpaid tax liability and 50% of the statutory interest due. The Connecticut tax amnesty program is focused on assisting taxpayers with future Connecticut tax compliance. Therefore, the Connecticut tax amnesty program is not available for underpaid tax liabilities for tax types and tax periods in which the taxpayer:
Has received a bill from the CDRS;
Is under audit by the CDRS;
Is a party to a closing agreement with the CDRS;
Has protested a determination of an audit; or
Is party to litigation against the Connecticut Tax Commissioner.
Taxpayers that want to participate in the Connecticut tax amnesty program must complete an online application. More information on the Connecticut tax amnesty program, including the link to the online application, can be viewed here. Ohio: The Ohio tax amnesty program begins on January 1, 2018 and continues until February 15, 2018. The Ohio tax amnesty program is an opportunity for eligible individuals and businesses that have qualifying unreported Ohio tax liabilities to remit such tax with no penalty and 50% of the statutory interest. The Ohio Department of Taxation (“ODT”) has developed a website with information on the Ohio tax amnesty program, including information on how to apply to participate in the Ohio tax amnesty program. The website can be viewed here. Based upon discussions with ODT, it is the ODT’s policy that in order to participate in the Ohio tax amnesty program, a taxpayer has to report and pay the tax liability for all periods that are due and unpaid as of May 1, 2017, regardless of any statute of limitation. The exception to the policy is for consumer’s use tax, which taxpayer’s are not required to report any tax due and unpaid prior to January 1, 2008. In order to be eligible, a taxpayer cannot have been contacted by ODT about the tax liability. Based upon discussions with ODT, contact includes receiving a bill or being contacted for audit. This contact precludes a taxpayer from participating in the Ohio tax amnesty program for the period addressed in the bill or in the audit. The taxpayer may still participate in the Ohio tax amnesty program for periods not addressed by the bill or the audit for the same type of tax, and for all other taxes covered by the Ohio tax amnesty program. The Ohio voluntary disclosure program will remain open during the tax amnesty period. The Ohio voluntary disclosure program offers participants a limited lookback period and an abatement of penalties, but a taxpayer is required to pay 100% of the statutory interest. Thus, there may be instances where a voluntary disclosure agreement may be more beneficial than participating in the Ohio tax amnesty program. Taxpayers should analyze the benefits of either the Ohio tax amnesty program or the voluntary disclosure program to see which option is the best to get into compliance:
Zaino Hall & Farrin LLC’s John Trippier recently wrote an article for the Ohio Society of CPAs that discusses the Ohio tax amnesty program in more detail and can be viewed here. The Ohio tax amnesty program is also discussed in the August 21, 2017 and July 17, 2017 entries below. Rhode Island: The Rhode Island tax amnesty program opened on December 1, 2017 and will continue until February 15. 2018. Interested taxpayers should act quickly to ensure that they meet the upcoming deadline. The Rhode Island tax amnesty program is also discussed in the October 13, 2017 and August 21, 2017 entries below. Texas: S.B. 1 authorizes a Texas tax amnesty program for taxes administered by the Texas Comptroller. The Texas tax amnesty program will run from May 1, 2018 through June 29, 2018. The Texas tax amnesty program applies to periods prior to January 1, 2018, and only tax liabilities that have not been identified by the Comptroller are eligible. Texas will waive interest and penalties for participants in the Texas tax amnesty program. This SALT Buzz will be updated as more information on the Texas tax amnesty program becomes available.
October 13, 2017
Multistate Tax Commission Online Marketplace Seller Voluntary Disclosure Initiative:
The Multistate Tax Commission (“MTC”) announced that it is extending the application deadline for its Online Marketplace Seller Voluntary Disclosure Initiative (the “Initiative”) from October 17, 2017 to November 1, 2017. The Initiative is discussed in detail in the August 21, 2017 entry below.
