Four States Offer Tax Amnesty

Posted on June 09, 2015

State Tax Amnesty

From time to time, various states may offer a period of tax amnesty during which taxpayers may come forward and register with a state for sales tax and remit without penalty and/or interest.  The amnesty programs generally run for a limited period of time and apply to specific tax types for certain periods.

Companies who do business in a given state should frequently evaluate their nexus footprint to ensure they are compliant in the states in which they operate.  Nexus can be based on employees, property, or even sales, service, or trade show visits within a state.

As of June 9, 2015, there are presently four states that will be offering tax amnesty: Arizona, Indiana, Maryland, and Missouri.  If your company is operating in these states and is not registered, now is the time to prepare and act.  Don’t miss out on this window of opportunity.

 Arizona Tax Amnesty Program

Arizona passed legislation on March 12, 2015, enacting a tax amnesty program (“Tax Recovery Program”).  The amnesty relates to the majority of taxes administered by the Arizona Department of Revenue except the luxury tax and withholding tax.

What can be waived?

Under-reporting
Non-reporting
Non-payment

When does the program occur?

September 1, 2015 – October 31, 2015

What is waived?

Civil taxpayer penalties reduced or waived for periods prior to January 1, 2014 (annual filers) or February 1, 2015 (all other filers)
Interest reduced or waived

How does it work?

The taxpayer and Arizona Department of Revenue will enter into an agreement that waives the outlined penalties and interest for taxes that are not paid in full during the amnesty period.  The taxpayer must agree to pay within the terms and schedule outlined in the agreement.  All tax must be paid in full no later than 10/31/2015.

What are the Exceptions?

If the taxpayer is currently or previously has been a party to a criminal investigation or case, then the taxpayer will not be allowed to participate in the Arizona tax amnesty program.

 Indiana Tax Amnesty Program

Indiana Governor, Mike Pence, signed legislation enacting tax amnesty for specific civil and criminal penalties and interest.  The State Biennial Budget Bill requires the Indiana Department of Revenue to create a tax amnesty program.  The program must offer taxpayers having unpaid tax liabilities for a specific tax due and payable for tax period ending prior to January 1, 2013.

What can be waived?

Under-reporting
Non-reporting
Non-payment

When does the program occur?

An eight week period to be determined by IN DOR
Ending no later than January 1, 2017

What is waived?

Civil penalties (unless previously assessed fraud)
Interest on returns that should have been filed 1/1/2013 or prior
Criminal penalties

How does it work?

The taxpayer and Indiana Department of Revenue will enter into an agreement that waives the outlined penalties and interest for taxes that are not paid in full during the amnesty period.  The taxpayer must agree to pay within the terms and schedule outlined in the agreement.  All tax must be paid in full no later than the conclusion of the amnesty period.

What are the Exceptions?

If a taxpayer was previously granted amnesty under an Indiana tax amnesty program, then the taxpayer will not be able to apply for amnesty again under the current program.

If a taxpayer participates in the current amnesty program as outlined effective July 1, 2015, then the taxpayer will not be eligible to participate in future amnesty.

If a qualified taxpayer does not participate in the amnesty program, then the taxpayer will be assessed with additional penalties if additional taxes are determined to be due.

 Maryland Tax Amnesty Program

Maryland Governor, Larry Hogan, signed legislation on April 14, 2015, enacting tax amnesty for specific civil and criminal penalties and interest.  The amnesty relates to state and local income tax, withholding tax, sales and use tax, and admissions and amusement taxes.

What can be waived?

Under-reporting
Non-reporting
Non-payment

When does the program occur?

September 1, 2015 – October 30, 2015

What is waived?

All civil penalties (unless previously assessed fraud)
50% of interest on returns that should have been filed 12/31/2014 or prior
Criminal tax offenses due to non-filing

How does it work?

The taxpayer and Maryland Comptroller will enter into an agreement that waives the outlined penalties and interest for taxes that are not paid in full during the amnesty period.  The taxpayer must agree to pay within the terms and schedule outlined in the agreement.  All tax must be paid in full plus the 50% interest no later than 12/31/2016.

What are the Exceptions?

If a taxpayer was previously granted amnesty under a Maryland tax amnesty program (1999-2014), then the taxpayer will not be able to apply for amnesty again under the current program.

Any taxpayer pending criminal charges in the Maryland state courts or under investigation by the proper Maryland authority will preclude amnesty from criminal tax offenses during the period of the amnesty program.

 Missouri Tax Amnesty Program

Missouri signed legislation on April 27, 2015, enacting tax amnesty for specific penalties and interest.  The amnesty relates to unpaid Missouri taxes.

What can be waived?

Under-reporting
Non-reporting
Non-payment

When does the program occur?

September 1, 2015 – November 30, 2015

What is waived?

All civil penalties (unless previously assessed fraud)
All interest on returns that should have been filed 12/31/2014 or prior

How does it work?

The taxpayer and Missouri will enter into an agreement that waives the outlined penalties and interest for taxes that are not paid in full during the amnesty period.  The taxpayer must agree to pay within the terms and schedule outlined in the agreement and must remain compliant with state tax laws for the next eight years.

If a taxpayer fails to remain compliant with Missouri state tax laws for the next eight years following the agreement, then the taxpayer will owe all penalty and interest that was waived under the amnesty program.

All tax must be paid in full no later than 11/30/2015.

What are the Exceptions?

If a taxpayer is granted amnesty under a Missouri tax amnesty program, then the taxpayer will not be able to apply for future amnesty of the same tax type.

If the taxpayer is currently a party to a criminal investigation or case, then the taxpayer will not be allowed to participate in the Missouri amnesty program.

 Tips for the Taxpayer

Evaluate your corporate footprint regularly to confirm where you have nexus.  If you find that you need to register in a state, take the necessary steps to get registered and become compliant with sales tax laws.  Determine whether a state is offering or will offer a tax amnesty period or program and whether you are eligible to participate.

 

For More Information

If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News and Events at www.allynintl.com or contact tax@allynintl.com.  To read the legislation referenced, please see the following or visit the states’ websites for more on their amnesty programs:

Arizona:  S.B. 1471

http://www.azdor.gov/

Indiana:  H.B. 1001, Laws 2015

http://www.in.gov/dor/

 

Maryland:  L. 2015, S763 (c. 50)

http://www.comp.state.md.us/

Missouri:  H.B. 384, Laws 2015

http://dor.mo.gov/

 

How Can We Help?

Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state and local tax compliance and consulting for large US and global corporations.  We use that experience to your advantage.

Allyn files state and local sales and use tax returns in every US taxing jurisdiction.  We can manage your tax compliance and consulting, create a solid tax process, and provide audit defense for your company.  Allyn can perform a nexus review and get your company registered for sales tax in the states in which you have nexus.

Contact us and we can provide a customized cost-effective solution to meet your company’s needs.  For further information on Allyn Tax services, please contact: tax@allynintl.com.

 

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