Do you owe tax payments to the state?
Or did you just “forget” outright to file income tax returns in one – or more – prior years?
The state is making it worthwhile to come clean. A new amnesty plan will forgive errant taxpayers not only back interest on what they owe but also the penalties that can total up to 25 percent of what remains unpaid.
But there’s a very narrow window: Taxpayers will have just two months, beginning Sept. 1, to cough up the money.
This isn’t the Department of Revenue feeling charitable. It’s actually part of the effort by the Legislature to balance the state’s books.
Lawmakers inserted the amnesty program into this year’s $9.1 billion budget. They hope to generate $15 million that would otherwise not be coming in the door.
Not everyone will qualify.
Department of Revenue spokesman Sean Laux said anyone with a prior conviction for tax fraud need not apply. Ditto if his agency already is pursuing someone in a criminal case.
But Laux said even taxpayers who already are in the middle of an audit or even have been assessed for some back taxes can take advantage of the amnesty – and avoid penalties and interest – by dropping any appeals.
Laux said there is no statute of limitations for failing to file returns and paying the taxes due. That means the Department of Revenue could even pursue someone for unpaid taxes going back decades.
He did not dispute, though, that the chances of his agency finding someone with a missing return that far back is probably remote.
Laux said the absolute deadline for paying off what is owed is Nov. 2.
The only question that remains is whether the state will reach that $15 million goal.
Legislative budget analysts said the problem with these estimates is that no one really knows how many individuals and businesses have been less-than-accurate with their tax payments.
For example, the last amnesty plan, approved in 2011, was predicted to raise $22 million. But when all was said and done, the state saw just $13 million.
By contrast, a 2009 amnesty program raised $32 million, more than six times what was predicted.
Laux said he believes his agency will meet the goal.
“The reason is because it involves what we call ‘accounts receivable,'” he said. “None of the other amnesties have ever included that population.”
But Laux acknowledged that means some of what the state will collect during the two-month window is from taxpayers his agency already was pursuing – and money it ultimately likely would have received anyway.
“You’re just accelerating the collection of revenues that we would expect to collect anyway,” he said. The result, though, is that much of the fiscal bump the state will get now will mean less money in future tax years.
How much the program generates may not be known for months.