Rhode Island:
The Rhode Island Division of Taxation (“RIDT”) released Advisory 2017-29 informing taxpayers of the upcoming Rhode Island tax amnesty program that will begin on December 1, 2017, and continue until February 15, 2018. All unpaid Rhode Island state taxes from periods ending on or before December 31, 2016 are eligible for the tax amnesty program. RIDT will also be sending notices to known taxpayers with balances due to inform those taxpayers of the ability to participate in the Rhode Island tax amnesty program. RIDT will waive penalties and ¼ of the interest normally due for taxpayers that participate in the Rhode Island tax amnesty program. RIDT will be posting additional information for the Rhode Island tax amnesty program, such as application procedures, on the dedicated tax amnesty website. A copy of Advisory 2017-29 can be viewed here. The Rhode Island tax amnesty program was also discussed in the August 21, 2017 entry below.
September 18, 2017
Virginia:
The Virginia Department of Taxation (“VDT”) has announced in its final tax amnesty program guidelines that the Virginia tax amnesty program will begin September 13, and continue until November 14, 2017. The tax amnesty program guidelines can be viewed here. A complete list of the taxes and periods eligible for the Virginia tax amnesty program are documented in the program guidelines, and include:
The Virginia tax amnesty program does not require a specific application. Rather, to be eligible for the Virginia tax amnesty benefits, a taxpayer must pay the tax due, pay one half of the required interest, and file any required returns before the end of the Virginia tax amnesty period. Taxpayers participating in the Virginia tax amnesty program will have penalties and one half of the required interest waived. If a taxpayer is unable to pay the full amount of tax and one half of the required interest by November 14, 2017, the VDT will enter into payment plans with the taxpayer, but the taxpayer will not receive the reduced interest amnesty benefit.
The VDT will be sending out notices to most of the taxpayers eligible for the Virginia tax amnesty program including taxpayers that received tax bills dated before June 15, 2017.
Taxpayers that do not participate in the Virginia tax amnesty program will be subject to an additional 20% penalty for assessments for periods eligible for the Virginia tax amnesty program. However, the program guidelines list situations in which VDT may waive the additional 20% penalty including for situations where the taxpayer enters into a payment plan with VDT during the Virginia tax amnesty period.
The Virginia tax amnesty program is also discussed below in our entries dated February 26, 2017 and July 17, 2017.
September 5, 2017
The Multistate Tax Commission has added five additional states to the Online Marketplace Seller Voluntary Disclosure Initiative including District of Columbia, Massachusetts, Minnesota, Missouri, and North Carolina. The August 21, 2017 entry below has been updated to include these states and special considerations for District of Columbia, Massachusetts, and Minnesota.
As a reminder, the Oklahoma tax amnesty program begins September 1, 2017 and continues until November 30, 2017.
August 21, 2017
Multistate Tax Commission Online Marketplace Seller Voluntary Disclosure Initiative:
The Multistate Tax Commission (“MTC”) is offering an Online Marketplace Seller Voluntary Disclosure Initiative (the “Initiative”) that acts as a tax amnesty program for online marketplace sellers. An online marketplace seller is a seller that uses a marketplace provider/facilitator to facilitate retail sales. The MTC defines a marketplace provider/facilitator as “a person who facilitates a retail sale by an online marketplace seller by (1) listing or advertising for sale by the online marketplace seller on a website, tangible personal property, services, or digital goods that are subject to sales/use tax; (2) either directly or indirectly through agreements or arrangements with third parties collecting payment from the customer and transmitting that payment to the online marketplace seller; and provides fulfillment services to the online marketplace seller.” A taxpayer that is not considered to be an online marketplace seller is not eligible for the Initiative.
The Initiative is being offered through the MTC Multistate Voluntary Disclosure Program. The current list of states that have announced participation in the Initiative includes Alabama, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Oklahoma, South Dakota, Tennessee, Texas, Utah, Vermont, and Wisconsin. A taxpayer is permitted to pick and choose which states that it wants to submit applications to participate in the Initiative. The MTC will accept applications for the Initiative from August 17, 2017 through October 17, 2017.
In general, if an online marketplace seller participates in the Initiative, the states have agreed to waive any prior period sales/use tax liabilities, income/franchise tax liabilities, interest, and penalties. The online marketplace seller will be required to register for sales/use tax and income/franchise tax in the state no later than December 1, 2017. Thus, the online marketplace seller will be required to collect sales tax, remit sales/use tax to the state, and file the required sales/use tax returns on a go-forward basis. The online marketplace seller will be required to file returns and pay income/franchise tax for the tax year that includes December 1, 2017 (i.e., for a calendar year taxpayer, an income/franchise tax return will be due for the period of January 1, 2017 through December 31, 2017). It is unclear if an online marketplace seller could claim P.L. 86-272 protection on net income taxes if the only connection in a state is the use of a marketplace provider/facilitator to facilitate sales into a state.
There are a number of states participating in the Initiative that decided to include a look-back period for sales/use tax and/or income/franchise tax. These states include:
Colorado will waive the lookback period for sales/use taxes, but an online marketplace seller will be required to file and pay Colorado income taxes for the previous four years. Note that Colorado has a factor presence nexus standard of $500,000, such that it is possible that an online marketplace seller may not meet the factor presence standard. Online marketplace sellers will be required to file sales/use tax and income tax returns for all future tax periods.
District of Columbia has a standard lookback period of 3 years for its voluntary disclosure program and has indicated that it will consider a shorter lookback period for applications received under the Initiative, but has not committed to do so.
Massachusetts will require online marketplace sellers to comply with the standard voluntary disclose program lookback period of three years. It is possible to shorten the lookback period if the online marketplace seller can prove nexus did not exist during the entire lookback period.
Minnesota will require online marketplace sellers to comply with the standard lookback period of 3 years for sales/use tax and 4 years (the prior 3 years, plus the current year) for income tax. It is possible to shorten the lookback period if the online marketplace seller can prove nexus did not exist during the entire lookback period.
Nebraska will consider waiving back sales/use tax and income/franchise tax liability, but as of the time of this publication has not committed to the waiver.
Wisconsin will require payment of sales/use tax for periods beginning January 1, 2015, and payment of income tax for the 2015 and 2016 tax years. Online marketplace sellers will be required to file sales/use tax and income tax returns for all future tax periods.
In order for a taxpayer to qualify to participate in the Initiative, the following conditions must be met:
The taxpayer must not have registered as a seller or retailer in the state, filed sales/use tax or income/franchise tax returns in the state, made payments of these taxes to the state, or had any prior contact with the state regarding a sales/use or income/franchise tax liability in the state.
The taxpayer must be an online marketplace seller that uses a marketplace provider/facilitator to make retail sales in the state. The taxpayer cannot have physical presence nexus in the state, except for inventory stored in a third party distribution center.
The taxpayer has timely applied to the MTC Multistate Voluntary Disclosure Program requesting to participate in the Initiative.
The MTC voluntary disclosure program is an opportunity for online marketplace sellers to mitigate the potential sales/use and income/franchise tax liabilities. However, it is possible that the taxpayer’s identity could be shared with states outside the Initiative if another state makes a specific request to the state with the taxpayer’s name and identification number. Taxpayers should consider both the opportunities and the risks of participating in the Initiative.
Ohio:
The Ohio amnesty program is discussed in our July 17, 2017 entry below. We understand that a marketing firm will be hired in the near future to promote the Ohio amnesty program and that the Ohio amnesty program guidelines will be issued around November. We also understand that the Ohio voluntary disclosure program will remain open during the Ohio amnesty program. As a result, taxpayers should determine which program provides the best results for their specific facts and circumstances. When more information is released, we will update this SALT Buzz.
Oklahoma:
The Oklahoma Voluntary Disclosure Initiative will begin on September 1, 2017 and continue until November 30, 2017. The Oklahoma Voluntary Disclosure Initiative is discussed in our July 17, 2017 entry below. On August 8, 2017, the Oklahoma Tax Commission issued an informational notice discussing the Voluntary Disclosure Initiative and administrative rules for the Voluntary Disclosure Initiative. The informational notice summarizes the details of the Voluntary Disclosure Initiative, which are discussed in our July 17, 2017 entry below. The informational notice also highlights the requirement that the Voluntary Disclosure Initiative requires the preparation and filing of the delinquent returns. The completed returns and payment of tax due should be mailed to the Oklahoma Tax Commission, P.O. Box 269059, Oklahoma City, OK 73126-9059. The Oklahoma Tax Commission will allow taxpayers to enter into a payment plan and still participate in the Voluntary Disclosure Initiative. The informational notice and administrative rules can be viewed here.
Rhode Island:
H.B. 5175 authorizes a Rhode Island tax amnesty program for all taxes administered by the Rhode Island tax administrator including sales/use tax, personal income tax, and corporate income taxes. The Rhode Island tax amnesty program will run from December 1, 2017 through February 15, 2018. Participants will submit a written application and pay the underpaid tax liability and ¾ of the interest normally due by statute. Thus, participants will save ¼ of the interest normally due and penalties will be waived. A taxpayer may enter into a payment installment plan as part of the Rhode Island tax amnesty program.
Virginia:
The Virginia amnesty program is discussed in our February 26, 2017 and July 17, 2017 entries below. As of the time of this update, Virginia has not announced the timeframe for the Virginia amnesty program.
July 17, 2017
Ohio
Am. Sub. H.B. 49 authorized an Ohio tax amnesty program, the fourth tax amnesty program since 2002, and the second tax amnesty program under the Kasich Administration. The Ohio tax amnesty program will run from January 1, 2018 to February 15, 2018, and will apply to all delinquent state taxes, tangible personal property taxes, county and transit authority sales taxes, and school district income taxes that were due as of May 1, 2017 and remain unpaid. The Ohio tax amnesty program is not available for taxes that have been formally assessed, for taxes that a bill has been issued or for taxes subject to an on-going or pending audit. The benefits of the program for participants will be elimination of all applicable penalties and payment of only half the interest that would otherwise be due. Additional details on the process of participating in the Ohio tax amnesty program are expected in the near future.
It is our understanding the Ohio Voluntary Disclosure Program will remain open before, after, and during the Ohio tax amnesty program. Thus, taxpayers should consider whether tax amnesty or voluntary disclosure provides the best result based upon their specific facts and circumstances.
Oklahoma
H.B 2380 authorized the Oklahoma Voluntary Disclosure Initiative program for most taxes administered by the Oklahoma Department of Revenue, including the income tax (for periods prior to January 1, 2016), sales/use tax, withholding tax, the gasoline and diesel tax, and the gross production and petroleum excise tax. The Oklahoma Voluntary Disclosure Initiative will run from September 1, 2017 to November 30, 2017. The program is limited to taxes that may be assessed within the last three years (i.e., the prior three years for calendar year taxes or thirty-six months for other taxes). Participants will pay the underpaid tax liability and will not be required to pay any interest or penalties. District Court approval of interest and penalty waivers in excess of $10,000 will not be required under the Oklahoma Voluntary Disclosure Initiative program.
In order for a taxpayer to qualify to participate in the Oklahoma Voluntary Disclosure Initiative program, the following conditions must be met:
The taxpayer must not have any outstanding tax liabilities besides those being reported;
The taxpayer must not have been contacted by the Oklahoma Tax Commission regarding the reported taxes;
The taxpayer must not have any collected and unremitted taxes at the time of the application; and
The taxpayer must not have been a participant in an Oklahoma voluntary disclosure agreement within the preceding three years for the reported taxes.
Additionally, as part of the legislation authorizing the Oklahoma Voluntary Disclosure Initiative, a modified voluntary disclosure agreement process was authorized in which a complete interest waiver may be requested for situations in which unreported taxes may extend longer than three years.
Pennsylvania
The Pennsylvania amnesty program is now closed. Taxpayers that have unreported tax liabilities may consider whether the Pennsylvania voluntary disclosure program or use tax voluntary compliance program would be advantageous given the taxpayers specific facts and circumstances.
Virginia
The Virginia amnesty program is discussed in our February 26, 2017 entry below. As of the time of this update, Virginia has not announced the timeframe for the Virginia amnesty program. Virginia has released draft rules for the Virginia Amnesty Program that can be viewed here.
February 26, 2017
Pennsylvania
The Pennsylvania tax amnesty program is for all taxes administered by the Pennsylvania Department of Revenue ("PA DOR"), including the corporate net income tax, employer withholding tax, personal income tax, and sales/use tax. Participants will pay the underpaid tax liability and one-half of the interest normally due. Thus, participants will save one-half of the interest and any penalties, including lien filing fees and collection agency fees that normally would have been due.
The tax amnesty period is scheduled for April 21, 2017 to June 19, 2017. Taxpayers must file an on-line amnesty application, file all required tax returns and make all required payments within the tax amnesty period. Therefore, it is important that interested taxpayers consider participating as soon as possible so taxpayers are prepared to provide all relevant returns and payments by June 19, 2017, or risk not being eligible to participate.
The tax amnesty program is open for state tax delinquencies, known and unknown by the PA DOR, as of December 31, 2015. The PA DOR will mail notices to taxpayers with known delinquencies prior to the tax amnesty program start date.
There are a number of limitations and restrictions to participating in the tax amnesty program including:
With respect to taxpayer's with tax liabilities unknown to the PA DOR, there is a limited lookback period dating back to January 1, 2011.
If a taxpayer participated in the 2010 tax amnesty program, then the taxpayer is not eligible to participate in the 2017 tax amnesty program. However, taxpayers that participated in the 1996 tax amnesty program are eligible to participate.
Taxpayers that participate in the tax amnesty program waive the right to file for a refund for tax paid as part of amnesty or protest an amnesty return.
Taxpayers participating in the voluntary disclosure program are bound by the terms of the voluntary disclosure agreement and are not eligible for a reduction in interest.
If a taxpayer is eligible to participate in the amnesty program, but elects to not participate, a five percent non-participation penalty will be applied to future tax assessments for the January 1, 2011 through December 31, 2015 period.
Taxpayers who can participate in the amnesty or the voluntary disclosure program should calculate the total cost (tax, penalty and interest) under each program to ensure the maximum benefit.
Virginia
Virginia enacted H.B. 2246 (effective July 1, 2017) that granted the Virginia Tax Commissioner the authority to create a tax amnesty program. Virginia Code Section 58.1-1840.2 provides the statutory authority for the tax amnesty program and outlines some basic rules for the tax amnesty program. The Tax Commissioner is required to develop detailed rules for the tax amnesty program.
At the time of this Buzz, the tax amnesty rules have not been published, however, the enacted statute does provide some guidelines including:
The tax amnesty program is for all taxes administered by the Virginia Department of Taxation.
Participants will have one-half of interest normally due waived and will not be required to pay any civil or criminal penalties associated with the tax underpayments.
Participation may be limited depending on the timing of an existing assessment or investigations for filing fraudulent returns.
The tax amnesty program will be conducted between July 1, 2017 and June 30, 2018 for a period of at least 60 days, but no longer than 75 days.
Taxpayers that are eligible to participate in the amnesty program, but elect to not participate, are subject to a twenty percent penalty on future tax assessments.
An updated Buzz will be released once the tax amnesty program rules have been published.
South Carolina
South Carolina enacted S.B. 526 (effective June 8, 2015) that granted the South Carolina Department of Revenue ("SC DOR") the authority to create a tax amnesty program. S.C. Code Section 12-4-397 provides the statutory authority for a tax amnesty program and outlines the basic procedures, including the requirement that the SC DOR provide the South Carolina General Assembly a sixty day notice of such tax amnesty program. To date, the SC DOR has not used its power to create a tax amnesty program.
If you would like to discuss upcoming state tax amnesty programs or state voluntary disclosure programs, please contact John Trippier, Rich Farrin, or any of the other professionals at Zaino Hall & Farrin LLC.
